Home Based Business - Making Sense Of The Failure Rate

The statistics relating to home businesses say that 90% will fail within the first five years. Ninety percent is a very high failure rate. If the statistics are correct, should we let that stop us from attempting to make money working from home? When there is such a big choice of different ways to make money at home, why do so many people fail when they try to start their own home business? Do they all choose the wrong business for them or is any attempt at earning money working from home doomed?

Some people quote a failure rate of 95% or 98% for Internet based businesses but, for now, let's assume the failure rate is at the same 90% level for any home business (online or offline). The figures don't take into account the fact that five years is a long time for most people who starr a home business. All sorts of people, for all sorts of reasons, decide to have a try at making money working at home. However, the majority of the people who decide to start a business so they can work at home are mothers of young children. They want to be able to earn money working at home whilst still meeting the demands of a young family. After five years, their circumstances can be very different.

Five years is a long time in childhood. In that length of time a child's needs will change dramatically. Think of the difference between a week old baby and a five year old child, or a three year old toddler and an eight year old. For a really dramatic example think about how a child will change in five years from an eight year old kiddie to a teenager.

After working at home for five years, the mother might prefer to pay for part time child care so she can go back to a career she enjoyed before having children. Alternatively the mother might decide to replace her home business with a more challenging one because she finds she has extra time she can commit to working at home. Maybe more children arrive and the mother simply does not have the time or energy to run a business while caring for several small children.

In either of the first two examples, if the business brought in a profit before it ended, it can hardly be deemed a failure but, because the business ended, it will be lumped in with the doom laden figure of 90%. In the third example the business did fail but the statistics don't give any indication that the reason had nothing to do with the actual business.

Another work at home statistic tells us that 50% of home businesses fail within the first year. Although 50% does not seem as foreboding as figures of 90% and above, for half of all home businesses to end within their first year is still a huge failure rate. The reasons for failure of a home business within the first year are mostly connected with unrealistic expectations or a mistake on the part of the business owner.

Many people mistakenly think the freedom and flexibility to be enjoyed in having a home business means they won't have to do any real work to earn money. Other people fail to behave in a businesslike way: they treat their home business more like a hobby they can play around with when they feel like it. These people put a minimal amount of effort into their home business and then wonder why they don't make a profit. Other people make an unfortunate choice and, only when it is too late, they realise they are not going to be happy running the business they picked.

People from each of these three groups often get labelled with disparaging names like "quitter" because they drop their home business at a very early stage. Patience and persistence are key to succeeding with a home business but it is also true that there is nothing to be gained in applying the whip if your horse is deceased. If you have no real hope of getting anywhere, it is far better to take a realistic view, cut your losses and use the experience as a lesson.

Personally, I have quite a bit of sympathy for the people in the third group who realise they made a bad choice and give up: owning up to a mistake requires courage. The people from this group who reassess their situation and pick another home business to work at often make good use of the lesson to be learned from their early failure. They account for many of the people who end up in the magic 5% - 10% who own a successful home business.