Overcome This Part-Time Work At Home Hurdle
If you're thinking about starting a part-time work at home business, you need to know how to overcome a hidden hurdle that many new business owners don't anticipate.
We'll explain how this hurdle can dramatically cut into your profitability when you are getting started, and how to overcome this.
So What Is This Hidden Deal Killer?
Working part-time from home sounds great in theory. You get to make your own hours, be in control, and work at home. And while you are building your part-time work from home business, if you already have a job, you are still guaranteed your regular paycheck.
But when choosing a business, there's one big concept you need to wrap your choice around, and that's on the subject of fixed costs. Now, fixed costs might seem like a simple, common sense thing but it's amazing how often people overlook the impact that this can have on the income they get to keep.
Part-Time Versus Full-Time
When you're planning to make money on the side from home, you are basically looking at part-time work which means that fixed costs eat even further into your income than if you were working full-time.
That's because many fixed costs stay the same for businesses no matter how many hours you are working. This means that if you are working your at home business part-time, it will be much harder for you to be profitable.
Examples Of Fixed Costs
Here are a few examples of different types of fixed costs. Recurring costs may not seem like much but because they occur monthly or annually, they can end up being much larger than you anticipated.
Recurring Costs
- A dedicated phone line
- Website hosting fees
- Email autoresponder that you use for prospect and customer follow up
- Minimum monthly purchase required in order to get a commission check
In addition, you will need items that require a one-time purchase. These also fall into the fixed costs category. Here are a few examples.
One-Time Purchases
- Equipment like computers and video cameras
- Computer software
- Training courses you take to develop your skills
- Office furniture
Start-Up Difficulties
As you put more time into your business, and your income from it grows, it becomes easier for you to cover these expenses and increase your profitability. But in the start up and beginning phase of your business, fixed costs can really cut into your profits.
So keep in mind that if you want to work part-time at home, you will need to thoroughly analyze and estimate your income versus your expenses to make sure that you can be profitable.
An Unexpected Solution
It can be really frustrating to watch your fixed costs eat you alive in the beginning. But there's also another aspect to fixed costs that a lot of people don't consider.
And that is taking a detailed look at these costs from the perspective of the type of business you choose to do from home. That's because even though businesses may seem very similar at first, they can actually have very different levels of fixed costs.
Optimizing Profitability Examples
Here are a couple of examples of choosing a business to optimize your profitability.
It's best to start by using knowledge you already have to create a business so that you can keep expenses to a minimum. For example, because I had worked as a legal secretary in the past, when I was at home with my baby, I did freelance legal typing for a local estate planning attorney. All I needed was my computer which I already owned.
In contrast, if I had chosen to provide day care for children in order to stay at home with my baby, I would have had to get licensed by my state, buy supplies and equipment, have first aid certification, and meet health and safety requirements in my home. All of which would cost me additional time and money.
Shoot For Simplicity
Here's another example. Let's suppose you love to cook. You've thought about starting a catering business from home. What kind of fixed costs are you looking at? Ingredients are a big one. Another one is transportation. You have to get your platters of food to various venues where events occur. There's also the added complication of health regulations required for food prepared in your home as well as the liability risk of serving food to lots of people.
Now let's look at taking your same skills and becoming a personal chef instead. Your clients pay for the ingredients, one of the largest fixed costs. You work for a few clients in close proximity to you so transportation ceases to cost much. As long as you are preparing food in the clients' homes, you don't have to worry about health regulations, and your liability risk decreases because you are serving food to less people.
Summary
So when you're looking at ideas on how to make money on the side from home, carefully consider the costs involved with various business models. The reason it's so important is because when you're planning on working part-time, fixed costs have a much larger impact on your profitability.
