by Jesse Loose

Created on: May 08, 2008

As a home based business I am constantly looking at the break even point of any and all projects that we consider undertaking in our expanding business. The main problem for a home based business is that almost all of the costs involved are not easily identified especially if that business is in the information service or hosting services. What I will address is the small or startup on-line business. Because I think more people are going to consider this option as the traditional job market continues to become more and more hostile towards its workforce.

Now the obvious costs are the cost of the product or service you plan to offer. This may be a recurring cost or a one time charge. However in the on-line business the cost of the product is actually the least of your cost of business. Your main cost is going to come from advertising the product or service you are offering and if not tracked it will get out of hand fast. It only takes about two days to spend $80.00 on one ad at Google and if you happen to be selling something that only makes you $20.00 per sale then you can see that you are in a losing situation unless you are able to generate 5 sales in those two days. If you only use the various traffic exchange services as your advertising source then you have to track any cost incurred by using them. ( membership fees or traffic purchases ) You also should factor in your time that you have to spend on these sites because it can become a very time consuming project. You also have costs that are almost hidden in a home based on-line business and they are electricity, phone charges, Internet service provider, and the very computer you are using to do your work. If you plan to have a Web site then you also have to add in the cost of hosting and domain registration. None of this things is ever mentioned in any of the marketing material I have seen promoting business opportunities and it ends up costing most would be home based businesses into the red. You must consider all costs and constantly evaluate your sales verses cost to prevent you from going into the cost side of the break even point. This may be something that a brick and mortar business sees as just a tool to help monitor the business trend but to a small home based business or an on-line operation this is absolutely essential to track literally the break even point daily simply because the market is so variable that any change in the economy is felt instantly on-line and if you do not keep track of costs vs sales you can be wiped out in a matter of days. It is truly a world market you are dealing with so small fish have to be extra careful not to starve or be eaten.

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