Working for yourself from home has long been an American Dream, but thanks to the recent economy more people than ever are taking the leap. The Wall Street Journal recently called this era "The Age of Going Solo." While many of these newly self-employed people are becoming consultants, we don't have to tell you that many others will try their hands at selling on eBay.
With so many new sellers coming onboard we thought this was a good time to get some pointers on working from home these days. (Home is where most entrepreneurs get started.) So, we went to two experts, Paul and Sarah Edwards. This couple wrote the first popular book about working from home more than 20 years ago, and now has more than 2 million books in print. Paul is an attorney, Sarah a licensed clinical social worker, so they bring some interesting perspectives to all this. Their latest book is Home-Based Business for Dummies, third edition, written with Peter Economy. And, yes, that's his real name.
In our interview, the Edwardses gave us more information than we could boil down into one article, so we decided to share it with you in two parts. In this article, we'll cover the basics of getting started working from home, and avoiding some of the common traps that ensnare new entrepreneurs. In Part 2, we'll cover other businesses eBay sellers may want to try to supplement their eBay incomes, health insurance for small businesses, as well as pointers for doing well in these trying economic times.
Let's see what they had to say.
Schepp: You point out some interesting facts and figures about the success rate for new home-based businesses that goes against commonly held beliefs. What has your research uncovered?
Decide whether you want to make enough to supplement your salary, or to support yourself full time
Edwards: We've discovered your odds are better than many people think. And research findings to support this keep coming in. Home-based businesses score roughly the same as small businesses based outside home, according to the Small Business Success Index, an ongoing project done by the University of Maryland's Robert H. Smith School of Business and Rockbridge Associates, Inc., commissioned by Network Solutions LLC. Contributing to home business success is the fact that, because of lower overhead, home businesses keep more of their earnings as profit—36 percent versus 21 percent, according to the National Venture Capital Association.
Schepp: What do you say to people who tell you they're thinking of starting an e-commerce business? Where should they begin?
Edwards: The place to start is matching something you feel good about selling or providing with what people will pay for. Take into account how much you money you want to make—enough to supplement your salary, or to support yourself full time.
Schepp: What are some of the most common mistakes that operators of home businesses make, and how can they be avoided?
Edwards: Some of the common mistakes people make are:
- Not doing enough digging and research before launching a business to be able to estimate basics, like how long it will take to break even, or how to price so you'll balance what people will pay for with what you need to cover your costs and make a profit. Writing a business plan prompts you to obtain this information and, if training's available, take advantage of it to the extent you can.
- Not spending enough time marketing, and over-relying on too few marketing methods. Expect to spend 80 percent of your time marketing during the start-up phase. Be experimental in the methods you use and keep track of the results.
- Not dotting the i's and crossing the t's to establish a legal and financial structure that won't cost you time and expenses later on. Find out what's required locally, by your state and for federal taxes. Virtually all this information is available on the Web, but if you need help, seek it out from a Small Business Development Center or a professional.
Schepp: You added a new chapter to this edition of Home-Based Business for Dummies called "Making the Web Work for You." What does this boil down to for e-commerce businesses?
Edwards: The most prized customers—people with money to spend—use the Web to shop, and consider it the best way to learn about new products. In fact, more than three-quarters of well-to-do shoppers use the Web to buy products, locate a vendor's Web site and scout out where to buy a product. So making use of the Web—including having a presence on the Web—is a necessity for most businesses. Going beyond making it possible for customers to find you, in this chapter we identify ways in which you can find work using the Web.
Schepp: Sourcing is one of the biggest challenges eBay sellers face. You stress the importance of finding a niche when creating your own items for resale. What pointers can you offer for coming up with profitable niches?
Set a regular schedule for attending to your business and avoid distractions
Edwards: When times are good, niches can be quite narrow. When times are not good and money is tight, our view is you need to telescope your niche. Telescoping in this sense means extending or adding to the range of products you provide to existing customers without undermining your reputation for the specialty you have developed. It means offering services to your customers that your competitors might not.
Schepp: What other advice do you have for those operating small e-commerce businesses?
Edwards: These are the essential points:
Maintain a professional attitude.
Use technology to leverage your time and yourself.
Locate your office in its own space.
Set a regular schedule for attending to your business.
When you're working, avoid distractions.
Set goals and keep track of your progress and what works.
Don't become a prisoner to your home office.
Be a constant learner—from your customers and elsewhere.
Have fun—enjoy what you do!
Keep an eye on Auctiva EDU for Part 2 of our interview with Paul and Sarah Edwards, in which they discuss ways eBay sellers can supplement their eBay incomes, finding health insurance and tips for riding out the economic cycles.