Which Home Based Business Option is Right for You?

Deciding between Starting from the Scratch, Buying a Business, Buying a Business Opportunity and a Franchise Business from home.

choosing the right home business to start

Even though you have read about the various options available to you when wanting to start a business from home such as starting a business from scratch or buying into a existing business or business opportunity, the choices can still seem confusing. At the end of the day, you might want to decide what option is right for you based on your personal likes, dislikes, experienced, skilled, ability and what you really want from your business set up. Lots of other factors such as the amount of money that you have to spend, the amount of time that you want to put in your business start up will all make a difference in choosing the right business to start at home. No business startup is guaranteed 100% rate of success. Even though you started at home. But a business does have a better chance of success if it is closely matched to your requirement, your need and your ability.

Here are some of the common factors that you should consider in order to choose the right business to start at home.

Are you a natural seller?

A majority of the people that buy into business opportunities and direct selling opportunities do not stop to consider this fact. The result is that many people sign up over the direct selling companies when in fact they do not have any idea how they’re going to sell the product beyond their immediate family and friends. If you do not have a natural talent or liking for selling directly to people on a face-to-face basis, then the option of direct selling and business opportunity may not really be a good one because both of these usually require active selling. You will be better off with a franchise or cultivating business idea that suits your personality better.

Do you have your own idea for a home-based business?

If you have your own idea for a home business home based business, you might want to start from scratch. Starting from scratch has its own advantages. If it is a new business idea, you will have less competition. Starting from scratch can also mean less startup capital. Starting a home-based business based on your very own idea means that you get to do exactly what you want to do and to shape the business end the exact format that you desire. Franchises and direct selling require that you closely follow the parent company’s established system.

Do you want your business to be independent?

If you are an independent person and would not like to run a business on somebody else’s terms, policies and regulations, starting from scratch is again option for you. Franchisees and direct selling usually do close monitoring of the business owner as well as telling you how to run things. At the end of the day, with a home-based franchise, the franchisor is the boss. If you have your own idea about how you want to develop and grow your business, starting from scratch is a good option. Starting from scratch also allows you to put in as much or as little effort as you want and work on your schedule along with putting in as much time as you desire.

What kind of income are you looking to generate from your home business

The amount of money that you wish to make also decides the kind of business you choose to start from home. Startup cost also direct you towards certain business models and keep you away from others. It is a fact that half of the people working in direct selling opportunities such as Avon or Mary Kay cosmetics only make $500 or even less in a year. Generally speaking, starting a business of your own from scratch is more profitable in the long run because any effort put into the business goes directly towards increasing the profits and benefits for you.

How unique you want your home business to the

Do you have a unique business idea or do you want to stand out from the crowd by starting a business that is different from all others. In this case, starting a business from scratch allows you to accomplish this goal. Franchisees and other opportunities are closely affiliated with established corporate identities. While this works for people who like to be associated with known corporations and brand names, others may want to carve their own identity.

What are your long-term goals

Your long-term goals will also determine the kind of business opportunity he choose. Depending upon how much money want to make in the long run, how much effort you want to give the business, how much you want to work, your retirement plans will all shape the choices that you make for your home-based business. Your long-term goals have to be compatible with your home-based business. If you’re contemplating existing business opportunities that you can buy into, look at the lives of the existing business owners who have invested in the same opportunity. Were they able to leave their careers behind? Were they able to become independent and lead the lifestyle that they always want to, did choosing the business opportunity help them accomplish their retirement plans? What is the reality behind the stimulating sales pitches for a business opportunity?

Can Direct Selling Be A Home Based Business?

Is the direct selling opportunity real or a scam?

direct selling business from home

Because direct selling is not governed by any federal law and even the state laws tend to defer in different places, direct selling has had a bit of a bad reputation as being fraught with less than reputable opportunities and in some cases outright fraud. The direct selling Association at www.DSA.org offers the following advice for checking out any panic selling opportunity before you buy into it.

  1. Identify the company that you are dealing with. Check out the recent list of member of companies or look into your local phone book.
  2. Take your time deciding. Be patient and look at all aspects of the direct selling opportunity. Look at the track record of the company. If you are getting in too late it might mean that you may not a very successful in recruiting others to join up to you in the case of a multilevel marketing business. A legitimate opportunity will not disappear overnight. Think about long-term business benefits and revenue potential.
  3. Ask questions. Contact the business opportunity and asked the company pertinent questions regarding its leadership, products, services, startup costs, cost of doing business, average running of distributors, return policies and anything else that you are concerned about. Get a copy of or company literature and read.
  4. Consult others who have worked with the company and its products. Check to see if the products or services are actually being sold to consumers.
  5. Investigate and verify all information. Don’t assume that the information presented to you by a person trying to recruit you into the target selling opportunity is genuine even if it is officially presented and it looks professional. Check all facts with the parent company.
  6. Check the list of direct selling associate members on www.DSA.org or call the Better Business Bureau, state Atty. Gen.’s office.

Disadvantages of A Home Based Business Opportunity

Disadvantages of a home based business opportunity

home-based business opportunity

There are some downsides to choosing a business opportunity as a home-based business model as well. Here are a few points you should consider

  1. While many people like the freedom that comes with working with a business opportunity, for someone without any experience with the prior business for themselves this can be a disadvantage. The probability is that you would not be provided with any training or ongoing support for the business opportunity and this leaves many people high and dry when it comes to starting off and generating income. This means that many people who sign up for a business opportunity could have potential problems starting up.
  2. There is no regulation governing business opportunities by the federal government and the state and local regulations also differ. For this reason there is a lot of scam and fraud in the this field as well. Beware of business opportunities that try to over sell and if they sound too good to be true, they probably are. Ignore any business opportunity that claims to earn you thousands of dollars without doing much work or menial work like stuffing a envelopes etc. However, the FTC has made great effort to root out these scams and they are much less rampant than they used to be some years back.
  3. Most owners of legitimate business opportunities do work harder than they ever did in a regular job. Chances are you will have to as well.
  4. The success of a business opportunity is directly proportional to your personal effort. Since it is not a franchise, you would have to rely more on your own personal effort and tactics. This could mean that there are more chances of the business to fail. Be sure to have a sufficient financial backup to support yourself and to weather a serious business setback.
  5. As in any other kind of business, you should explore your options before you invest your hard-earned money in a particular business opportunities. While most of the business opportunities cost little with little upfront payment, there are those that can be expensive such as applying for a dealership for a well-known company or product.

What Is A Home Based Business Opportunity

What are the business opportunities

business opportunity

If you are looking to buy into a business that does not fit into the category of a franchise or direct selling, the odds are that it is a business opportunity. Usually franchises and direct selling have a well-defined infrastructure and can be easily identified. Business opportunities come in all flavors, shapes and sizes. For this reason, you need to be extra careful when choosing a business opportunity as this field has its share of scam artists as well. In general, a business opportunity can be defined as an idea, product, system or service that someone else has developed and allows another entity or business to use that same product, system or business model to start a business on their own.

Usually the business opportunity belongs to one of these following categories.

  1. Broker – A broker is someone who buys or sells products or services for parent company often acting as agent. Examples include real estate and insurance brokers. Although brokers are independent contractors they are generally paid commissioned by the parent company for their efforts.
  2. Dealers and distributors. – Dealers and distributors is often an interchangeable term. However, there is a difference between the two. Dealers usually sell the consumer product directly to the consumer. For example, a dealer who sells carpets produced by several different companies to customers and uses his or her home for operating. Distributors get their supply from wholesalers and manufacturers and resell them to sales organizations, brokers and dealers. Distributors do not sell to consumers generally however some of them do through direct mail orders or online.
  3. Licensing – Licensees buy the right to sell, market, produce or use established product brand names, technology and systems. This business model is a little bit like a franchise but licensees have greater freedom to run their business according to their requirement.
  4. Mail Order Businesses – Mail order businesses take orders for product over phone and e-mail on the Internet and send those products directly to consumers. In some cases mail order businesses can have the products drop shipped as well which means that the product is shipped directly from the manufacturer removing the need to maintain the product inventory while dramatically improving cash flow.
  5. Vendors – Vendors sell material and supply for the companies for their own consumption for example office supplies, for use in their own production process, or for resale to consumers or other companies.
  6. Manufacturers – The manufacturers build and produce products that are eventually sold to consumers. Manufacturers can also sell to consumers by the same methods as mentioned above such as direct sales, mail order or the Internet. They usually sell to brokers, dealers, wholesalers and others.
  7. Wholesaler – Wholesalers buy products directly from the manufacturers, put the profit margin and sell them to retailers. Retailers are people who sell directly to the consumer. In most cases wholesalers do not sell directly to the public.

The business opportunity that you choose will be either one of these or a amalgamation of the above mentioned types. The kind of business opportunity you choose will dictate the kind of business you run and the kind of lifestyle you have. It will depend the kind of job that you need to do in order to run your business and make it successful. In order to make the right choice, make sure that you fully understand what the business opportunity requires you to. Do your due research and figure out if your strong points and interests match the requirement of the business opportunity.

What Is A Direct Selling Business

What is Direct Selling? How Can It Be A Based Business?

direct selling

Direct-selling means selling a consumer product or service a way from a fixed retail location and doing it in a face-to-face manner. According to the direct selling Association, in a recent given year 30 million people sold more than 28 billion worth of products through a direct selling opportunities. A direct selling business opportunity that can be turned into a home-based business comes in a huge variety of fields. Common examples are cleaning supplies, cookware, personal care products, cosmetics, jewelry, skin care products, wellness products, weight loss products, vitamins, leisure products, educational products, toys, games etc.

The companies that provide direct selling home-based business opportunities are well-known names that you must have heard about. It is also more than likely that you must have come face-to-face with another person who has taken on direct selling as a way to make some money working from home. Some of the well-known companies of offering direct selling opportunities are Nu Skin, discovery toys, Amway, the fuller brush company, Tupperware, Nikken, Primerica and many more.

The direct selling business opportunities can be further divided into two main groups. These groups are single level marketing and multilevel marketing.

Single level marketing — single level marketer sells products by buying them directly from the parent company and selling them directly to their customers.. This is how they are money by including a profit margin on the products that they sell. multilevel marketing

Multilevel marketeers make money both by selling products to consumers as well as by recruiting new direct sales into the direct selling business opportunity.

What a single level marketing?

Single marketing is the most simple form of a direct selling business opportunity. To a person involved with the direct selling business such as a single level marketing buys products from the parent organization and sells them directly to his customers. There is a profit margin added onto these products. Sometimes this profit margin is dictated by the parent company there is another location scout that seller is allowed to play his margin within a certain range. There are many who popular names for direct selling single level marketing businesses. These names are Avon, Electrolux, Tupperware, Kirby, etc.

What is multilevel marketing?

Multilevel marketing was started by Lee Martinger and William Castleberry in 1945 when they launched the California Vitamins to sell the vitamin supplement called Nutrilite. Multilevel marketing known as MLM in short form also known as network marketing or a person to person marketing has grown rapidly over the past few years to generate $22 billion in sales in United States alone and employs more than 10 million people.

With a multilevel marketing job, the direct seller or a salesperson has two ways of earning money.

As a distributor — as a distributor of a product, the salesperson working with the multilevel marketing business will buy the product from the parent company and sell it directly to the people at a profit margin.

As a Recruiter — the salesperson working for multilevel marketing business also earns money by recruiting other people in the business. These people form the ‘downline’ for the salesperson. Whenever people in the downline of a salesperson makes sales or recruit for the people in their downline, that same person or everybody up on the outline of the commissioners were. This process of recruiting other people is also called sponsoring and the people in the outline of a salesperson or cosponsors.

The most successful multilevel marketers make more money through the downlines — reducing the product for themselves. This is also a way of automating the home-based business where you no longer have to make since personally but get commissions from the sales that other people make in your downline. Because of this many multilevel marketers more focused most of their efforts on recruiting new distributors rather than to selling.

It should be noted that this is the business model resulted in the creation of lot of scams in the past to stop it is against the US law, the level marketing organization to recruit distributors and collect fees from them without also selling products. Such an arrangement is called a pyramid scheme and is illegal. It is set up specifically to make its creators which while leaving everyone else of the heart on the money. These scams can be spotted when there is no real product to sell and the emphasis is on recruiting other people in the U. and asking them to pay you to join the program has been the only way of earning money. When there is no good aqueduct involved for sale for something that has little or no intrinsic value such as a special report on how to make Money on the Internet, this may just be a pyramid scheme which is illegal and may result in legal complications for you if you take part in it.

Disadvantages of A Home Based Franchise Business

home based franchise businessAs with advantages, the franchise system also has some additional disadvantages. As already mentioned, the advantages and this amount is often that of Outlook other person. The same point that is an advantage for one person can be a disadvantage for another depending on what he wants out of his business set up. For example, a franchise is a great idea for someone who has no business experience because they offer ongoing training and they give you a system within which you are required to work. You don’t need to change a lot of things or come up with the very different ideas to run a business to make it successful. This syntax can be a disadvantage for people who are independent and want to do things completely their own way. For those people these restrictions, regulations may be too stifling. Anyway, these are some of the potential disadvantages of buying into a franchise system to do business from home.

You work without a great deal of supervision. This could be a disadvantage because even if you start a business from your on your own, there is really not going to be any supervision and you are going to have to be in a place where you drive yourself and motivate yourself and your employees to reach a business school.

You are required to pay an ongoing fee to the franchisor. This may or may not be an advantage depending on the kind of business you’re doing. If you’re doing a lot of business, the marginal royalty that you have to pay to the franchisor may not matter much. However, if your business is marginal, basic fee and royalties can quickly become an anchor that drags a business down.

Ultimately, even though you have a business of your own, the franchisor is the boss. The franchisor lays down the rules and regulations about how you run your franchise business. You have to adhere to these laws otherwise you run the risk of terminating your agreement or be in violation of it. Violating franchise agreement could not only result in a termination but could also result in the nasty possibility of a lawsuit, loss of income etc. Any business is the risk. However it should be mentioned that choosing a successful franchise model, this is considerably reduced as long as you have determined that there is a demand for the franchise’s products and services in your particular area.

In the long run independent businesses tend to be more successful and financially rewarding to people. Because all efforts at a person puts in a business of his own goes directly to benefit the person, self started businesses tend to be more successful in the long run provided the person can make a success of the startup. Of course, there is more effort involved in starting a business from scratch such as doing market research, making business plans, hiring the right people and making right decisions all along.

Having a franchise also limits you in the way you compete with the competition in your area. Because of the restriction by the franchisor, you may not be allowed to counter the promotional tactics by the distributors, retailers and competitors in your area. It is mostly up to the parent company to promote itself and make sure that you are suitably advertised and promoted.

If you have decided that the franchise is the right way to go about setting up your home-based business, you should explore and do all research. If you have identified a particular franchise system, try and talk to the current owners of existing franchise and get a candid opinion from them. Spending time in existing franchise and talking to existing franchise owners is an extremely good idea as it may get you a direct feedback. Disgruntled franchisees may not be very shy about telling you about their bad experiences. However, do not get discouraged by negative feedback since they may be a result of a lot of factors some of which might not have to do anything with the incompetency or bad behavior on the part of the parent company. Buying a franchise is usually more expensive than starting your own business so take your time and give in the due effort to find the right one for yourself.

Advantages of a Home Based Franchise Business

home based franchise

Like any other job or business opportunity, a home-based franchise system also has its advantages and its advantages. How suitable franchise businesses for you will mostly depend on your personality, your skills and your requirement. Whether a franchise business is right for you, will depend on your Outlook and what your idea of having a business of your own is. For many people a franchise can be too restrictive while for others it is just the perfect way to start. These are the advantages of buying into a franchise system.

One of the biggest amongst these is that you don’t have to start a business from scratch and you buy into a business model that has a proven track record. A franchise business that is successful has probably perfected a system to many through it and try and its past success goes on to prove that you are undertaking a much less risk by choosing the model rather than starting something completely.

Starting a franchise can translate into quick startup with immediate cash flow.

When you buy into a particular franchise system you will probably have an estimate of how much can. So in a sense you have an idea of whether a particular business is going to meet your financial expectations. If you follow the same system that has proven its track record in the fast, you are almost sure to make the same kind of profit that the franchise system has been making for the people.

A franchise is a good option for people who have not had a business experience in the past.

Many executives prefer a franchise system because most of the things such as, business development, marketing, advertising, generating customers, generating a new brand image is all taken care of. Many people who start a franchise business with a known corporation can concentrate their efforts on jobs that they are already good at handling such as managing employees and workflow, attending to executive jobs, taking care of paperwork, dealing with dealers and clients over the phone etc.

A franchise business also usually provides training to the franchisee and offers ongoing support.

You have access to a network of other franchises were in business just like you. Many franchises offer special websites, arrange conferences and conventions where all the franchisees can get together to talk and discuss and share their experiences.

Many franchises provide opportunities for regional and national cooperative advertising. Being associated with a brand name you get to save a lot of money on this aspect of your business as well. Getting exposure on your own for your own business could probably cost you a lot more as well as a lot more brainstorming creating effective marketing strategies.

As franchisee associated with a known name, you could have an upper edge when it comes to dealings and negotiating with people like landlords, banks, lending institutions. You make it preferable rates and preference for the popular and major retail locations and down as well as get more easy qualify for financing from a stop being associated with a known brand name and starting a franchise tends to instill more trust in other principle were going to be involved in the business.

Common Elements of A Franchise Agreement

  1. franchise business from homeGrant of franchise, defines the nature of the franchising agreement.
  2. Use of trademark, patent and copyright, spells out how you can use the franchisors trademarks and copyrights.
  3. Defining bodies, lists the parties to the agreement and sets forth the independent relationship between the parties.
  4. Payments, spells out how you are supposed to pay the franchise fee and any others require royalties or ongoing payments.
  5. Term of agreement, enumerates the length of time that the agreement will be in effect. Most of the franchise have agreement for five years whereas many also have an agreement for ten years.
  6. Franchise renewal, details how the agreement continues in the future.
  7. Developing and opening, lists the length of time that you have to start operating your business after signing the agreement which is usually 90 to 120 days.
  8. Territory, spells out any restriction on the areas in which you can upgrade your business. Generally, the larger the territory the larger the franchise fee table.
  9. Advertising, sets forth the requirements for using the franchises logos, trademarks set up.
  10. Equipment and supplies, tells you what supplies and services must be purchased direct from the franchisor.
  11. Training and assistance., details about the training offered by the franchisor as well as any ongoing support and assistance.
  12. Assignment of franchise, these were the rules regarding transfer of ownership, the person or entity should the franchisee decided to sell the business.
  13. Termination of franchise agreement, sets forth the legal requirement for terminating the agreement.

Be sure that you understand every aspect of the franchise agreement. By understanding we do not simply mean that you have read it but understood every single line. The legal ramifications and requirements of every single point may have far reaching consequences if you do not understand them. A point that you overlook and big huge difference somewhere in the future regarding how you run your business. Which is why the help of a qualified attorney who specializes in franchise law is so important.

Legal Technicalities of Starting a Franchise Business

home based franchise business

Many franchise of the one by the state rules and regulations that control the sale and functioning of franchisees in the state. When the state laws are absent, the franchise is usually governed by the federal law. In most cases the franchising laws and regulations actually protect the franchisor and not the franchisee. Here are some of the common legal issues that you should be aware of when buying into a franchise system.

The Uniform Franchise Offering Circular, UFOC

In states that do not have their own franchising laws, the Federal Trade Commission has established a comprehensive code of regulations that are referred to as franchise rules. One of these rules states that the franchisor is required to provide prospective franchisees with with the detailed disclosure in a statement called the uniform franchise offering circular.

This is circular or document contains a wealth of information regarding the parent company and its franchise offer. You should make sure to get a copy of this document before you even consider signing on for the franchise company. The information contained in the telephone franchise offering circular has a direct impact on your decision to buy into a particular franchise opportunity or not.

The uniform franchise offering circular contains the following information.

  1. The franchisors name.
  2. Complete and accurate as description of the business.
  3. A listing of people affiliated with the franchisor.
  4. Background information and principals in the company including business experience and track record.
  5. The franchise’s financial information.
  6. Detailed information about the number of franchisees, the failure rate, termination rate. You should also know that the failure of a franchise is means that the company closed its business due to financial reasons to stop some franchise companies may prevent this from happening by the acquiring the franchise from the franchise holder. The franchise is terminated but is technically not a failure. This helps in keeping the statistics looking good on paper.
  7. Bankruptcy and litigation history of the franchise and the principal officers.
  8. The franchisee fee.
  9. Ongoing fees royalties and other payments to be paid to the franchisor. An itemized list of goods and services that must be purchased, rented or leased directly from the franchisor.
  10. Terms of franchisor provided financing.
  11. Restrictions on how you are to a operate the business.
  12. Training programs available from the franchisee.
  13. Information governing the termination of the franchise.

For additional information on franchising laws and regulations you can consult your state attorney general office or contact the Federal Trade Commission at www.ftc.gov.

What Is A Home Based Franchise Business

What is a home-based franchise?

home based franchise

You have probably visited the premise of the most popular franchise system in the world without even knowing that you have. The name is McDonald’s. McDonald’s is probably the most successful franchise idea in the entire world. When you visit any McDonald’s in anywhere in the world, you get the same look, feel and the same kind of food. This is probably the number one advantage of having a franchise as a business. If you have the franchise of a known organization, people instantly know that they are going to get the same product that they have come looking for no matter where in the world your franchise is. In a world where corporate trademarks, logos and brands have taken on a great meaning, franchising system gives a business startup those advantages. It was estimated by the international franchise Association that franchisees all the world employ millions of people and the churn out billions of economic output every year. In the United States alone this figure is 9 million people that produce $600 billion of economic output.

There are other popular franchisees such as Subway, Curves, Quiznos and Burger King. However, these are large-scale franchise systems and not exactly a setup for a home-based business. You’ll probably have a more difficult time identifying a franchise system that is ideal for business from home. However, this does not mean that they do not exist. The truth is quite to the contrary. Franchise system come in a wide array of sizes, shapes and styles. You can find a home-based franchise to start a home-based business in any industry ranging from babysitting to photography,. You’ll find a franchise system to fit your personal needs if you know where and how to look. And we are going to make that extremely easy for you.

What is a franchise?

The franchise is an agreement where a company gives another business the right to distribute its products or services. Typically the franchise also grants the franchisee to write to use its logo and branding. This is an important part of a franchise set up where you get associated and work under the known name of well-known brand or trademark. Typically, the company giving the franchise has a successful and proven business model that can easily be replicated by others.

Following elements define the franchise.

  • Use of a trademark.
  • Payment of fees and royalty.
  • Significant assistance and training provided by the franchisor.

Who is the franchisor

The company that owns the franchise trademarks, trade secrets and the successful business model that gives out its business opportunity to other people and businesses is called the franchisor.

Who is the franchisee

The individual or business that pays to use the franchise model of business and to use the trademark, trade secret and successful business model to run a business on their own while paying ongoing fee and loyalty to the parent company is known as a franchisee.

Fees and ongoing royalties are paid to franchisor by the franchisee in one or more of the following ways.

  • A one-time payment fee to buy the franchise business model.
  • An ongoing flat fee payment.
  • Ongoing sliding scale payments.
  • Ongoing royalties.
  • Advertising fees.

The fee that you have to pay to buy a franchise business would depend considerably from one business to another. Also buying the franchise and the fee that you have to be pay might just be might not be the total cost that you need to undertake to start business. For example if you need to buy additional equipment, hire people, these costs may not be included in the franchise fee.

A popular home-based business franchise by the name of Jani King specializes in commercial cleaning services. It has an upfront franchise fee of $8600-$16,300. Additional startup cost of about $3000-$18,000 with an ongoing royalty rate of 10%. This is substantially more affordable than let’s say a McDonald’s franchise which costs about $45,000 just to buy. Additional setup costs may run from $400,000-$1 million.

Before you can choose a franchise business to run from home, you need to do your research. You need to understand that a franchise business has its advantages and disadvantages. Also each separate business has its own pluses and minuses. You need to decide which one is best for you.

A good idea to get an extensive listing of franchise opportunities both home-based and otherwise would be to check out the entrepreneur Magazine’s franchise 500 list on its website that www.entrepreneurmag.com