Tory Johnson: Start a Business for $200

Jan. 29, 2007 — -- We've heard from thousands of "Good Morning America" viewers who say they desperately want to work from home but can't seem to find the right opportunity in their area to fit their skills and interests.

If that sounds like you, perhaps it's time to start your own business. It's not as difficult -- or as expensive -- as it may sound!

First step, ask yourself three questions to help define your goals:

1) What kind of business do you want to start? Is it a product or service? Do you possess the skills to make it happen? Give a lot of thought to what type of work would excite you every day.

2) How much time can you devote? Be realistic, and think seriously about your current routine to figure out how much time you can devote to this endeavor. Perhaps you have five hours a day while your kids are in school, or maybe you only have nights when your baby is sleeping. Will you focus on finding the time to give this priority? If you're going to devote too little time or you're going to find excuses why you're too busy, this won't work.

3) What are the financial requirements and expectations? Let's face it, business is about money! How much will it cost you to get started? If it's a product, think about materials you'll need to get going. And ask yourself how much money you'd want to make -- realistically -- for this endeavor to be worthwhile, given the time you'll have to invest. Some people want to make $1,000 a month -- others want three or four times that. Is this money to cover special extras such as vacations? Or is it to help pay the mortgage?

There's some crossover between time and money to consider. If you're going to have to hire a babysitter while you're working, will the cost of that sitter negate any money you're making?

What will you charge? How much is your product or service worth? Pricing is always something that makes people a bit queasy. If you charge too much, you scare off the potential customers. If you charge too little, you're cheating yourself -- and there's a potential to actually lose money.

While there's no precise science to pricing, take into consideration a couple of key things: Exactly how much does it cost you to produce your product or service? Put a value on the materials used, as well as your time. Then figure out what the market can bear by doing some basic research.

For example, to determine pricing for sewing classes in New Jersey, Fiona Arang looked at what other extracurricular courses were going for in her area. She also asked a group of likely clients what they'd be willing to pay for sewing classes. She used that information -- combined with what she felt her time was worth -- to develop her pricing.

And make sure you don't undercharge. Sarah Lemire of MemoriesMadeSpecial.com, which creates video montages, admitted to me that her husband thinks she's practically giving away her services. He's absolutely right. But she's not alone: Many women worry about fear of overcharging. Now that she's got more experience under her belt, Lemire is confident about raising her rates.

How do you figure out who your customer is -- and where you'll find that customer?

Let's face it: Nobody absolutely needs sewing lessons or video montages. They can make for viable businesses, but those are things we can do without. It's up to you to convince people that they want what you have to offer.

You do this through effective promotion:

Since starting a business on your own can sometimes feel lonely, there are some great resources to turn to for advice and mentoring. I have a few favorites that I think are particularly comprehensive:

Score is a nonprofit organization with a robust Web site and, more significantly, more than 10,000 retired and working entrepreneurs and executives who volunteer their time to provide one-on-one business mentoring and coaching. Score also has 400 locations as well as online assistance. It's all free and confidential.

The Small Business Administration, which is an independent division of the federal government, offers free online self-paced courses for starting a business. It also has lots of related issues including managing and growing the business.

Count Me In is a terrific nonprofit that supports women's economic dependence through a range of services for entrepreneurs. My site, Women for Hire, offers advice on becoming an entrepreneur and links to other resources as well.

And if you're going to sell a product, you'll definitely want to check out the storefront tutorials on eBay, since there's valuable information on how to tap into eBay's 200 million users. I've talked to dozens and dozens of small business owners who swear by eBay.

Legal issues are important considerations -- both to protect yourself and to comply with the law. Check with your local chamber of commerce to inquire about city, county and state requirements for permits and licensing. You might need to file a form for a simple business certificate, or you might want to consider incorporating. They'll also be able to advise you about sales tax certificates.

The type of legal business structure you ultimately opt for is often directly related to your liability and risk. For example, if you're a home-based painter, your liability is likely to be fairly limited. But if you're also a painter who takes her work into someone else's home to deliver and install it, your liability increases -- and you will likely want to incorporate and purchase the necessary insurance to protect yourself and your business.

Score is also a perfect resource for this type of advice that's specific to your location and your type of business. And your accountant or tax preparer can also be of some assistance.

Unless you're truly inventing something brand spanking new, there's a good chance that what you want to offer already exists. Do not worry! That's absolutely fine -- every day in New York I pass competing banks, coffee shops and clothing stores all on the same street. We all know plenty of lawyers and doctors. You need not reinvent the wheel to get someone to buy from you.

You have to make a good product and provide great customer service. And you need a fire in your belly to succeed. Start today, because if not now, when? Don't delay your dreams!

Tory Johnson is the workplace contributor for "Good Morning America" and the CEO of WomenForHire.com.