Work-at-Home Success

Be Financially Prepared

Are You Financially Prepared for Self-Employment? If you're currently working outside the home, many experts recommend that you have a year's worth of living expenses squirreled away before starting a business. Of course, not every entrepreneur follows that advice, but most experts agree that at the very least, you need to plan for a few lean months if you're giving up a regular paycheck. "One of the biggest mistakes that people make is not having enough money to get them through the first years," says Beverley Williams, president of the American Association of Home-Based Businesses. "You have to look at your finances and spending habits and then ask how long you can go before you feel the pinch."

Remember that whether you're offering a service or selling a product, you'll need to market yourself to customers, complete the job, and then wait to get paid (30 to 90 days is standard in most industries). At the same time, you'll have start-up costs: office supplies and furniture, computer equipment, child care, and so on (see "Home-Office Essentials" for a list of what you'll need). Therefore, it is prudent to clean up your personal balance sheet and optimize your credit rating. Pay off any high-interest credit cards; this will give you a fresh start and more clout with potential lenders. The bad news is that no matter how fiscally attractive you look, it can be tough to get a loan from your local bank; start-up capital is notoriously difficult to come by. You might, however, try a Small Business Administration lender with access to microloan funds or one of several microloan funds designed for women, such as Count-Me-In.

Many home-based entrepreneurs minimize the initial financial stress by running their business part-time and keeping their day job to finance the venture, an arrangement that can work well for a while. "When you start to take vacation and sick days to work on your business, then you're probably busy enough to make the transition," Williams says. When you do, make sure you don't cheat yourself on benefits. If you aren't covered by a spouse's health insurance, you'll need to foot the bill for your own plan (a percentage of the cost is tax-deductible). And if you've been contributing to a 401(k) -- or even if you haven't -- talk to an accountant about setting up a personal retirement account, such as a SEP-IRA. Not only is this a savings vehicle, but it's like buying yourself a deduction at tax time.

Do You Have a Child-Care Plan? There may be some extraordinary women out there who manage to run their business at home without child care. Whether you're one of them depends entirely on your business goals and your start-up plan. Moms with very flexible business hours and limited contact with customers may be able to work around naptime and playdates. And your kids may actually cooperate occasionally while you work.

Parlapiano, who began working at home when her first child was born, remembers setting up a small desk and an old cordless phone in her office. The children would sometimes "work" while she did. That type of arrangement may be fine when you're involved in a task that requires minimal concentration, but it can be problematic when you're up against a tight deadline or trying to have an extended phone conversation with a client.

When you start your business, you may be tempted to wing it with child care, relying on friends, relatives, and the VCR for emergency help. But the start-up phase of any business is hectic and unpredictable, and this is when a more formal care-giving arrangement may become a necessity -- even if it's just for a short time every day. This is particularly important if you'll be dealing directly with customers.

"Every client wants to know that they're special and getting your undivided attention," says Paul Edwards, coauthor of Working From Home (Tarcher/Putnam, 1999). "We live in a very competitive environment that's focused on customer service." So while your customers may tolerate the occasional tiny voice in the background, it's unreasonable to expect anyone to deal with constant interruptions.

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