by Lily S

Created on: January 08, 2008

Why do home businesses fail? The main reason is unrealistic expectations. This takes many forms. Ever wondered why there are so many ads on the net shouting "Get rich fast" or "Make big money" or "I only work three days a week and I'm making millions"? It's because these phrases are guaranteed to get a response from people looking for an easy option whereas the sensible ads don't get clicked on so much.

The only way to get rich fast without doing work is to inherit money or to win the lottery. That's it. All earned riches take considerable time and effort. Most self-employed people actually end up working harder and longer than people working for someone else. Yet a lot of people set up home businesses because they are looking to cut their hours. So they get up in the morning and feel they have time to do their housework, errands and watch some daytime TV as well as fit in their home business. Fitting in your home business when you have a bit of time spare from other activities usually guarantees that you fail. Home businesses usually depend on sales, and this means a huge amount of full-time effort at the start of the business establishing relationships and reputation.

In addition to not spending enough time on the business, the other mistake people make is to spend their time on things that bring in very little money. The 80/20 rule says that you will earn 80% of your income from only 20% of your tasks/clients. The key to a successful business is to focus mainly on that lucrative 20%, and fit in the other tasks as and when you have spare time. Yet this is the opposite of how most people approach things. For example many people who try to earn money on-line spend hours on pay-per-click sites that pay a mere 1/4 cent (or less) to view ads, when they could be doing something more lucrative. You also get people who spend an inordinate amount of time on "easy" or non-essential tasks. This is a hangover from being an employee, when you could easily spend time surfing the net instead of working and it would not affect your paycheck. Wasting time like this when you work for yourself is a killer.

Not organizing themselves as a business is another mistake people make. They simply get up in the morning and do the first thing that comes into their head, regardless of whether it is the most important thing or the most lucrative. You can't tell what your most lucrative work is if you don't keep records. You can't tell if you are covering your costs if you don't keep records.

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