sealPurdue News
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January 1997

Purdue team offers tips to avoid home-based business pitfalls

WEST LAFAYETTE, Ind. -- Home-based businesses are an attractive alternative to the daily grind many Americans confront each day. But running a business out of your home can be peppered with pitfalls at every turn.

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Thirty-two Purdue University Extension specialists, calling themselves the "Working for Yourself" expert team, are offering help for homeward-bound entrepreneurs. Barbara R. Rowe, associate professor of consumer sciences and retailing and point person for the team, says there are several things to watch out for when contemplating "going it at home."

"One of the first mistakes people make is not assessing the market," Rowe says. "People often think that because they know how to make a product -- like dollhouses -- that there must be a market for that product. Unfortunately, that's not necessarily the case."

She says potential business owners first should look for "holes" in the existing market and determine how they can fill a particular gap.

Pricing products too low is a second common problem for home-based businesses, Rowe says. Many people are satisfied to break even, instead of charging enough to make a profit.

"Home-based business owners need to realize that their products are unique and worth the price they charge for them," she says. "They should charge enough to cover materials and labor and add enough to make a reasonable profit."

Family can be a huge pitfall if an individual isn't careful, Rowe says.

"Make sure you negotiate with your family so that everyone knows what is expected from them," she says. "The entire family needs to understand what 'support' of the business means to them.

"Supporting the business might mean staying home to answer the phone and take orders, driving the kids around town on errands, or fixing dinner four nights a week. Each member of the family needs to do his or her part."

Rowe says that small businesses, many of them home-based, drive the nation's economy, and an expert team such as Purdue's is not only unique, but sorely needed.

"Many institutions have individuals on staff who specialize in small businesses or home-based businesses, but to my knowledge there are very few, if any, that have created a team of experts who focus on working at home," she says.

"Statistics show that 50 percent of the wages paid in the United States come from small businesses. Growth in the home-based business industry is tremendous, and demand for advice, help and information is growing equally as fast. We decided that we would start with Indiana and eventually expand our services regionally."

Experts on the team range in experience from two to 20 years. Indiana's 92 counties are divided into 10 areas -- each one served by at least one expert. There are four different areas of specialization: community resource development; production agriculture/horticulture; human development; and family resource management.

The team was created last fall, and so far the response has been very good, Rowe says.

"Horticulture has been the hottest area," she says. "We've presented several workshops to Extension Homemakers, and we're considering a regional workshop in the very near future."

In addition to statewide workshops, the team also offers a series of written information pieces and publications directed at the home-based entrepreneur.

"All of our services are provided as needed," Rowe says. "In other words, the business owners are vital to the creation and growth of this team. It's our job to listen to them, assess their needs and provide assistance in whatever way possible."

Rowe also is co-author of an upcoming national curriculum on home-based business and is a member of a national design team that specializes in home-based businesses. For more information, visit the national team's Web site at http://decit.if.uidaho.edu/HBB/homebus.html

House-bound entrepreneurs who need a helping hand can contact Purdue's "Working for Yourself" team by calling Rowe at (765) 494-8316.

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Source: Barbara R. Rowe, (765) 494-8316; e-mail, browe@purdue.edu
Writer: Victor B. Herr, (765) 494-2077; e-mail, victor_herr@purdue.edu
Purdue News Service: (765) 494-2096; e-mail, purduenews@purdue.edu

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A color photo of a home-based financial consultant being pestered by her grandchildren is available. Photo ID: Rowe/Homebiz
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