Working at home is a great way to balance your family life with your ability to generate money. It can be a lot of fun — if you’ve chosen the right business. But, you need to consciously sit down and figure out whether you want a product based business or a service based business.
Both product and service based businesses sell a product, but in one case the product is tangible and in another, it’s a skill. In order to determine which is which, let’s look at some differences between a product based business and a services-based business.
Product Based Business
When you sell a product it’s usually a tangible item, but with the advent of the Internet and digital products, the lines are being blurred.
Today, you can offer digital products, courses, books, blogs, videos and information as your product as well as products you can touch like jewelry, art, and so forth. Don’t get tied up in thinking you must create the products. You can become an affiliate or reseller for the right products.
Services Based Business
When you deal in services the client puts their faith in you and perhaps your staff to perform the services hired to do, depending on your skills and experience. These are things like bookkeeping, architecture, legal services; virtual assistance, graphic design and coaching services.
You can also combine both a service based business model with a product based business model on the Internet and have the best of all worlds. For example, you can promote a book and a course as a life coach offering your coaching services as your higher priced product over the books and courses.
In order to determine what services and/or products you want to promote in your work at home business, take the time to do your due diligence.
- Make a List of Your Skills – It’s important to do an inventory of your skills first thing. Write down a list of what you already know how to do. Do you have computer skills, people skills, and knowledge that you can share with or teach others?
- Determine Who You Want to Work With – Do you love a certain group of people and what they do or what they stand for? For example, perhaps you are currently a paralegal at a law firm and you enjoy working with attorneys and helping clients who are dealing with divorce. You can still do that with your own work at home business. It’s important to identify the exact audience you want to work with whether you’re going to promote products, a service or both.
- Make a List of Things You Can Do for Your Audience – Once you have your skillset and audience determined now you can start figuring out how to solve their problems. Identify their pain points of the audience you chose, narrow it down to two or three pain points and then figure out how you can serve them.
- Match Your Skillset with the Services – A key in choosing products, creating products, and offering services is to match your skill set with what is needed to solve the pain points of your audience. When you take the time to do this you’ll find that your work at home business is going to be more successful.
Finally, once you’ve chosen your audience, and your niche within that audience and whether or not you’ll have a product or service based business (or both), you’ll have to know how much cash you have for your business startup.
How Much Startup Cash Do You Have?
The type of business you choose will be affected a lot by how much cash you have to get started. Service-based businesses are a lot less expensive to start, depending on your skill set.
Digital products don’t cost much more to develop either, again depending on your own skills and whether or not you’ll need to outsource some of the work such as website design or product creation.
You can start a work at home business for relatively little money compared to bricks and mortar business. You don’t have the high rent, utilities and so forth to pay for a work at home business that you do with bricks and mortar business. Therefore, your startup costs can be a lot lower, but you still have startup costs.
- Business License Fees – You need to get a business license in most states and counties in the USA to run a business from your home. Usually, the cost is very low, so don’t allow yourself to be afraid of finding out the costs and rules in your area.
- Technology Costs – You may already own a computer and the technology that you need, but you may need to invest in some extra software too. Today you can “rent” software on a monthly basis which makes it a 100 percent write off like other direct expenses. For example, it costs $9.99 a month to rent bookkeeping software through Go Daddy. That is a cost you can write off as an expense.
- Contractor Fees – You may need to hire help such as marketing professionals, virtual assistants, web designers and others to help you get started and maintain your business.
But, there are also deductions you can count on when running a business from your home. If you can set up an exclusive area of your home to be the home office you can get quite a large home office deduction that makes everything even less expensive when starting a home business because these expenses you can deduct won’t go up, such as utilities, electricity, internet and so forth.