Editor’s note: How many times in your life have you heard some version of the words “go get a job” from well-meaning parents, teachers, friends or spouses? But has anyone ever told you to “go start your own company”? Does that seem too scary, too tough or impractical? Yes, it can be hard. And yes, the prospect can be frightening. But whether it's a beauty salon, a mortgage company or an interior design business, ownership is an important block in building wealth and having something of value to pass on to the next generation.
Small businesses are also a major economic driver, accounting for about half of all the jobs in the private sector. With black unemployment still twice that of whites, one benefit of entrepreneurship is to grow our own jobs. Right now black-owned businesses are far off-pace with the population, accounting for less than 6 percent of all small businesses (pdf).
We asked nationally known small business expert Melinda Emerson to share her expertise with The Root's readers each week, with advice on how to start a business and strategies for surviving and thriving. Her column is called About the Money With Melinda Emerson.
Do you have the desire to run your dream business from home? If a life of kitchen-table lunches and conference calls in your pajamas sounds like what you’re looking for, then a home-based business could be the right move. Many folks think that building their own home-based business is the opportunity of a lifetime. We fall in love with the idea of being our own boss and setting our own schedule, but it’s a hard way to earn a living. Working at home means you need to be even more organized to build a successful business.
Every day, I see ads on the Internet and on Twitter: “How to make $1,000 a day from home” or “I made $671 today on Twitter, let me show you how.” There are a lot of so-called opportunities out there, but none of them will make you a fortune overnight. In fact, if someone tells you that, they are lying and just trying to get your enrollment fee in their program.
When I was a kid my father told me, “There are no free lunches. You get what you pay for.” In terms of business, his advice is still true. There are no legit get-rich-quick schemes. Do not be fooled. Home-based businesses are enterprises based on direct transactions, not just entities where checks start magically appearing in the mail.
Most of the self-made millionaires I know said it took five to 14 years for them to become successful. There are all kinds of multilevel marketing programs (MLM) out there, but beware of the business model that has more emphasis on signing other people up to sell, as opposed to selling an actual product.
Real thought is required to build a successful business, and much of it is needed before you ever open for business.
Develop a Life Plan
Have you really thought about what your life is going to be like as an entrepreneur? Will you work seven days a week, 14 hours a day? Do you have the energy to work like that? Do you have any competing priorities such as small kids or aging parents? Working all alone in your back bedroom or your basement behind a lonely PC could be a big adjustment. Isolation is the enemy of entrepreneurship. Working at home can also present a lot of distractions such TV-watching, noisy neighbors, personal calls phone, napping, chores, etc. How will you combat your environment?
Know Your Market
Have you done extensive business research on the market and industry trends? Even if you are going to sell Mary Kay, you need to know how many other Mary Kay sellers are in your area or operate in your church. Is the market saturated? Is there already a lady with a pink Cadillac in your neighborhood who’s cornered the market?
Develop a Marketing Strategy
How will you attract business? Will you advertise? Will you strictly use the Internet? Will you blog and use article marketing to attract clients? Will you need a social media coach or virtual assistant to help manage your social media footprint? Whatever your strategy, you will have limited time and resources to make a big splash. Be willing to do what your competitors are not willing to do to get noticed in the marketplace.
Build Your Network
Your network is your net worth in business. People do business with people they like and know and trust. Are you now more internally at your company than externally? Do you have a complete LinkedIn profile? How many times per month do you attend networking functions? Everywhere you go, you need to talk up your new business. Try the hair salon, trade association, supermarket, your child’s daycare—even at your current job. Build the contacts you will need to build your business. Always be ready to promote your business.
Develop Strategic Alliances
Approaching a complementary business is a great strategy. You can help each other grow in business, and trade tips and resources. If you are a massage therapist, partnering with a chiropractor could be a good move and a great referral business. See what kind of referral agreement you can work out. You never know what kind of deal people might be willing to make with another local business. Now, not every business owner will be eager to partner with you, but networks are built one relationship at a time. You will never know until you ask. They might not be interested now, but maybe later …
Having a home-based business is like opening any other business except that your business happens to be headquartered in your home. If you plan well, do your market research, build your network before you start, develop a comprehensive marketing strategy and build strategic alliances, your business will be far more likely to be successful.
Melinda Emerson, known to many as SmallBizLady, is CEO of Quintessence Multimedia. Emerson educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing. She also publishes a resource blog and is the best-selling author of Become Your Own Boss in 12 Months. Follow her on Twitter.