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Adventures in home business.

Most of us have considered exploring new territory to achieve self-employment, or at least self-direction as a representative of a larger organization. With no guide, that exploration can lead to a misadventure. Numerous road map business magazines offer a variety of exciting escapes. Self-direction should be an adventure, not a misadventure. Before embarking on an expedition, going to work for, associating with, or buying a dealership from a "cottage industry" company, there are some preparations to consider.

We've spent more than a few dollars exploring various uncharted wildernesses. We've had adventures and we've had misadventures. Sometimes we lost only $20, sometimes we lost several hundred. A couple of our more spectacular misadventures taught us lessons that helped make our adventures more profitable.

The library and local bookstore have shelves of guidebooks available to help the new explorer find direction. However, many of the lessons we learned weren't covered in any of the guidebooks we read. We don't claim to be the Lewis and Clark of the cottage industry world, but we would like to share some tips we have discovered.

One thing that's obvious is the only person who makes a fortune from a get-rich-quick scheme is the one who wrote and sold it. We've read so many of these, it's ridiculous. As honest and trusting people, we used to think that one of these hot, new ideas would really work some day. We spent our share of $20's looking for the right one to guide us. Maybe one would, but the ones we've explored were set up to fail before they started. The hidden requirements were possible to meet and because it's planned that way, the money-back guarantees weren't worth the paper they were printed on.

If one certain cottage industry seems the perfect map to buried treasure, do some serious investigating before setting off on what could result in a misadventure.

1. Do the homework. Go to the library; check out the current business magazines, related trade and industry magazines, etc., and read the reports on this new territory. If the library doesn't have certain periodicals, request them through interlibrary loan. Check the Occupational Outlook Handbook. Sometimes they list additional information and projections.

2. Send for information and junk mail. We actually send for and carefully read junk mail. One way to see what is going on in the market and what people are looking for is by the quantity of junk mail that's available on the subject. The more people in a "new field" the less likely you are to find buried treasure. With a variety of junk mail, it is possible to do some comparing of claims and get a feel for how many companies are offering the same basic adventure. It is also possible to glean some good ideas.

3. If this still looks like the perfect guide to a self-directed venture, ask the local Chamber of Commerce or Better Business Bureau about the potential company. We have a terrific executive director of our local Chamber of Commerce. Our oldest daughter had an opportunity presented to her and we went to the Chamber of Commerce to talk it over with the director. He wasn't familiar with the company, so the first thing he did was contact the appropriate Chamber of Commerce or state Better Business Bureau. If there have been any complaints against the company registered with the BBB, they will disclose this in a report to the local chamber director. It is our understanding that the BBB will not send a report to private individuals. The report came back fairly favorable, so we agreed to let her pursue it. Since then we steer clear of any company that has a history of complaints, based on the advice of our Chamber's executive director. If the company under consideration is a member of either their local Chamber, Better Business Bureau, or both, that adds to their credibility but is no guarantee of anything.

4. Ask the company for referrals. This means names, addresses, and phone numbers, not preselected testimonials. We spent several years looking at a potential adventure. When we finally decided on a company with whom to associate, we telephoned their regional manager and asked for a referral. We then spent the time and the money to call the referral and ask some very candid and pointed questions. Logically, the company is not going to give the name of someone who isn't doing well; but if questions are well thought out, it is possible to pick up some in-depth information and pointers on how the referral person made this a profitable adventure. Any question that the referral hesitates to answer, well, read between the lines.

5. Ask the bank to check on the company. One particular adventure we started pursuing did a lot of business by mail and we wanted to offer our customers ease of ordering. When we opened an account for the business, we asked the bank about accepting Visa and MasterCard. One thing banks and bankcard centers don't like is shaky companies or fly-by-night outfits. They also checked out the home office and questioned us about whether or not we had checked out referrals. The bank and bankcard center did approve our request, so we felt that was a relatively safe sign.

6. Ask independent third parties for opinions. Talk to people in related areas of business or other home business ventures. It's not like someone will steal the idea. Quite a few years ago, my husband considered fish farming. He responded to an ad that claimed to supply start-up materials and support for an initial investment. For whatever reason, call it luck or divine intervention, my husband got a wrong number that happened to be the advertiser's brother. The brother proceeded to explain that, in essence, the advertiser was a shyster and the fish farm operation was a flop. The advertiser was facing bankruptcy and was "selling" his idea in a last ditch effort to raise money to appease his creditors, The start-up package was not what it was cracked up to be. The brother advised my husband not to explore this territory. Why would someone do this? Well, he was guiding others away from a misadventure he had already experienced at the hands of his own brother. That doesn't mean fish farming is a poor investment. It means this particular company was a poor consideration. Thanks to the wrong number, we were saved a lot of money and heartache.

Instances like that don't happen very often. When we agreed that I would turn my writing into a full-time business, I spent time talking with business people in related fields. In our community of 20,000, I'm the only professed freelance business writer. The going has been sporadic, but it's going. However, without input from third parties, I wouldn't be doing as well as I am.

7. Before signing contracts or investing money, visit the company's headquarters. If the home office isn't willing to show off their operation, be suspicious of them. If the company is above board, they should be willing to have potential representatives visit, meet the staff, and view the total operation. It is expensive to visit all potential affiliates, but if travel can be combined with some other business, do it. We have a lot of friends and relatives around the country and occasionally one lives near headquarters of a company that we're investigating. Depending on the relationship, it may be possible to ask one of them to check it out. A personal visit is well worth the time.

8. If the expedition requires putting up money, don't put up more than the loss of which can be absorbed without jeopardizing other commitments. Getting started in a cottage industry is gambling. If a misadventure would mean disaster, don't play. We've done this both ways; once when we could afford to lose the money, once when we couldn't. Imagine which one sticks worse in our memory? Right, the one when we couldn't afford to lose. We lost because we didn't follow our own advice to check it out completely.

9. Know the market in advance. Again, do the necessary research. Know the demographics of the target area and target market. If this venture is scheduled for Utah and the primary market is in Maine, give some serious thought to the physical problems of advertising and transporting the product or service. Those costs add up and cut profit.

10. If possible, go it alone! The ventures that have proved the most profitable for us are the ones we basically started on our own. That's not to say that being a representative for a cottage industry company is a poor investment, because we have done that, too. However, our self-direction is secondary to our self-employment. Meaning, we added self-directed representation to expand what we were already doing.

11. Network. After getting into business, or maybe even before, start building a network of other home-based business people. Share information, ideas, success stories, advice, resources, and moral support. Work cooperatively if possible. When the writing business finally outgrew the house, I moved into an office with two other businesses that complement mine, a graphic artist and an advertising specialties product supplier. All of us started as home-based businesses. Together the three of us can offer more than what a full line advertising agency could. We often work together on projects, but each remains a separate entity and does projects on our own.

Working cooperatively is the ultimate in networking. Join trade associations and home-based business associations. Nebraska has a new home-based business association that's growing and becoming a vast network of information and resources for its members. Oklahoma also has a state association and Missouri is in the process of building one. The Dakota's and Montana have Economic Development Groups that function much the same way. Check with the local Chamber of Commerce to see if there is one in your area. If not, consider starting one. Remember: When one succeeds, all succeed.

For those who are serious, suggested reading: Working From Home, Everything You Need to Know About Living And Working Under The Same Roof, Paul and Sarah Edwards, 1990; Homemade Money, Barbara Brabec, 1992; The Whole Work Catalog, Free Copy, 1-800-634-9024; The Small Business Directory, Publications and Videotapes for Starting and Managing a Successful Small Business, SBA Publications, P.O. Box 30, Denver, CO 80201-0030.

Call your local Score chapter.

Read and Learn. Make your new business a happy adventure.

Jo Lutnes is President of the Nebraska Home-Based Business Assoc. and owner/operator of Studio 7 Business Writing, Columbus, Nebraska.

Home Address: 1210 3rd St., Columbus, Nebraska 68601, phone 402-564-3082.

Business Address: 3222 16th St., Columbus, Nebraska 68601, phone 402-562-6210 or FAX 402-564-0707.
COPYRIGHT 1993 Countryside Publications Ltd.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Author:Lutnes, Jo
Publication:Countryside & Small Stock Journal
Date:May 1, 1993
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