Tuesday, September 16, 2008

Making home business easy: to inventory or not?

What could be better than working at home, you say? Good choice!

So, how do you do that, and succeed?

Embarking on your own home-based business adventure involves a myriad of up-front decisions, such as:

  • what type of business entity to create
  • whether to operate a product-based business or provide unique services
  • whether to invest in a franchise or develop a ground-up operation
  • deciding what of kind of marketing is required

Each of these up-front choices can involve some heavy-duty homework to assess what is best for you, what offers the best prospect to achieve your goals for starting your home-based business. Not to mention what will help ensure that you get to spend time doing the things that you love to do. You're doing research that led you this far, so a tip-o-the-hat for doing more homework than many who launch into a home-based venture!

But there’s more.

If you choose a product-based business like I did, additional choices show up to say "you're not done yet". For example, should you market products that you manufacture yourself, or resell products that someone else manufactures?

Like the idea of skipping the make-it-yourself alternatives? I know what you mean. A key decision then for growing a product-based, reseller-type home business is whether you will inventory the products that you resell.

Managing a product inventory was not an attractive option for me in considering home business options. Devoting space to that, physically handling the goods, optimally choosing buy points to ensure profitability, analyzing turnover, staying ahead of shrinkage and obsolesence. Argh. Hats off to those who do those things well every day. But not what I wanted.

Enter the reseller option with products that are shipped directly to customers by the manufacturer. What's not to like about that? In addition to avoiding the requirements of managing a product inventory at home, I also miss out on order fulfillment, returns, shipping, and so on. Now you're talking!

Although I'm not devoting space here to the advantages of the other types of home businesses, there are tradeoffs. And there are certainly some requirements, or things to watch, with an inventory-less home business. Not necessarily downsides, but factors that can affect your level of success with this type of business. Here are a few that come to mind:

  • Quality of your products - obvious, you say? You'd be surprised how many opportunities basically push their system, marketing thunder, etc. and place a low priority on the products themselves. Long-term success with consistent repeat business and referrals is not realistic without unique, top-drawer products.
  • Quality of your supplier - you are essentially outsourcing critical aspects of how you will be perceived, and how you will succeed, to the company that provides your products, fulfills orders, and delivers to your customers. If they are less than excellent, it may cost you extra labor, customer satisfaction, and ultimately long-term business.
  • Your commitment to effective marketing - whether you leverage the tools and systems of your supplier company, or use a roll-your-own strategy, your business will live and die by the effectiveness of your marketing. A wonderful place to devote much of that time you saved by choosing an inventory-less business!
  • Your commitment to customer service - even with breath-taking products delivered by a best-in-class company, you have the most important relationship with your customers. And their experience throughout the lifecycle of your relationship is impacted most by the level of service you provide. Does the passion that launched you into your home business venture carry over into the long-term service experience that your customers have?

For me the choices narrowed the field to network marketing opportunities with proven performers. These opportunities provided the inventory-less style of product business that was right for our family (and my personal skills and priorities). Plus they offered a long-term residual income compensation structure that better leveraged our time investment.

I then found a unique internet marketing 'front end' that provided a turbo boost to that function of our business. So I can concentrate on doing my part every day in marketing that fits with who I am, and in surprising and delighting my customers with above and beyond service.