Can we just stop calling it a “home-based business” please?

I have a number of clients who I write for and most of those clients are distributed all around the world, which means that I can work for those clients from my nice comfy little home office.

But one of my clients is a very big corporation and their head office is not far from my house and when I write for them, I go into their office because I work with a team there. The projects I work on for them cannot be written from my home because it requires secure software and face-to-face meetings with the writing team… and I’m totally cool with that because I love this client and I really like hanging out downtown with all the bustle of downtown activities and shops and restaurants.

So I do a lot of work at home and I do some work at my client’s office and I’m really happy with that mix.

Well a funny thing happened not too long ago: Someone wanted to get together for coffee with me and I told them that I couldn’t get together with them at the time they asked for because I was going to be at my client’s office at the time they wanted to meet. They were befuddled by this and said rather incredulously, “I thought you owned a home-based business”. The person who asked me about my business seemed surprised and disappointed that my business wasn’t run 100% from my house… it seemed like they had just found out that Santa wasn’t real.

And at that moment I realized just how much I hate the term “home-based business”.

As the name suggests, a home-based business is a term that describes a business you run from your home. And believe me, there is NOTHING wrong with running a business from your home! But I think the problem I have is that the words “home-based business” set up a misunderstanding for the aspiring entrepreneur.

By focusing on the “home-based” part of “home-based business”, the aspiring entrepreneur does a disservice to themselves by limiting what kind of business they can actually start: You can run MANY businesses from your home that may not fit the definition of “home-based businesses”. And, if you start a business from your home but you want to grow your business, you may need to explore the possibility of expanding beyond the four walls of your house.

That’s the case with my business. In the strictest definition, it’s a home-based business because I started freelance writing from my home. I have a home-office and do all of my administration and all of my marketing out of that office, as well as the content for most of my clients. But I also want to grow and serve other clients and sometimes the services I provide (such as managing a group of writers employed by my client) requires me to show up at my client’s office for meetings and whatnot. I love running my business and I have the freedom to run it at home or at my clients’ offices — whatever I choose to do.

My business is a business that I happen to run from my home; it’s not strictly a home-based business.

There’s an entire industry of experts and gurus and info-marketers who are making a bundle by selling “home-based business” opportunities to an unsuspecting populace who believe that home-based businesses are somehow different than other kinds of businesses. They’re not.

Consider some really big corporations that started at home: Microsoft, HP, Apple, and Dell were all home-based businesses at some point, because they were started at home (or in a garage or dorm-room)… but they didn’t stay there.

I promise you that Bill Gates, Mrs. Hewlett and Packard, Steve Jobs, and Michael Dell were NOT deciding to start “home-based businesses”. They were just starting businesses that happened to be in their home but which they eventually chose to grow beyond.

And that’s what you should do, too. If you want to start a business, destroy your notion of finding a “home-based business” and instead focus on finding a prospective client base with a pressing need that you know how to solve. Then start up your business from the comfort of your home and serve that clientele. And if you choose, you can grow your business beyond that.

Why you should think twice before starting a business

“I’ve got a great idea for a book,” someone told me recently… and then went on to recount what is possibly the worst idea I’ve ever heard for a book.

I wished them good luck and declined the “opportunity” to work on the book with them.

I hear this fairly commonly: “I have a great idea for a book” or “I have a great idea for a business”, only to be told something that is a mundane and/or cookie cutter as a Ford Taurus.

There are a lot of ideas out there… but they’re not all as great as the thinker thinks. For a hundred (or a thousand?) ideas, there is one that has some merit. And for a hundred (or a thousand) ideas with merit, there is one that can get off the ground. Not all opportunities are created equal. Many opportunities are compelling (at least to the person dreaming them up) but not all are feasible (maybe there is no market or the numbers just don’t work).

Perhaps what makes it particularly challenging is that the people who have experience turning ideas into real businesses understand this balance between compelling ideas and feasible ideas, while people who have never gone through the painful process of turning ideas into real businesses just don’t understand the balance. That second group thinks that a compelling idea is a feasible one.

This concept is made real week after week on shows like Shark Tank — where people bring compelling ideas to the investors… but not always feasible ideas. And we are entertained as the “sharks” tear apart the idea for its lack of feasibility.

A Business Insider article called Worst Ideas for Apps does a great job of talking about this from a few different angles. The article lists several app ideas that were compelling ideas but just not feasible. But the real gold in this article is buried at the bottom of the article when they list a couple of ideas that they called about regularly. In fact, the last bullet sums it up perfectly:

[quote]People hear about Internet startups and founders striking it right with a hot new website. They assume these things are trivial to build and can easily be built overnight, if only someone could come up with the right idea first.[/quote]

But there are a ton of ideas and they require a mix of other things to become more than an idea.

So how do you make sure that your dream of building an app, writing a book, or starting a business actually has legs?

Test the idea first: Run a smaller version. Put together a beta model. Write a few blog posts. TRY it on a small scale and see what happens.

When someone tells me they want to write a book, I tell them to start writing blog posts. In my experience, if you cannot sustain a blog after 2 months (which is often the case), then you’ll never get that book off the ground.

And when someone tells me they want to start a business, I tell them to build a website or blog about it and start driving traffic to it. Gather names on an email list. Ask the audience for feedback.

This is exactly what I did for a press release writing service I built a few years ago. I thought it was a great idea but I wasn’t sure how feasible it was. So I created a really small trial and discovered very quickly that my market wanted to speak to me before getting their press releases. That was fine but it wasn’t the purpose of the business I was trying to build () so I shut it down.

We live in an amazing time when you can start up a small business/brand/website/app/blog very inexpensively and test the results before moving into something larger. It hasn’t always been that way (a hundred years ago, it would have been hard to start a factory or a railroad as a test model).

I’ve come to learn that there are a bazillion compelling ideas out there. And with the right minds and sweat and technology and investment, perhaps many of them could work. But compelling ideas that are feasible and can turn into an actual running (profitable) business or app or book? Those are beautifully rare.

Aaron Hoos’ weekly reading list: ‘Business models, prospecting, and social media’ edition

Aaron Hoos: Weekly reading list

Here are a few of the things that caught my attention this week:

  • How to turn your business idea into a business model: I’m totally a sucker for any article that contains the word “business model” in the title. It’s Pavlov’s bell to me. This article by Entrepreneur does a great job of highlighting the difference between a business idea and a business model and then connects the dots to help you turn your great idea into an actual enterprise. This article is a must-read for any entrepreneur who thinks they’ve created a better mousetrap.
  • Live to prospect or prospect to live?: This is a blog post by my friend Mark McLean. Like so many of his blog posts, it contains really practical advice for real estate professionals who want to grow their practice. In this blog posts (which contains video and text — be sure to watch the video!), Mark talks about running (he’s an avid runner) and draws some parallels to prospecting — possibly the most important activity any real estate pro can do.
  • Downtowns: This article by The Economist explores the consequences (both good and bad) of cities. Cities have some advantages, like diminished transportation costs and improved competitiveness (if you’re a Michael Porter fan, you’ll think this stuff is gold!). Cities also have disadvantages, primarily short-term economic thinking that can lead to downturns and even amplify their impact. I live this type of macroeconomic thinking (although I recognize that it’s not going to compel anyone to abolish cities anytime soon). What’s interesting about this article, to me, is that you could exchange the word “city” for “nation” and the article preserves a lot of truth. Many of the opportunities and challenges created by a city are also created, on a larger scale by a nation. This article won’t interest everyone but it’s well worth a read if you love economics as much as I do.
  • 20 astonishing social media statistics for financial advisors: I often hear from financial professionals that social media is not a place where they can do business. It’s hard to target geographically, people don’t want to talk about finances on social media, and there are (of course) regulatory considerations as well. But this article from the Financial Social Media blog, does a great job of presenting a number of social media statistics that should jolt these professionals into taking a second look at social media. I’m not saying it will be easy but it’s definitely worth considering how your financial practice can use social media. If you’re not sure how, start by developing your social presence map.

Aaron’s Answers: Should I buy an existing business, buy a franchise, or start my own business?

There are a lot of choices to make when starting up a new venture. One of the things that entrepreneurs have to decide is whether or not they should buy an existing business, buy a franchise, or start their own business. Each one offers advantages and disadvantages that must be weighed.

BUYING AN EXISTING BUSINESS

Buying an existing business is one that has already started; one that has been marketing, selling, and earning revenue from a client-base. It might be in various stages of start-up — perhaps a relatively new company that the founder is selling, or perhaps a well-established company from which the founder is looking to retire and move on.

I think you’re looking for two types of businesses: Either, you’re looking for an established clientele, positive word of mouth, a strong supply chain, good processes, and strong financials that you can buy, walk in on day one, and continue earning profit; or, you’re looking for a business that is currently struggling but has potential to grow.

Compared to the other two options (buying a franchise or starting your own business), you’ll need a comparatively large amount of money up-front to get into this business because it’s established already. But the advantage is, you can potentially start earning an income almost right away (depending on the stage of the business and whether or not the previous owner was active and successful in the business prior to your buying it). Expect to pay more for a healthy company that has existing cash flow.

BUYING A FRANCHISE

Buying a franchise is when you buy a brand and marketing system from a company for a business that hasn’t yet started. This is a nice hybrid model between buying an existing business and starting your own. The business may not be started up yet but you are shortcutting the process with an established and recognized brand, and a business system already in place.

You’re looking for a company that has a strong, positive presence on a larger scale (i.e. in the national market) but has not saturated your marketplace. Look for a franchise that provides support and education and all of the marketing tools you need. Perhaps compare several franchises within the same industry to identify the best one for you.

Expect to pay a franchise fee for the right to use the brand and the business system, and expect to put in time to grow your business. Depending on the franchise, the up-front fee and the ongoing fee could be small or large. If you have some money and some time, but you want a slightly faster start with an established brand, this might be a good option for you.

STARTING YOUR OWN BUSINESS

Starting your own business is the third option. It’s when you create a brand from scratch and build your own business model and products or services.

You really are starting from zero and building it up from there. Not surprisingly, it can take longer to do but many entrepreneurs prefer it because they have the most control over the process plus it generally has a lower “cost” to start.

There are costs, including financial costs, but most of the costs are likely going to be your time. And it might take a while before you establish your brand and start earning money. This is an advantage for people who want to start a business part time while they are working. But be prepared to spend a lot of time! The fail rate is potentially higher with these types of businesses because they can take a while to get off the ground and there is a lower-perceived cost to start them.

SO WHICH ONE IS RIGHT FOR YOU?

The short answer is: It partly depends on how quickly you want to earn money, and it partly depends on how much money and time you have available. (There are other considerations but these are the big ones, in my opinion). If you want to earn money as quickly as possible, buy an existing business; if you have time, start your own business. If you have more money than time, buy an existing business; if you have more time than money, start your own business.

Marketing is an investment. What’s your marketing’s ROI?

Marketing is an investment of time, effort, and money. Entrepreneurs invest these valuable assets in the hopes of getting a return (i.e. a response by prospects that leads to more business).

All of your business’ marketing is an investment, which means you need to decide whether or not a marketing effort is worth it based on the return on that investment.

Recently a business information resource site, I wrote an article called 5 Laws of Marketing ROI in which I outlined 5 useful rules that will help entrepreneurs make decisions about the return they can get on their marketing.

Check out the article here:

5 Laws of Marketing ROI

(The above link opens in a new window and sends you to the article on EvanCarmichael.com)