Home Based Business - Making Sense Of The Failure Rate
When there is such an enormous choice of ways to make money at home, it seems strange that so many people fail when they try to start their own home business. Do they all choose the wrong business for them or is there something inherently wrong with the idea of earning money working from home? The statistics produced in regard to home businesses say that 90% will come to an end within the first five years. Ninety percent is a frighteningly high failure rate. If we assume ...
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When there is such an enormous choice of ways to make money at home, it seems strange that so many people fail when they try to start their own home business. Do they all choose the wrong business for them or is there something inherently wrong with the idea of earning money working from home? The statistics produced in regard to home businesses say that 90% will come to an end within the first five years. Ninety percent is a frighteningly high failure rate. If we assume the statistics are correct, should we let them deter us from working from home?
Some people quote a failure rate of 95% or 98% for Internet based businesses but, for now, let's assume the failure rate is at the same 90% level for any home business (online or offline). One thing that the figures don't reflect is that five years is a long time for most of the people who start their own home based business. All sorts of people, for all sorts of reasons, decide to have a try at making money working at home. However, the majority of the people who decide to start a business so they can work at home are mothers of young children. They want to find ways to earn money working at home that they can fit in around the demands of a young family. After five years, their circumstances can be very different.
Five years is a long time in childhood. In that length of time a child's needs will change dramatically. Just picture the difference between a newborn and a five year old, or a four year old and a nine year old. For a really dramatic example think about how a child will change in five years from an eight year old kiddie to a teenager.
After five years working at home, the mother might feel comfortable in arranging for part-time care for the child outside school hours so that she can go back to a career she enjoyed before the responsibilities of motherhood took over. Alternatively the mother might decide to replace her home business with a more challenging one because she finds she has extra time she can commit to working at home. Maybe more children arrive and the mother simply does not have the time or energy to run a business while caring for several small children.
In either of the first two examples, if the business brought in a profit before it ended, it can hardly be deemed a failure but, because the business ended, it will be lumped in with the doom laden figure of 90%. In the third example, it might be fair to say the business failed but again the figures don't tell us that the reason was not because there was anything wrong with the business itself.
Another work at home statistic tells us that 50% of home businesses fail within the first year. Although 50% does not seem as foreboding as figures of 90% and above, for half of all home businesses to end within their first year is still a huge failure rate. The reasons for failure of a home business within the first year are mostly connected with unrealistic expectations or a mistake on the part of the business owner.
Many people fail to understand that the freedom and flexibility of working from home does not mean they won't have to do any real work to earn money. Other people fail to behave in a businesslike way: they treat their home business more like a hobby they can play around with when they feel like it. These people put a minimal amount of effort into their home business and then wonder why they don't make a profit. Other people make an unfortunate choice and, only when it is too late, they realise they are not going to be happy running the business they picked.
People from each of these three groups often get labelled with disparaging names like "quitter" because they drop their home business at a very early stage. Patience and persistence are key to succeeding with a home business but it is also true that there is nothing to be gained in applying the whip if your horse is deceased. If you have no real hope of getting anywhere, it is far better to take a realistic view, cut your losses and use the experience as a lesson.
Personally, I have quite a bit of sympathy for the people in the third group who realise they made a bad choice and give up: it takes courage to admit to making a mistake. The people from this group who reassess their situation and pick another home business to work at often make good use of the lesson to be learned from their early failure. They account for many of the people who end up in the magic 5% - 10% who own a successful home business.