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How To Evaluate Home Based Businesses
When you evaluate home based businesses, the task can be daunting and just a little scary.
after all if you are going to throw part of your life at something you would certainly
like to know that you have a good chance to succeed
When You Evaluate Home Based Businesses
Let’s look at how to evaluate home based businesses.
This is a an important decision and you need to do your due
diligence before you dive into anything.
Let me start by dividing the task into two categories.
If you need cash today – you are going to have to find a JOB.
Typically these won’t pay much, since the employers have a
large pool of desperate people, especially now. The income
is immediate, but it is small and will remain small.
The title was “Evaluating Home Based Businesses,” but many
people see “working from home” as being an “employee at home.”
When you change this to “Running My Own Business From Home”
the potential for large income is there, but it won’t be
You can absolutely run a real business – from
home. You just need to find the right one and you will
need some time, energy and money to make it work.
The Cash Flow Quadrant
Robert Kiyosaki (a best selling author and management consultant)
wrote two famous books “Rich Dad, Poor Dad” and “The Cashflow Quadrant”
where he divided “how we make money” into four categories.
- Small Business
- Large Business
Most people spend their lives in the Employee category.
It is extremely logical to feel that people in the Employee
category should look into move “up” to the Small Business category.
That’s what we are going to talk about here.
And it would see that moving into the Large Business category
is virtually impossible for the “work at home” entrepreneur.
Nothing could be further from the truth. It just isn’t obvious.
Hours for Dollars
One of the main points in Mr. Kiyosaki’s books was that Employees
and Small Business owners have no leverage. They trade hours
for dollars, their income grows linearly (if it grows at all) and
when they stop working the money STOPS.
A Closer Look at Small Business
A Small Business depends heavily on the owner. This person
is critical to the income of the business. For example, if you
are a consultant, you may make good money per hour, but your income
is still limited to the number of hours you can personally get
paid for. And if you are sick or on vacation, your income stops.
Think about a small doctor’s office. It is a brick and mortar
establishment and when you there are several employees. These
employees are EXPENSES, not assets. If the doctor is not there,
the amount of income producing activity that can be done is extremely
Besides the problem of linear income Small Businesses have several other
inherent weaknesses – most of them have to do with capital and time.
How To: Evaluate Home Based Businesses – Looking at Big Business and Investing?
Obviously if we are honestly evaluating home based businesses,
it takes a lot of money to move into the Investor
category, so we will not spend any time looking at this.
When he was evaluating home based businesses, Mr. Kiyosaki defined
Big Business as one where you can walk away for a year and the
business would still generate a significant income for you.
The Big Business and Investing categories are where you have
leverage – other people are working and you benefit from their
efforts in a way that you are NOT the total lynchpin for your
business. Napoleon Hill is famous for his quote: “I’d rather have
1 percent of the efforts of 100 people than 100 percent of my own effort.”
He was talking about a system where people made money for you, even when
you weren’t there.
Incomes on these categories do NOT have to be linear. They can double,
triple or quadruple. This is possible through leverage.
Let’s Look Closer at Big Business
Donald Trump and Robert Kiyosaki co-authored an article in Success Magazine
where the stated that in order to run a leveraged business (Big Business)
you need a SYSTEM. The system allowed the business to run WITHOUT the
owner’s constant attention.
The authors concluded that there are three ways to obtain a viable system.
1. Build your own (most people who do create a system, fail several times before they get
2. Buy a system. This is what Franchises are all about. Now the average
decent sized franchise costs $150,000 and you contract to give up a percentage
of you gross. You DO get a proven system and corporate support.
3. Buy INTO a system. This is Network Marketing. These companies
have the same benefits as a Franchise, without the large initial investment
and the requirement to payout a percentage of the gross revenues.
Some Thoughts on How to Evaluate Home Based Businesses
↓ ↓ If this post gave you some ideas (pro or can) – Please comment below. ↓ ↓
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