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New Mexico State University

New Mexico State University

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Before Starting a Home-Based Business, Get the Facts

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 sale 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."