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Sherri Richards, Published November 14 2012

Tips for opening an at-home business

DILWORTH - Tanya McFarland and Courtney Miller both say they jumped into owning a business with their “eyes wide shut.”

The two women had worked together at a portrait studio for more than a decade. Shortly after McFarland quit to spend more time with her family, Miller called asking if she wanted to open a photography business together.

Both craved more creative freedom. Miller loved what she did, but not other aspects of the job. For McFarland, starting a business “was 15 years in the making. I was just too scared to do it,” she says.

Within a week of Miller’s phone call they ordered equipment. Within a month, they shot their first pictures.

Now, a year and a half later, they operate Everlasting Images out of McFarland’s house in Dilworth. Their office is in a front room, while a garage has been converted into a studio space.

They’ve traded services with a graphic designer who designed their logo and an electrician who wired the studio. They visited a photography business Miller’s friend had opened in Wisconsin.

“You have to be willing to put in 200 percent. Some days go without sleep, things get put aside, in order to make the business,” Miller says.

America’s women are starting businesses more often and in a more diverse range of industries, studies show. These businesses are also more likely to be smaller and home-based.

Often people starting a home-based business have a skill or hobby they want to offer to consumers. Other entrepreneurs are outside-in, looking at the marketplace and seeing what needs they can fill, says Donovan Wadholm, regional director of the Small Business Development Center in Fargo.

Wadholm’s job is to help entrepreneurs get started in business, or to help existing businesses either expand or wade through murky waters.

So how do you go about turning a skill or hobby – whether it’s photography, bookkeeping, jewelry-making or baking – into a full-fledged business?

Wadholm says the most successful small businesses are the ones that test the market and keep overhead as low as possible.

“The classic ‘if you build it they will come,’ it doesn’t work that way,” Wadholm says. “A lot of people … underestimate the level of commitment and salesmanship that it takes to gain clientele.

“Just because you register the business and put products in the store doesn’t mean you have a business. You need sales to have a business,” Wadholm says.

Shara Fischer is a relationship banker with Alerus Financial in Fargo whose clients are small business owners. Sometimes, their banking needs are simply to open a checking account. She may connect them with an accountant or insurance agent.

Some home-based business owners jump in with both feet, while others test the water with one toe, she says.

“The people who do best step back from the pressure of everyone saying ‘you can do it’ and feel for themselves what’s best,” she says.

Fischer says business owners need to have a plan – not necessarily a 30-page business proposal, but a sense of what they want to accomplish financially. Will the business supplement or replace their income? Do they want to sell the business or pass it on to their children?

“The success of it comes when they have a definite idea of what they want to do. Not just, ‘I love jewelry so I’m going to sell jewelry,’ ” Fischer says.

Both Fischer and Wadholm say the biggest mistake people make is borrowing too much money and putting too much into infrastructure.

Wadholm says it takes on average 18 to 24 months for a small business to break even. He suggests having at least six months of business expenses set aside before starting, and that the business owner should be able to replace 40 to 50 percent of his or her income before quitting paid employment.

There are plenty of other factors to consider before launching a business venture: city regulations, sales tax remittance, liability insurance and marketing. But there are also plenty of resources.

Fischer recommends SCORE, a nonprofit association that provides free small business advice and mentoring, as well as the Women’s Business Exchange.

Small Business Development Centers, like Wadholm’s office in Fargo and a West Central Minnesota office at Concordia College, can run projections and do cost analyses for small-business owners.

The Lake Agassiz Regional Development Corporation runs the Regional Small Business Center, a small business incubator in downtown Fargo where small business owners can rent office space. Wadholm says the center provides a sense of credibility, with a physical mailing address, telephone answering service, photo copying and a conference room.

Wadholm says today’s social media landscape can help small businesses market themselves and create a community around their goods or services like never before.

“The No. 1 thing stopping people in here is themselves,” Wadholm says. “We get a lot of people who get too involved writing the plan, worrying about registering the business, making sure they have the perfect name and all this other baloney and really what they need to do is get out there and start selling.”

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Online resources for small business start-ups

• Small Business Development Center: www.ndsbdc.org (North Dakota), www.cord.edu/sbdc (West Central Minnesota)

• SCORE: www.score.org

• Women’s Business Exchange: wbefargo.com

• Lake Agassiz Regional Development Corp.: www.lakeagassiz.com