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A Hot Trend: Home-Based Businesses

Tech advances and a weak job market spark a rise in businesses run from home.

More than half of all small businesses are now run from owners’ homes. And they’re not just hobbies: 6.6 million of them supply 50% or more of household income. Two-fifths employ two to five people. Ten percent have more than five employees.

Helping spark the trend are fast home Internet service, smart phones and so on. Also, a high rate of joblessness and growing frustrations over balancing personal and work time make working full time from home appealing to many people.

See Our Slide Show: 10 Fast Growing Home-Based Franchises

The flexibility to run a franchise based around your hours and needs -- be it a part-time or full-time venture -- is part of what makes it an attractive option to many entrepreneurs, says Kelly Sweeny, vice president of U.S. sales at Jazzercise, a home-based franchisor. “It allows you the option to work on both ends of the spectrum and offers you the flexibility to have your franchise grow with you as your life changes,” she adds.

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Several firms offer home-based franchises -- some for minimal investment -- though start-up costs can vary widely. A Jazzercise franchise, for example, can be had for $3,000. A cruise-planning agency – under $2,000. But Lawn Doctor -- a lawn care service -- requires franchisees to have at least $40,000 in liquid assets.

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The range of investment costs in starting up any franchise typically depends on what services you choose to offer, the work needed to prepare a home workspace and any home-business permit costs that may be required by your community.

Laws pertaining to permits for home-based businesses differ depending on where you live. Some of the variables focus on whether you’ll have employees working in your home, the amount of client traffic to your home and neighborhood and whether you’ll have a sign on the outside your house.

Profits vary wildly, too, depending on the number of clients, hours of service and variety of services offered. While some owner-operators can make six-figures, others make decidedly less.

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Companies that offer home-based franchises are prepared to train clients, putting them through business development classes and other educational programs. Relationships with the parent company often remain strong after franchisees are up and running -- with regional support groups, toll-free hotlines, newsletters and field evaluations. Rooter-Man, for example, provides its franchisees with advertising and Internet services plus a helping hand for grand openings.

A caveat: Keep an eye out for “make money fast” scams that promise high levels of return quickly from the comfort of your living room. These scams usually come in the form of flyers or e-mails and have become increasingly more common as people struggle to make ends meet in tough economic times. Common ploys often involve envelope stuffing, assembly or craft work, rebate processing or online searching, according to the Federal Trade Commission. This FTC site has information on avoiding unscrupulous operators.

There are also business opportunities in serving “homepreneurs,” catering to their needs for technology, specialized tax assistance, office equipment, etc. Tax preparation, for example, for home-based businesses can be tricky, so start-ups should consider getting expert advice.

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