Basic Training

Home business basic training introduction

Business is about selling. There I said it, the bad word, selling.

But first, I want to define a few business related terms. You will see why later on.

By definition, business is an organization or economic system where goods and services are exchanged for one another or for money. Every form business requires some form of investment and enough customers to whom its output can be sold on a consistent basis in order to make a profit. To read more check out The Business Dictionary.

When it comes to business and selling, you will see and hear the term economics often. Economics, in part, is the study of production, distribution, and consumption of goods and services. It studies how scarce resources are used to satisfy wants of consumers.

Another term often used is business model. A business model is a representation of an organization in terms of underlying assumptions and statements to deliver value to a consumer.
business model flowchart

Wikipedia defines the term business model as a description:

“used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, business process, target customers, offerings, strategies, infrastructure, organizational structures, sourcing, trading practices, and operational processes and policies including culture.”

And Harvard Business Review published an article, What is a Business Model?”  The term “business model” is more common now than it was in the past. The heart of the matter is a business model tells a story. It is a story about how a business works. Your business, for example.

The definition of a business model above describes delivering value to a consumer. Within a business, value has two parts. The first part is the gathering of resources and converting the resources (production) into a product. The second part is the marketing of the product. Marketing is those activities related to selling and delivering the product to the consumer.

HBR adapted the following chart from Mark Johnson’s book titled, “Seizing the White Space” to show types of business models.

Business Models


Why is all the above important to a home business?

It is important because the business model you develop or follow when deciding to start a home business will be determined by your business decisions.

You will have to decide whether you want to sell your products or someone else’s products.

If your decision is to sell your own products or services, then your business model will include both the production side and marketing side. If your decision is to sell someone else’s products and services, you will be concerned only with the marketing side of a business model.

When selling your own product or service, business decision factors relating to production include:

  1. design of the product or service
  2. facilities for production
  3. purchasing raw materials (sources of supply)
  4. labor required in production
  5. manufacturing process including production machinery, workflow, quality control

The following list of marketing components are considered whether you are selling your own or someone else’s products and services:

  1. market research
  2. product development
  3. pricing
  4. distribution
  5. sales strategies
  6. advertising
  7. public relations

Home business model of selling someone else’s products and services

When you decide your home business will involve selling someone else’s products and services, you have several options. Your options are franchising, affiliate marketing and network marketing.

franchisingFranchising – is an agreement or license entered into by two parties, the franchisor and the franchisee. As defined by the Veteran Administration, Office of Small & Disadvantaged Business Utilization,

“a franchise gives a person or group of people – the franchisee – the rights to market a product or service using the trademark of another business (the franchisor). The franchisor has the obligation to provide these rights and generally support the franchisee, both initially and on an ongoing basis.”

Some franchise businesses are beyond the scale of a home business. For example, being a McDonald’s restaurant franchisee. But If you are considering purchasing a franchise, the Federal Trade Commission’s Bureau of Consumer Protection has a wide range of resources and guides to help you buy a franchise and avoid franchise mistakes.

Affiliate marketing – is an online process where a person (affiliate) earns commissions by selling other people’s or company’s (retailer) products and services to consumers.  Most commissions are paid on a “pay per sale” basis. The amount is a percentage of the sales price. The percentage varies depending on the retailer and product. Your goal as an affiliate is to send visitors to the retailers’ websites and if the visitor buys something, you earn a commission (it varies between 1 – 75%+ depending on the program).

Richard KiyosakiNetwork marketing –  involves direct selling to consumers with the opportunity to recruit and create a sales organization and make commissions on multiple levels (commonly referred to as Multi-Level-Marketing). These “downlines” provide multiple levels of compensation. Network marketing companies are often criticized because more emphasis is placed on recruiting new distributors than selling products. The opportunity to earn commissions from downline distributors can exceed the amount of commissions earned by selling products.

Because of the shape of a sales organization, network marketing companies are often misidentified as illegal pyramid schemes. The Federal Trade Commission provides a definition of a pyramid scheme.

A coalition of lawmakers has come together to write and sponsor a bill that would finally define at the federal level what a pyramid scheme is and is not. The applicable bill number is H.R. 5230 – Anti-Pyramid Promotional Scheme Act of 2016.

Home business training summary

Home businesses come in many different shapes and sizes. Defining your home business model is important to the success of your business. Your business model tells the story of your business. Over time economic and business conditions change. These changes will impact the assumptions built into your business model. Evaluation and assessments of your business performance may require changing your business assumptions.

For more information, comments or questions, please fill in and submit the form below. I love feedback!

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18 thoughts on “Basic Training

  1. My biz model is affiliate marketing. I earn from promoting others’ products. It’s great because I don’t have to worry about production, rent, or other overheads that may be costly.

    That said, affiliate marketing has its own costs. You need to pay your web host, domain name provider, training, etc. When you get big enough you might want to outsource some of the work. I’m paying less than $300 a year for hosting and training at wealthy affiliate. Great place to start a biz for beginners.

    • Thanks for your comments, Regina. My upcoming article shows that one of the primary causes of business failures is the lack of adequate cash flow. Keeping your start up costs low is a good way to help maintain business financial health.

  2. Thanks Glen, this information is great and made me consider my mission to help students become fluent in English in military terms. I have chosen an affiliate marketing model and don’t expect to make any sales in my first six months. My idea to win the hearts and minds of my readers and so build trust. I don’t intend to do any hard selling but of course making some commissions would be very nice. Do I come across as amateurish or do you think I have a plan that could work? All the best sir, Steve

    • Steve, what you propose doing is the model I follow. If you notice, my site is not heavily monetized because this site is more information content oriented. I have reviewed some programs and make recommendations within the reviews. But is mostly passive promotion. And I do not advertise or promote offers to my subscriber list. At some point I may add more monetization to my site.

      I am currently building out a golf product website that is focused on selling stuff.

      I have had a Google Adsense account for years. It brings in a few dollars. I am just not comfortable sending visitors to another website if they are not buying from me.

  3. I love the layout on this page so much! You do one of my favorite things. I love when people go out of their way to explain what they are going to be talking about throughout the post. Not only does it provide clarity but it’s also insightful for the reader. Your website is simple but gets to the point and makes great use of images. This website is well put together and I wish you the best in the future!

  4. Always been interested in starting up my own business and the internet seems to have brought this reality to my doorstep. My only problem is that there seems to be so much to learn at the end of the day. How intelligent do you have to be to take all of this in? Do you feel that the affiliate marketing route is a simple form of marketing?

    • Chris, Anybody can do this. It just takes a vision of your future and desire to create a better lifestyle. The new site builders really make it easy to create websites. I believe affiliate marketing is the easiest route relative to the others. It does take work and a desire to succeed. I have seen a number of training programs and think Wealthy Affiliate gives you the most chance of being self-reliant. My review shows the kind of training available.

  5. I can’t even begin to express how important this information is! Especially in this day in age where we are transforming from an Industrial Age to an informational age. Everyone needs to be aware of other types of business especially home based businesses like network and affiliate marketing. Although I am familiar with both I still find myself learning more and more from each page and post I come across. This one especially. You did a fantastic job laying out facts and reliable key points of information for us as readers! You broke everything down wonderfully with step by step processes, that alone make us as “students” very relieved, keep up the good work! And thank you for your time building such a helpful page within your website. I very much enjoyed it.

    -Daniel

    • Daniel, I appreciate your comments. Thank you. Hopefully, I conveyed the idea that if someone is not successful with their business or website, it is not the end. There are many factors and assumptions that should be evaluated and changed. Successful businesses are adaptable to their environment.

  6. Very nicely laid out and I like how you’re detailed in your explanations. It really gives me a lot of important information on what a home business entails and the options available out there. Thanks so much for putting out this stepping stone for me. It’s really helping me pave a way to what I really want to build. I will be visiting again!

    • Thank you, Rey! I think successful businesses comes down to options available. Strategic planning is based on settting goals and evaluating performance. If at first it does not work, try again (but change your assumptons and associated process).

  7. Hi,

    I am new home based business owner and my choice is the affiliate marketing that is selling other people’s product as what you mentioned in your article.

    Before I read your article, I’m still not really understand what am I doing. After reading this, it has widely open my mind of the vast opportunity of what can I do in my business. Thanks for sharing this.

    • Hi Fadhil. I am glad you had the chance to read this. Please bookmark the website and come back. I will have new information to help you build a home business.

  8. Hi, Glen. This is an interesting article and well researched. In my case, I was unsure of what home business I want to be in. I was also lacking in the know-how. But through a friend, I was introduced to Wealthy Affiliate. This is the place where I learn all that is to be learned and I took up their affiliate program as my initial online business or as you say it, home business.

    • Thank you, Mazlan, for visiting my website. I appreciate your comments. I am focusing on education and training because there is so much junk out there. Wealthy Affiliate is a good place to start because of the quality of training and help they provide. Thanks again.

  9. My personal favorite business model is affiliate marketing for a number of reasons, but a couple of the major ones are that there’s no need to develop your own product/service or handle inventory, customer service, etc. You essentially only have to worry about the marketing aspect.

    It’s also fairly easy to create a website these days and get started at a relatively low-cost. With just a few blog posts and pages, you can begin making sales and build up a solid income over time. It won’t happen overnight but it’s a formula that works. What’s your favorite business model?

    • Thanks for taking time to comment, Matthew. I agree. I have done the network marketing business as well as sell my own services. The best part of affiliate marketing is the ability to focus on the advertising and not worry about product development or even delivery to the customer.

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