written by: John Garger•edited by: Rebecca Scudder•updated: 1/1/2011
Entrepreneurs everywhere are struggling with keeping their home based businesses afloat in a bad economy. Learn which service businesses are best when the economy has everyone tightening their belts.
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Many potential entrepreneurs only think to start up a business when the economy is good. However, just because the current economy is bad doesn’t mean it isn’t a good time to start a home based business. Remember, many home based businesses start out as a means to supplement the primary source of income but grow over time to become the entrepreneur’s primary source of income.
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Goods, Services, and Home Based Businesses
No matter what home based business you start, you are providing one of three things to your customers. You are selling a good, a service, or some combination of both. Service home businesses are simpler to start because you won’t have to carry any inventory and expenses typically go directly into building the business.
However, not all services are alike. There are two broad categories of services you should consider before you decide which services to provide to your customers. Services can broadly be categorized as either needs or wants, but there is some grey area of some that share attributes of both kinds.
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Needs services are those services your customers cannot do without. When your customers need this type of service, they have no choice but to pay someone else to do something for them. The main reason for paying someone else for a needs service is because the customer is incapable of doing it on their own. Some of the most popular needs services for home based businesses include:
Computer Repair Technician
Credit Card Debt Consultant
Income Tax Consultant
Personal Finance Consultant
Resume Writing Service
Vacation House Sitting
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Wants services are typically those kinds of convenience services that customers could do for themselves but find it more convenient to pay someone else to do it. People with greater amounts of disposable income are more likely pay for wants services than people who live on a budget. Some of the most popular wants services for home based businesses include:
Blind Cleaning Service
Dry Cleaning Pick-up/Delivery Service
Family Tree Research/Services
Food Delivery Services
Grocery Shopping Service
Home Organizing Services
Snow Removal Services
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Needs, Wants, and the Economy
When the economy is bad, the average consumer has less disposable income. Hence, some of that consumer’s spending has to be reduced or eliminated. Typically, the first things to go are the non-essentials and that includes the types of services that are wants and not needs.
For example, someone who needs computer repair is almost as likely to hire someone to fix his/her computer in a bad economy as in a good one. Snow removal from a driveway is one of those jobs that most people can do for themselves but are more likely to hire someone to do it for them when they have more disposable income. Essentially, demand for needs services is less elastic than demand for wants services in a fluctuating economy.