Home-based companies in economically depressed regions don’t make more use of online business models. Economists have been studying the phenomenon for a while. The new findings add to this growing critical literature about the future of home-based companies and the potential impact of online business models on the national economy. In the United States, most home-based companies are clustered in metropolitan areas. This concentration contributes to a national shortage of entrepreneurial talent.
In fact, cities such as San Francisco, which is one of the world’s most popular business destinations, house the majority of business startups and expansions. And they are experiencing a tremendous surge in home business. There may be a mismatch between supply and demand. As more people buy homes in large numbers, there is also an increase in population density that requires more businesses to take up the slack. In other words, cities with higher population densities may need more home-based business ideas than smaller towns with fewer residents.
But even if there is a mismatch between population and business possibilities, there’s still an advantage to owning a home office. One major advantage is overhead costs. Owning a home office can save entrepreneurs a lot of money. Here are three ways in which owning a home office helps entrepreneurs:
Dropshipping and wholesaling – Today’s most successful home business entrepreneurs to make money by selling products on eBay or online auction websites. They can do this through dropshipping or wholesaling. Dropshipping describes the process in which you sell goods online without actually owning them. For example, you could sell clothes through your own online shop instead of having to rent a storage unit to store them.
Monetizing your blog – Many people who start blogs do so as a way to make money from online ads. If you’re a blogger, it’s easy to monetize your blog by selling affiliate products. Google AdSense is probably the best-known program to monetize a blog. You can display Google ads on your blog site or sign up to become an affiliate marketer for other companies. This is a particularly good home business idea for someone who wants to monetize their writing, but who doesn’t want to put out a lot of cash up-front.
Sell digital products – Many entrepreneurs who want to get started in business choose to buy eBooks or other digital products to sell online. These sellers can use to resell rights to make huge profits on the back end. You can start this type of business yourself by getting a digital product (most of them are free) and building a web site around it. Or you can outsource the work to an organization that specializes in doing just this. Either way, it’s a very lucrative home business idea. You can become an author, build a distribution network, and get paid to promote products in dozens of different ways.
Build a customer base – Almost any home business you can imagine can also be a service-based business, and many entrepreneurs have a successful home business online that they could turn into a service business if they really wanted to. Service-based businesses include things like personal care products, cleaning and janitorial services, or pet grooming services. If you already have a customer base of regular customers, the easiest way to monetize your blog is to grow your customer base organically.
If you do decide that you want to try one or more of these home-base businesses, you’ll need to budget for some expenses. It’s tempting to take on a project or two when you first start out, but you will likely have to invest in some office equipment or space if you want to maximize your profits. While you’re at it, you may also want to spend some money on marketing so that you know what strategies work best for your business.