How to Analyze Home-Based-Business Models
When an individual first starts to think about jumping on the home-based-business bandwagon, there are typically many questions that need answering. Unfortunately, the source of information that presents itself is usually someone that is trying to recruit for his or her specific opportunity…not a particularly objective point of view.
There are three main types of business models to consider. First, the sale of products and the business opportunity to friends, family, co-workers, acquaintances, and even strangers. Second, there is the pure network marketing model that entails selling mostly services (and again, the business opportunity) to the same set of potential clients. Lastly, there is affiliate marketing, which revolves around advertising others' products and services and receiving commissions.
While all three models are valid, and can result in enough income to substantially augment or even replace one's current income, the activities involved in successfully implementing any of these models vary to a great degree.
The sale of physical products via network marketing or MLM, (multi-level marketing) has gained popularity over the last few years, especially with the advent of the Internet making the ordering of these products quick and easy. The problem that most people face when trying to start this type of business is that it relies heavily on traditional sales techniques - real-time, personal contact with prospects for both the product and the opportunity.
Most people are uncomfortable with trying to sell to people they know, and even more uncomfortable pitching their wares to strangers. Industry studies show that a little less than 3% of these businesses result in a viable income.
However, MLM has been around for a long time, and many large, well-known corporations are starting to see the benefits of using this model. What's the advantage for them? Even at the low success rates, these companies realize large revenues at high margins from the sale of their products to their distributors, because most require a minimum order rate to be eligible for the discounts that allow the business owner to make a profit.
Many of these companies even make a profit from the start-up and annual distributor fees charged - especially when less than 3% are actually using the services provided on a regular basis. The other 97% end up with inventory that will never be resold, which is either consumed by the business owner or discarded.
The pure network marketing model is similar to the sale of products in that it involves selling to the same set of prospects…friends, family, etc. The difference is that there is no physical product involved, usually a service that gives the consumer/client access to information that they desire in order to achieve certain goals. This business model is one that basically feeds on itself, and is very popular with people that are interested in self-help and motivational materials.
Affiliate marketing is simply signing up with companies (for free) to direct internet traffic to a sales website. When a sale occurs, the person responsible for pointing the purchaser to the site receives a commission. Internet technology makes it easy to track where the buyer came from and pay the originating source the proper fee for the referral.
This business model is gaining ground in the home-based-business arena, because it doesn't require the entrepreneur to embrace and practice the traditional sales techniques that make most people uncomfortable. It does, however, oblige the business owner to know (or learn) effective internet advertising methods. The big advantage in this business model for the entrepreneur is that it requires very little capital expenditure to start and maintain. The primary investment for this type of business is time and effort.
When a potential home-based-business owner is evaluating the various opportunities available, he or she should be realistic about what they are willing to do in order to achieve success. All three business models discussed here are legitimate ways to make money, and all will require getting out of one's comfort zone to some degree. The decision about which business model is best depends entirely on the individual.
The key is to make sure that all of the questions are answered by someone you trust before investing…and of course, to have faith in your ability to succeed!
Start an Internet Business - Search for your Market
One of the more time intensive tasks when you start an Internet Business is the one of finding your niche market, as well as a product that will sell well in that market. For the purpose of this article it is assumed that you have racked your brains, as well as your family and friends memories to create a list of possible businesses that you would be happy working in.
In order to clarify things, it would be best to state what the term "Niche Market" means.
A niche is defined as a "specialized market" or "an area of the market specializing in one type of product or service". In other words it is a narrowly defined group that have the same specialized interests and needs, where the group as a whole will have the following characteristics:
1. A strong desire for the product or service that you offer.
2. You can create an offer that will interest them more than those of your competitors.
3. You can create a method to present your offer to individuals within the group.
4. The group will provide a sustainable volume of business.
5. The group is small enough that your competition is likely to overlook it.
With the above in mind, and taking one business at a time, you will now need to decide on the best keyword or keyword phrase that defines the niche, and then use it to research the volume of traffic being searched on that keyword, and also the amount of competition that there is for that particular keyword.
For example, if you were interested in "dog training", then start by researching the keyword dogs. This keyword is searched for on Yahoo over one million times per month (demand) - when searched in Google it returns in excess of 100,000,000 results (competitors). This indicates a very large market plus a very highly competitive market.
Now research the keyword phrase "dog training". There are over 130,000 searches per month on Yahoo for this phrase, and the Google results are greatly reduced to around 10,000,000. This is still a large demand, but it is still highly competitive.
Next check the keyword phrase "dog training aids". This is searched for 770 times per month and has 1,500,000 results. The demand is now greatly reduced and there is still a lot of competition here. However, if you check Google for the full keyword phrase "dog training aids" in inverted commas, the results drop down to just under one hundred thousand. Now the competition is not so fierce. maybe this could be your niche.
Once you have found a appropriate niche it is necessary to delve more into its depths. Forums are an ideal place to find out about your niche, in particular what your niche market is looking for. To find your forum, enter into Google the term "your keyword+forum", without the inverted commas. Then search the results for a forum that you feel reflects your needs.
Check the posts for the information that is of interest to you. Find out, and get used to the language of the forum. Check out the posts of the moderators as these will be the specialists within the particular forum. In this manner you can get a feel for the niche, find some of the needs within the niche, as well as answers to some of the problems that you have already come across within it. In this way you can glean enough information to become an expert within this niche, especially if you start posting to them and interacting with the other members of the forum.
The above analysis is very basic but provides the principle involved. There are tools to help with keywords, but other than that it is plain hard work carrying out the research itself. Start an Internet business on a solid foundation and it will serve you well as you continue to grow.
Derek Jones - trying to ease the frustration of newcomers to the Internet business world. Sign up for a 7 day Ecourse which will help find answers as to what is required to start a Business at: Sign-up page
How to Price Your Home Based Transcription Business
Perhaps one of the most challenging facets in the area of home based transcription is pricing. When you are starting there really is no standard table or chart. The nature of a home based business pits you against cheap outsourced labor in India, entrepreneurs in their undies typing away at a home computer, and professionals in bricks and mortar offices in the States just to name a few.
Tough questions need to be examined in order to set up a fee structure and set pricing to be competitive. What are your strengths and weaknesses? What are your competition’s strengths and weaknesses? What does your competition charge? Where are you at in your transcription career? How many work hours does it take you to transcribe an hour of audio?
Before you consider making a bid or accepting an offer on a transcription job, sit down and transcribe a single hour of audio. Time yourself. You do not have to work continuously – that’s one of the pluses of doing it yourself. If you need to take Rufus out for a walk or take the kids to the soccer game, deduct that time accordingly. Once you’ve calculated the number of hours it takes to complete an hour of transcription, you are ready to create a fee structure.
On a side note, most transcriptionists use the estimate of three hours of work for a single hour of audio. It’s not set in stone, but it is an excellent guide. You would be surprised at the number of people who start out ‘cold’ in the bidding selection process. They figure if they type 100-120 words per minute and an hour of audio represents roughly 8,000-10,000 words, then they are looking at around an 1½ hours to complete the project. So, they make an outlandish offer of something like $60 for a six audio hour project rationalizing their decision that ‘it’s a starting point’. When reality sets in, deadlines are missed, and money, time & work are forfeited. The buyer then pays a premium to a real transcriptionist to “rescue” the project, and quite often the disillusioned transcriptionist quits the field before they actually even had a chance to start. All this is sidestepped with a transcription test run. If you are new, do it!
Next, if you are just starting off, it is perfectly acceptable to undercut the competition and the average going rate. In fact I did exactly this when I first started my transcription business, www.infoaces.com. You have to make it appealing and worthwhile for a buyer to consider your services. You need the first few jobs to get yourself established, develop a reputation, and garner some feedback and testimonials. However, no matter how much you want the job, make sure that it’s at least marginally worthwhile for you to do. You don’t want to be working for $1.00 an hour or sometimes less because you underestimated the demands of the job!
Competition is a major factor. Know your competition. Outsourcing in India is booming. Indians will work for pennies on the dollar, and they work hard, fast, and professionally. It’s a great deal for them and for their employer. So, what can you do to compete against foreign outsourcing?
While you must recognize them as an admirable form of competition, when you break it down to the foundation, foreign outsourcing has a difficult time in the field of transcription. The nature of the English language, the nuances, the slang, the inflections and dialects are often lost upon their study of ‘Queen’s English’. Basically, if your English grammar and vocabulary skills are strong, as a native transcriptionist you have a monumental head start over foreign competition. Since you are able to establish a strong product differentiation, specifically superior quality, you will be able to command a higher fee. Your employers only need to get stung once to learn the time immemorial lesson, “You get what you pay for.” Craft your skills. Pay attention to the details. Do an actual reading proof and not just a spell check. Things like this enable you to firmly establish your pricing structure.
The going rate for a single speaker hour of audio ranges from $20 - $60. You will find employers accepting proposals at all levels along that range. When I first started I priced my work at $25/audio hour. It took me almost six hours to transcribe one hour of audio. That’s below minimum wage, but I was happy to do it. I did it at my own leisure, and it helped to form the foundation of my feedback to allow me to grow. After I began to get comfortable and more proficient, my transcription time dramatically began to drop, and I started getting too much work. This is where Econ 101 kicks in with the supply/demand curves. Raise your price. Grandfather your existing customers and slowly expose them to slight increases over time.
The last major factor to consider when pricing is the volume of work. When you get massive projects requiring the transcription of 40, 60, or 80 hours of audio, it is almost understood there will be some type of incentive discount for the employer. For example, my current established rate is $50/audio hour. All of my longtime repeat customers are grandfathered in at $45. When I bid on large projects, depending on my current workload, I will bid anywhere from $45 to $50 per audio hour. This seems to work well in spite of the foreign outsourced bids of $15 to $20.
In closing, work hard to distinguish yourself from your competition. Rock bottom outsourced rates should be examined within the scope of the big picture. Be aware of the rates, but recognize that all things are not equal and if you differentiate yourself enough, the competition from foreign outsourcing can be minimal. Price yourself & your business accordingly–even if you are transcribing away in your pajamas! Please feel free to email me any questions, comments, tips, suggestions or anything. I love success stories. Leona.
