The Secrets of Million Dollar Home-Based Businesses

Thanks to innovations in technology, home-based businesses no longer have to be small in scale.
March 06, 2012

Not long ago, running a business from home usually meant keeping it small scale. Today, thanks to rapid advances in technology, a whole new class of home-based businesses is emerging: companies with $1 million or more in sales. Thanks to innovations from the iPad to Skype, in many fields it no longer really matters where you work.

But gearing up with the right technology alone isn’t the secret to building a scalable company from home. You’ve got to have the right mindset. Here are tips from three home-based entrepreneurs who’ve built businesses with annual sales above $1 million.

Build a strong track record before you start up

Accessibility Partners, a profitable IT consulting firm that specializes making technology accessible to people with disabilities, has built revenues to more than $1 million in just three years and has served clients from Dell to the U.S. Department of the Interior. Principal partner Dana Marlowe, who works from home in the Washington, D.C. area, says her ability to tap her deep experience and connections in her industry helped the company pick up traction quickly. “I’ve been in disability advocacy for 17 years now,” she says. Besides delivering keynote addresses at symposiums, conferences and events in her field, she has served on federal and international committees. “I know a lot of the key players,” she says.

Keep the vibe corporate

Freelancers may be fine working from the dining room table or a coffee shop, but if you plan to build a larger business, consider setting up a more formal home office where you can meet with clients.

“Don’t make it a closet,” advises Brian Curin, president of Flip Flop Shops, a 130-unit chain of footwear stores in the U.S., Canada and the Caribbean. Curin may work in flip flops—hey, he sells them after all—but he’s always ready to meet with clients in his impeccable home office in Vancouver. It’s decked out with graphics from the chain’s marketing campaigns and surfboards, as it might be if he was working from a corner office at a corporate headquarters. And even when Curin is not holding meetings there, he says that the formal office setting he’s created helps him stay focused. Focused indeed—he and his partners have built the franchise company to more than $10 million in revenues while working from far flung home offices in the U.S. and Canada. They purchased the company, founded in 2004, in 2008.

Find top-quality contractors

Attracting a great team of people who work “virtually” on a contract basis can help you to expand the reach of your company without the high overhead that comes with running a corporate headquarters staffed with full timers.

Ted Scofield employs a global team of contractors to expand the reach of his business, Icebreaker Entertainment, which creates products such as school supplies for mass market retail chains through licensing partners. The contractors, found through venues such as online marketplaces, range from artists in California to a personal assistant in Israel. “The sun never sets on our home-based business,” jokes Scofield, whose company, run from his New York City apartment, generates more than $1 million in annual revenues.

At Accessibility Partners, Marlowe has found that hiring professionals with disabilities who want to work from home has enabled her to offer clients top-quality IT talent without requiring her to invest in creating a more traditional office setting for her team. “We can tap into very qualified, educated, experienced professionals who are eager to work,” she says.

Avoid isolation

It’s easy to network over lunch or coffee if you’re operating from a business district. Doing so can be more challenging if you work from home.

The remedy? Build time into your schedule to meet with contacts and friends who may be able to help your business grow. It’ll also help keep your creative juices flowing. Scofield stays plugged in by calling a couple of colleagues or friends each day, or, when he’s short on time, keeping in touch via social networks like Twitter and Facebook. “When you work in a home-based business, you have to work a bit harder on communicating,” he says.

Elaine Pofeldt is an independent journalist and editorial consultant who specializes in small business, entrepreneurship and careers. A former editor at Fortune Small Business magazine, she has written recently for Fortune, Money, Crain’s New York Business, Working Mother and many other publications. She is co-founder of $200KFreelancer, a community for freelance professionals, and Endhousearrest.com, for homeowners looking to sell.

Photo credit: iStockphoto