Common Reasons a Business with Its Base at Home Fails

A Home Business Article Contributed by Elizabeth Fox-Wise

No One Sets out to Build a Business to Fail, Even Those with the Business Base at Home.

A business, with its base at home is, simply put any type of business that is run primarily out of the business owner's home.

Every new business owner has dreams of success, this includes those who have their business base at home. So why do ninety-five percent of them fail within the first five years?

We have all heard the statistics. Only five percent of small start up businesses survive beyond the fifth year, this includes traditional small business and those businesses with their base in the owner's home. It is obvious that starting a business, with or without a home base, is a very risky proposition. Yet thousands of people each year continue to join the ranks of home based businesses.

What Steps Can You Take to Make Your Home Based Business Part of That Successful Five Percent?

One of the most common mistakes that owners of home based business makes, is pricing their goods or services too low for the market. At first this might sound funny to you. But just as pricing your goods or services to high can be a death wish for your home based business, so can pricing those goods and services too low.

The problem here is in perceived value. The business owner is most likely setting the prices lower than the competition in an attempt to get a corner of the market. However, this can have a detrimental effect on the business. Your potential customers will believe that since your prices are "so cheap" that your product or service is "sub par" or "cheap". People do not want to buy something that is "cheap". Reasonably priced - yes, Affordable - yes, Good Value for the money - yes, but not cheap.

With this in mind, when setting prices for your home based business' goods or services, it is alright to "slightly undercut" the competition to break into the marketing field. But be very careful about so under valuing your goods or services that their perceived value in the marketplace is threatened.

What Other Steps Will Help Your Home Based Business Succeed?

The biggest one, which is surprisingly often overlooked is the need for a well developed business plan. It is amazing how many home based businesses are in operation without ever having taken the time to develop a business plan. It is impossible for a business owner to follow a plan that was never built. Making a well researched and highly thought out business plan is perhaps the most crucial ingredient for a successful business, with or without its base in your home.

There are some other "keys to success" which should not be overlooked by a home based business owner. Many successful business owners, create a "mini day plan" each day of what needs to be accomplished on that day, this helps to keep the business on task and moving forward. If you haven't already done so, you should also create a "client profile" to help you determine your niche in the market. And perhaps of most importance for a home based business owner, remember you can not do it. Go with your strengths and "outsource" or hire others to do those things you do not do well.