This Article is About
home businesses
small business loan
successful home business
necessary tool
necessary adjustments
personal time
work time
procrastination
distractions
interruptions
business strategy
amount of money
business owner
Top Reasons Why Home Businesses Fail
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Top Reasons Why Home Businesses Fail

In order to build a successful home business, you need to understand what makes home businesses fail. Knowing up front what challenges will arise while you try to grow your business will allow you to put together a contingency plan for facing and overcoming them. It is important to understand the top reasons why home businesses fail to avoid that fate.

Balancing Work and Personal Time

The number one reason home businesses fail is the inability to separate personal time from work time. When first starting out, the passion and enthusiasm for your new venture will be very high and you will most likely want to spend as much time as possible working on building your business. As time goes by, the distractions of being at home can start to pull you away from your work and you could start to lose focus. It is very easy to put work aside if you do not have a “boss” to report to or a deadline to meet.

In order to keep from falling into this cycle of procrastination, you will need to write up a work schedule and stick to it. Make sure to have your own space where you can work without distractions and interruptions. Treat your home business the same way you would if you were working for someone else to keep from failing.

Home Businesses Do Not Need a Business Plan

A written business plan is not just a tool to try to get financing from a bank. While it is a necessary tool for small businesses to secure a small business loan, it also serves as a blue print for the crucial first three to five years of a business. Not writing up a business plan can be a key reason why home businesses fail.

As a home based business owner, you can use a business plan to outline your goals for the first three to five years and the steps that you plan to take to reach those goals. You will also be able to forecast the amount of money you will need to have available to stay open. Putting your potential revenue and expenses down on paper will help you visualize your business strategy and make necessary adjustments before any problems arise.

A written business plan will not only uncover potential obstacles and challenges, it can also reveal hidden niches and potential revenue streams. Part of your business plan will be to perform a market study. During this study, you may discover untapped resources that will have the potential of bringing you sustained income for many years!

While the idea of writing up a business plan can be intimidating, not having one can be very detrimental and could cause your home business to fail! Luckily, there are resources that can help you. The US Small Business Administration has comprehensive guides for creating a business plan. Visit their website to download the guides or to take a free online course on writing a business plan.

Overestimating Revenue

A common and completely avoidable reason why home businesses fail is OVERestimating your revenue. We all tend to be extremely passionate about our home business. Let’s face it, it’s our baby! While we want our baby to run before it crawls, the reality is that by doing this, we could be setting ourselves up for failure. A business owner should be optimistic and passionate, but also conservative when projecting future revenue.

A good way to make sure you are accurately estimating your revenue is to talk to other business owners in the same profession. Striking up a relationship with a few people who have been in the business for a while can help you gauge potential revenue, market trends and customer behavior.

The success of your home business rests solely in your hands. To avoid failure and you should know the reasons why home businesses fail, make sure that you have the right tools and get the right training. It is also helpful to have a mentor and connections to other business owners who can help you through any tough spots. Having support from people who have successful home businesses is an invaluable asset. Good luck with your venture!


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