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HOME SWEET WORK <br> THINKING ABOUT STARTING A HOME-BASED BUSINESS? THERE'S A LOT TO CONSIDER BEFORE YOU DO IT

Mass layoffs around the country are forcing lots of people to abruptly rethink their careers.

For some, the answer might be a home-based business.

There's lots to like about the idea: a short commute from the living room, the familiar surroundings and low overhead costs.

People who run home-based businesses say those are just some of the advantages. They also like having flexibility in their day to balance work and family time.

An estimated 24 million people in the United States run businesses from their homes, including Cliff Madell, who has a resume service in Buffalo.

Madell started his business out of his home and then moved into leased space on Main Street. A few years ago, he brought the business back into his home.

He does nearly all of his business over the Internet, so location wasn't an issue. Now that he has a child, he can break away to go along on field trips or attend school activities during the day. "I love it," he said.

For anyone seriously thinking about starting a home-based business, there's lots of information you can gather by spending little or no money before committing to the idea (see accompanying box).

Even before you attend a seminar or pick up books on the topic, here are some basic points to consider:

Is it permitted? Start at the most basic level, such as a homeowner's association in your area, to find out if there are any covenants or restrictions against operating a business out of your home, said Beverley Williams, founder of the American Association of Home-Based Businesses.

If everything's OK at that level, see if the town, city or county where you live has anything on the books about home-based enterprises.

Home-based businesses are usually welcome as long as they're not attracting lots of vehicle traffic due to customers dropping by the house, or additional noise.

"You have to think about other people in your neighborhood and how it will impact them," Williams said. "You want that to be a positive thing and not a negative."

Williams recalls the story of a home-based tow truck operation that riled neighbors. The truck's backing-up "beep" would wake up residents when the owner responded to service calls late at night. The lesson: It's fine to run a business like that from home, but keep the truck parked somewhere else.

Insurance, financial support and taxes. Chances are, a homeowner's policy won't cover a home-based business. You'll probably need an in-home business insurance policy, which typically costs $100 or $200 a year.

Williams warns that it can be tough to get a loan from a financial institution to fund a home-based business, since lots of start-ups fail. Many newcomers will use a home-equity loan or even use a credit card to get on their feet, she said. "You can start out a little slower, particularly if you have a full-time job."

Also consult with the Internal Revenue Service to find out what deductions might be available for a home-based operation.

Exploring your idea. You won't get far without a good business plan, but fortunately, there's lots of help - much of it free - available to develop your idea.

The basic test is figuring out whether there's a market for your product or service. Lots of people, for instance, are interested in running a billing business from home, such as for doctors. But consider that lots of doctors handle that type of work in-house or already have billing services lined up.

You need to pinpoint who your customers will be and how you'll go about attracting them, said Cindi Thomason, senior business adviser at the Small Business Development Center at Buffalo State College.

"You need to have a really good marketing plan," she said.

Would-be new business owners should also know how they plan to get paid, said Tom Grover, executive director of the Strassberger Center for Entrepreneurship at Canisius College. Will they collect cash, or will they be on a billing cycle that brings in payments every 60 or 90 days? How do they intend to keep the doors open in the meantime?

Marilyn Schrimmel received lots of guidance from the SBDC at Buff State when she started TLC Photo Restoration in her Town of Tonawanda home. She used to work as a receptionist but decided to turn her love for photo restoration into a business.

"I always wanted to be my own boss and have my own business," she said.

Schrimmel said people who launch their own business need to be committed and shouldn't expect to make much money for a while. "It's not like rubbing a magic lamp," she said.

For that reason, Williams said people who have just been laid off should think carefully before plunging into a home-based business as their next career. It's a good idea to have a financial cushion backing you up.

Start-up costs for a home-based business vary widely, depending on what kind of business someone is going into. Williams said many can get going on a budget of a few thousand dollars. Draw up a list of the kind of equipment you'd need to invest in to get a better idea.

Schrimmel notes that advertising eats up a good share of a start-up budget, but it's helped her attract lots of customers. She also promotes her business through a Web site.

Grover advised budding entrepreneurs to seek as much help as possible, from programs at colleges and government agencies. They can point you to more sources of support.

"A person starting a business really should make an effort to talk to the people in the industry who have done it," he said.

Projecting an image. Home-based business owners face all kinds of stereotypes: They can't be serious business people since they're working from home, or they're not putting in real workdays. Even if they've been in business for a while, some get questions about why they haven't "graduated" into storefront space.

"You'll have to overcome that by a year or two of a good track record," said Don Butzek, senior economic development specialist with the U.S. Small Business Administration.

Home-based business owners can aid their cause by taking steps to bolster their image.

Williams said it's essential to keep your office distinct from your residence, particularly when customers visit. They shouldn't be traipsing past Tonka trucks.

Madell made some adjustments to his house in Buffalo, such as adding a couple of walls, and he has a separate entrance to his business. While those improvements cost money, he's doesn't have to pay for leased space.

Williams said adding an extra phone line - so that family members aren't answering business calls - also helps project a professional image. So does having a business-only e-mail address. Lots of customers will expect to be able to communicate with you electronically, she said.

"If you don't have e-mail, you're considered behind the times," she said.

Making it work. As tempting as it sounds to work from home, there can be pitfalls.

If home-based business owners aren't careful, they run the risk of going in one of two directions: getting too distracted and not devoting enough time to the business, or getting too wrapped up in the business - since it's so accessible - and neglecting their families.

Home-based business owners say they've also had to get family members and friends accustomed to the idea they're working when they're in their home office, and can't drop everything to run errands or answer the doorbell.

Butzek, the SBA official, said home-based business owners need to be diligent about taking care of managerial details before they blossom into bigger problems. That can be difficult as the business is growing, he said, but they need to be attentive.

Above all, a home-based business needs to be a good match for the owner and the household, said Schrimmel, the photo restorer.

"This needs to be something that you absolutely love. Your home is where your family is. There better be a good reason why you're bringing this into the home," she said.

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