Rules No. 4 and 5 For Starting A Home-Based Business

Rule No. 3: Make Sure There Is An Active Market
The most common fatal mistake would-be entrepreneurs make is the failure to find out whether there is an active market for their intended product.

The mistake occurs most commonly when people violate Rule No. 1 by starting a business that they know little or nothing about.

It's an understandable mistake. You have a special interest or a pet peeve and you think of how to turn it into a great business. You assume there are plenty of people n the world who share your feelings and imagine it would be very easy to sell your new product or service to them.

You talk to a few friends and they bolster your courage (though they don't know anything about it, either). And before you know it, you've spent a year and most of your life savings getting a business going that falls flat on its face with the first promotion.

"What went wrong?" you wonder.

Answer: You forgot to see whether there was an active market for your bright idea.

We would like to think that we could create the next Wite-Out or Post-it pad or AOL. In fact, 99.9 percent of such brand-new ideas result in dismal, disappointing failures. The reason is simple: There is nothing new under the sun. Although you may feel sure that your brainchild is unique to you, chance are that it, or something very similar to it, has been thought of by countless other people  - and months, or years, ago!

That is true in every aspect of business, but it's especially true when your great idea is outside of your experience. That's because most "good ideas" don't work for reasons that are invisible to outsiders (including new employees) but are obvious to anyone who's had the benefit of seeing such ideas fail in the past.

The solution is to follow Rule No. 1. If you do, you'll probably avoid most of the mistakes you're likely to make. But if you must (or simply really want to) get into a business you know nothing about, don't invest a nickel in it until you've determined that there is an active market for your product.

What do I mean by that? I'm talking about lots and lots of buyers already out there purchasing similar, if not identical products.

When it comes to investing your time and money in a side business, you want to be very careful not to blow everything on your first effort. A good way to increase your odds is to make sure that there is already a ready market for your business.

I'm not recommending getting into a crowded market with a weak, copycat product. But your chances of success doing that would be much greater than trying to create a new market with an untested product.

When it comes to launching a new product, a very good position to take is second or third place. The marketability is proven with the first success. By coming in second or third, you reduce your risk while still enjoying the momentum that the first product may have created in the marketplace.

But even if you are fourth or fifth, or tenth in your market, you can still be successful so long as you price your product competitively, sell it forcefully, and develop its own peculiar benefit to distinguish it from the competition.$

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