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Getting Started with a Home Based Business

FRANCHISE OPPORTUNITIES

Financing your Home Based Business and Setting up the Home Office

Financing your Home Based Business

When George Knauf became a consultant for FranChoice he was surprised to learn the number of home-based franchise concepts in their database. "It was just mind-blowing that we thought these business concepts were among the best," he said. "The spectrum was across the board, from businesses specializing in personal services, consumer products to B2B."

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Most of Knauf's clients with home-based businesses did not need substantial financing, pulling capital from their own reserves. "The initial investment is low," he said. "With a home-based business you eliminate the infrastructure that goes along with, say, a restaurant. You speed up the path to profitability and the return on investment."

Commercial lending can be more difficult to secure because of the fly-by-night stigma home-based businesses still possess. In addition, in many cases, there are no tangible items that a lender can use as security. If a brick & mortar business goes under, the property, equipment and products can be repossessed. If your home is not used as collateral and your business offers services to consumers in lieu of products, there is not much, if anything, a lender can confiscate. Since the start-up costs are traditionally much lower than brick & mortar franchises (e.g., it costs $9,800 to buy into CruiseOne as a consultant) you may not have to fuss with financing at all. According to Joe Ewart, some franchisees charge their start-up fees on credit cards. But before you pull out the plastic keep in mind your card's interest rate and how quickly you can realistically repay the debt.

The Home Office

"Before you map out any prospective home office, first make certain that the home office you have in mind is, in fact, legal where you live. In some communities customers are prohibited from visiting a home office. In others, you can't hire outside help. Ensure that there are no legal constraints on the business you plan to start out of your home," said David Caplan.

According to Caplan the location of your office is key-keep in mind that if you have clients at your office and if it is located at the back of your house no where near a separate entrance, visitors will have to walk through your entire house to reach your place of business. Experts advise home offices to be at least 10 feet x 10 feet. Do you have an acceptable location and enough space for your home office? Are you ready to open up your home to strangers if your business concept requires clients or employees to come to your office?

The Breaks of a Home Based Business

Another upside to operating a business from home is that there are significant opportunities for tax breaks. You may be able to deduct a portion of the operating expenses and depreciation of your home, as well as the use of your vehicle and insurance premiums. If you meet specific guidelines you may qualify to deduct additional expenses like home and vehicle repairs and rent. Consult a qualified tax professional for specifics, or to conduct your own research log on to www.irs.gov.

A Word to the Wise

The hand-written signs are everywhere: earn up to $5,000 weekly stuffing envelopes at home! While there are hundreds of legitimate home-based business concepts, there are inevitably dozens of snakes in the grass. From a logical standpoint, if it seems too good to be true, it usually is. Many unscrupulous operators advertise in the Business Opportunities sections of newspaper and tabloid classifieds. Beware of ads using vague language to describe the job you will be performing. Also pay close attention to wording that promises exorbitant salaries doing menial tasks such as envelope stuffing or word processing.

Hot Home-Based Franchise Business Opportunities

Resources

Home Based Business Opportunities
Articles, Forum, Resources
http://www.home-based-business-opportunities.com/

Work At Home Forum
http://www.work-at-home-forum.com/

SOHO America (Small Office Home Office)
Articles, Forum, Advocacy, Resources
http://www.soho.org/

Work at Home Central
Opportunities, MLM, work from home jobs and business resources.
http://www.workathomecentral.com/

About.com
www.about.com
Links, forums, articles, opportunities, resources
Enter keywords in search field: "home based business," "home office resources," "working at home," etc.

Small Business Association (SBA)
Business Plan For The Home-Based Business
http://www.sba.gov/library/pubs/mp-15.txt

CruiseOne (Home Based Cruise-Only Travel Sales)
800-892-3928
www.cruiseonefranchise.com

NetSpace (Search Engine Promotion, Direct E-Mail Marketing, Strategic Online Advertising Placement, Online Yellow Pages, and Streaming Media Technologies)
800-NET-SPACE
www.netspace.info/fran-opp.html

Action International
888-483-2828
actionusa@action-international.com
www.action-international.com

ElizaJ (Upscale, Self-Contained Restroom Provider for Special Events)
800-437-1139
info@elizaJ.com
www.elizaj.com

CM IT Solutions Inc. (Technology Partnering/Mentoring)
800-399-CMIT
www.cmit.biz

OpenWorks (Commercial Cleaning)
800-777-6736
www.OpenWorksWeb.com

Tastefully Simple (Consumer Food Products and Gift Packs Sales at Hosted Taste-Testing "Parties")
320-763-0695
www.tastefullysimple.com

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