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New Mexico State University

Before Starting a Home-Based Business, Get the Facts

Date: April 1, 1999
Editor: D'Lyn Ford, (505) 646-6528, dlford@nmsu.edu

LAS CRUCES -- Small, home-based businesses offer everything from homemade jams and country crafts to day care, accounting services and custom drapery making. The idea of working at home is enticing but doesn't provide financial security for all risk takers.

With the national failure rate of 70 percent or more for all new businesses, it is important to consider what it will take to own and manage a home-based business, said Susan Wright, consumer education specialist with New Mexico State University's Cooperative Extension Service.

Wright said people who are planning to set up a home-based business should assess their skills in each of the following areas before embarking on such a venture:

  • Organizing and planning. Entrepreneurs should be able to set and follow through on goals, time commitments and work schedules.
  • Handling money. A home-based business will require planning budgets, securing loans, keeping financial records and completing tax forms.
  • Selling ideas and products. Entrepreneurs must be able to promote their ideas to secure business loans, engage in direct selling to customers and determine sales quotas.
  • Management. People who want to own their own businesses should be able to make decisions about allocating resources, setting goals and determining when they have been met.
  • Working with people. Many businesses require the ability to work with people who have different views, such as customers, suppliers and part-time employees.
  • Ability to take risks. Business owners should be able to tolerate moderate, calculated risk, such as investing in the business, purchasing raw materials or shouldering liability.
  • Willingness to lead and work. A home-based business often requires great self- discipline and efficiency. Owners should be able to take initiative when required and be willing to accept and accomplish more than their share of the work.
  • Knowledge and skill. Before starting a business, find out as much as possible about the service or production of goods that will be provided.

"Finally, be honest with yourself as you do this assessment," Wright advised. "Decide whether you can spend the time to learn the necessary skills for starting a home-based business. Find out where to get help, and decide whether you have the energy and enthusiasm to carry you through the rough times to success."