A guide to bootstrapping home business

Filed in archive How-to on August 5, 2006

Many bootstrapped businesses will be started in the home, some as part-time jobs until they develop real revenue.

In fact, one site provided by Small Business and Government Grants Resources suggests 50 million people in the United States have already started some kind of business from home up from just 6 million in 1984.

The website credits the National Association of Home Based Businesses, which also runs a portal to abundant home business resources, with the statistics, and gives some tips on how to get started.

When choosing the type of home business, the site advises:

• Turn what you most enjoy into a home-based venture, such as a favorite hobby or interest.

• Utilize existing skills from your salaried job.

• Solve a problem that people are willing to pay someone else to do for them.

• Use technology and resources you already have around the house, from your van to your computer.

To define a niche setting you apart from other home businesses providing similar services, the site recommends the four w's. Be sure to consider:

• WHO you serve. Define your demographic.

• WHAT you provide. Be as specific as possible about the kind of service you offer

• WHERE you work. This could refer either to a geographic area of concentration or a setting. The site gives the example of a caterer specializing in outdoor functions.

• WHEN you are called upon. This would not only include your hours of availability but probably also the type of situation in which your services are required. Again an example from the site: a public relations firm that specializes in crisis communications for companies involved in scandals or tragedies.

To decide on a cost to charge for your service, the site suggests considering these three factors:

• Direct costs... gas, telephone calls, postage, printing and your time.

• Overhead... equipment, software, utilities, office supplies, advertising and marketing expenses, and administrative costs. (The site suggests the practice of multiplying hourly wage by two or three to cover this)

• Profit...an amount calculated over and above direct and indirect expenses (charging 15 to 20 percent over expenses is recommended)

Another site maintained by the Mathews Memorial Library of Mathews, VA, provides additional resources on home based business.