There are exceptions of course, but the exceptions are in a definite minority. The simple truth is that for every example of someone who succeeds in a home based business, there are thousands who do not, and probably the most damaging statistic is the fact that the successes are sprinkled very thinly across a broad spectrum of different types of home base businesses, and not confined to a few specific areas, which means there are few obvious common denominators of success. Therefore it is very difficult to identify the key requirements for operating a successful home based business. Yet despite this, a quick search engine enquiry will show no shortage of experts offering to reveal the insider secrets to generating massive incomes via their particular version of a home based business, and to be fair, some do offer good, practical information, however there is also a lot of totally useless information as well. The problem is that even when people receive good basic advice, the failure rate remains largely unchanged.
Of course this is partly due to the simple fact that most new small business start ups fail within 5 years anyway, not just home based businesses, but all types of small businesses, and there are several common reasons for this, including under-capitalization, insufficient market research, inexperience etc. However, the fact remains that home based businesses have the highest failure rate of all, so why is this?
Well first of all let us take a closer look at home based businesses. There are basically 3 types of home based business. The first is the Hobby Extension business, this is where someone develops a hobby into a commercial enterprise, and continues to operate from home. Generally these businesses are craft based, jewelry manufacture is a common example, and the owner is well versed in the demands of the business, having been involved for several years during which time it has slowly evolved from a simple hobby to the point where it has become a viable commercial enterprise. The second is the Professional Practice, where a person with appropriate qualifications or experience, decides to go it alone and work from home. Generally these people bring a client list and numerous contacts with them from their previous position, so once again the risk factor is low because they are working in a familiar field, dealing with familiar clients, and their success is largely based upon their existing reputation. The third type of home based business is the New Entrepreneur, where people attempt to establish some form of commercial enterprise for which they have little or no, prior knowledge or experience. The two most common examples of this are Network Marketing and Online Business. This is obviously where the high failure statistics come from, people are generally drawn to these two types of business because they desperately want to escape from the stress of their existing job, or they have a passionate desire to enjoy the perceived freedom and wealth of self employment; and there is no doubt that both of these business types have the potential to satisfy these two ambitions, but unfortunately, the potential rarely develops into reality.
So given these alarming facts and figures, should people still aspire to establish a home based business?
Well obviously there is no major problem with the Hobby Extension or Professional Practice, the difficulties are with the New Entrepreneur type, though even in this sector there is encouraging evidence. Firstly, the potential rewards are very attractive, secondly there are some basic common sense rules which need to be applied, and finally, keep your capital investment low, work your new business on a part time basis until your home based business income exceeds your traditional job income, and only then think about quitting your job. This way you are risking very little and not putting yourself under too much pressure.
So why do most New Entrepreneur businesses fail?
It's quite simple really, most new participants in network marketing fail because it looks easy and they think they know what they are doing, they ignore the advice, training and coaching that is offered to them, and they proceed to do it their way, with failure being the inevitable result.
Most new online business participants fail for the opposite reason, they find the business incredibly complicated, technical, and confusing. They quickly discover that they can not get sufficient targeted traffic to their site, they spend a fortune on ineffective advertising, they run out of money, and they simply give up.
So what is the solution? Well I have one more vital piece of advice for all New Entrepreneurs.
Do not try to do it alone, you need an experienced, ethical, caring, knowledgeable, and accessible Mentor. Someone with a proven track record and a genuine interest in your success, someone you can rely on to guide you through all the difficult times, and who can in the process teach you how to ultimately perform the same valuable service for your own downline. Without this you will probably add to the failure statistics within 12 months.
Of course this is partly due to the simple fact that most new small business start ups fail within 5 years anyway, not just home based businesses, but all types of small businesses, and there are several common reasons for this, including under-capitalization, insufficient market research, inexperience etc. However, the fact remains that home based businesses have the highest failure rate of all, so why is this?
Well first of all let us take a closer look at home based businesses. There are basically 3 types of home based business. The first is the Hobby Extension business, this is where someone develops a hobby into a commercial enterprise, and continues to operate from home. Generally these businesses are craft based, jewelry manufacture is a common example, and the owner is well versed in the demands of the business, having been involved for several years during which time it has slowly evolved from a simple hobby to the point where it has become a viable commercial enterprise. The second is the Professional Practice, where a person with appropriate qualifications or experience, decides to go it alone and work from home. Generally these people bring a client list and numerous contacts with them from their previous position, so once again the risk factor is low because they are working in a familiar field, dealing with familiar clients, and their success is largely based upon their existing reputation. The third type of home based business is the New Entrepreneur, where people attempt to establish some form of commercial enterprise for which they have little or no, prior knowledge or experience. The two most common examples of this are Network Marketing and Online Business. This is obviously where the high failure statistics come from, people are generally drawn to these two types of business because they desperately want to escape from the stress of their existing job, or they have a passionate desire to enjoy the perceived freedom and wealth of self employment; and there is no doubt that both of these business types have the potential to satisfy these two ambitions, but unfortunately, the potential rarely develops into reality.
So given these alarming facts and figures, should people still aspire to establish a home based business?
Well obviously there is no major problem with the Hobby Extension or Professional Practice, the difficulties are with the New Entrepreneur type, though even in this sector there is encouraging evidence. Firstly, the potential rewards are very attractive, secondly there are some basic common sense rules which need to be applied, and finally, keep your capital investment low, work your new business on a part time basis until your home based business income exceeds your traditional job income, and only then think about quitting your job. This way you are risking very little and not putting yourself under too much pressure.
So why do most New Entrepreneur businesses fail?
It's quite simple really, most new participants in network marketing fail because it looks easy and they think they know what they are doing, they ignore the advice, training and coaching that is offered to them, and they proceed to do it their way, with failure being the inevitable result.
Most new online business participants fail for the opposite reason, they find the business incredibly complicated, technical, and confusing. They quickly discover that they can not get sufficient targeted traffic to their site, they spend a fortune on ineffective advertising, they run out of money, and they simply give up.
So what is the solution? Well I have one more vital piece of advice for all New Entrepreneurs.
Do not try to do it alone, you need an experienced, ethical, caring, knowledgeable, and accessible Mentor. Someone with a proven track record and a genuine interest in your success, someone you can rely on to guide you through all the difficult times, and who can in the process teach you how to ultimately perform the same valuable service for your own downline. Without this you will probably add to the failure statistics within 12 months.
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