From Home Startup to Millionaire Mom

From Home Startup to Millionaire Mom


For Lindsay Holt, starting a business two years ago with her new husband
already has paid off in an end run around maternal guilt.

For years, as a single mom working for a catalog company in the San Francisco
Bay area, she used to leave for work before her daughter Danni, then in middle
school, was awake. Holt helped Danni get moving in the morning by phone from
the ferry as she commuted.

"That was just gut-wrenching," Holt recalled.

It was on the sidelines of one of Danni’s soccer games that Holt was inspired
to start the business that now allows her to make breakfast for her daughter
and drive her to school. At the matches, Lindsay and her husband Tate noticed
mothers complaining about having to run back home to fetch jerseys, shin
guards and other items the kids forgot to pack.

After six months of research and patent searches, they launched Nagtags,
electronic checklists that kids can attach to sports bags and backpacks. They
put in $50,000 of their own money, excluding salary sacrifices, and raised
about $575,000 from investors since incorporating in mid-2005.
video report on home-grown businesses.

The Holts are doing what many parents long to pursue. Being your own boss with
the ability to work from home is the holy grail for many families, though the
financial risks can be great.

Parents often have to sacrifice the regular income, employer-sponsored health
insurance and other tax-favored benefits that make covering bills, planning
for contingencies and saving for retirement easier and automatic. But the
upside can be lucrative for people who find a market for their product or
service, small-business experts say.

Nagtags Inc.’s two employees diverge in their tolerance for risk. "I’ve been a
steady paycheck kind of person for a long time, so it takes some getting used
to," said Lindsay Holt.

Tate Holt said he’s more comfortable with uncertainty. "Having been through
peaks and valleys of consulting for 15 years, I’m used to periods where
there’s comfort and then periods where there’s panic."

Their family is in good company. About half of all U.S. businesses are
home-based. Two-thirds of new businesses with at least one employee survive at
least two years, and 44% survive at least four years, according to the Small
Business Administration’s Office of Advocacy.

Strategies for success

Entrepreneur Tamara Monosoff interviewed 17 successful businesswomen for her
new book, "Secrets of Millionaire Moms." Among them was Julie Clark, creator
of Baby Einstein, the video series for infants now owned by Disney.

"She said she couldn’t do it all," Monosoff said of Clark, who found it
increasingly difficult to do housework and grocery shopping on top of running
her business. "As her revenue started building up she did take some money out
to get that type of support."

Another "millionaire mom," Lane Nemeth, founded and led Discovery Toys for 20
years. The business nearly ran out of money three times but eventually rang up
$100 million in annual sales. Nemeth sold that company to Avon a decade ago
and is now chief executive of Petlane, a home-based party-plan business that
sells pet products, based in Concord, Calif.

Nemeth advises parent entrepreneurs not to expect a home-based enterprise to
free up their schedules.

"If you’re serious about building a business, you’re going to marry that
darned thing," she said. "You do have more flexibility, but you don’t more
have free time."

Taking the leap

Here are nine other considerations for those operating or considering a
home-based business, according to small-business experts:

  1. Start with research. Explore business structures
    on Web sites such as
    from the Small Business Administration. Seek feedback on your business plan
    from seasoned volunteers at
    , Counselors to America’s Small Business.

  3. Do a detailed analysis of costs to figure out how much
    money you’ll need.
    Forecast three scenarios: a best-case, realistic and
    worst-case financial picture. Karen Belasco, founder and "chief cookie
    counselor" of Good Fortunes, a personalized cookie business in Canoga Park,
    Calif., said she wishes she had spent more time learning about cash flow and
    the bottom line when she started the company in 1995. "I really lost money for
    a very long time and we couldn’t figure out why," Belasco said. "There were
    certain hidden costs we just weren’t seeing." Still, Good Fortunes has grown
    to do just under $5 million in annual sales. "My drive and determination was
    what kept me in business," she said. "I could’ve used some basic tools at the
    beginning that probably would’ve gotten me here a lot faster."

  5. Overcome distractions and designate a space in the
    house for business activity.
    "Carve out a space where you actually go,"
    said Charles Matthews, executive director of the University of Cincinnati’s
    Center for Entrepreneurship in Ohio. The kitchen table doesn’t cut it, he
    said. "Select a location that’s exclusively devoted to your business. It
    doesn’t have to be huge but it has to be effective and efficient, especially
    if you have clients visit your office."

  7. Be your first investor and keep funding sources close
    to home at first.
    Start with family, friends and home equity before
    seeking angel investors or venture capital, Monosoff said. "You have to
    believe in what you’re doing with conviction, and you have to invest in
    yourself with education and time and money before you can expect other people
    to support what you’re doing."

  9. Consider entering contests and business-plan
    competitions that can help fund and guide your business.

  11. If you have trouble securing a bank loan, consider
    applying to the SBA or microlending organizations.
    Monosoff recommends
    sites such as
    , and, which are
    run by nonprofit organizations that offer loans up to $25,000, plus coaching,
    she said. "To have that combination of the funding to give you the seed money
    and the mentoring is just invaluable."

  13. Outsource high-level business functions such as
    accounting if you don’t have the background or time to do a competent job.

    "A lot of accountants and attorneys will give you a consultation for free,"
    Monosoff said. "Be sure to ask that before you go." Ask for and check
    references before turning over the bookkeeping, Nemeth added.

  15. Ask family for support or consider hiring someone to do
    the domestic work if you feel overwhelmed.
    Relinquishing tasks such as
    child care, housecleaning, cooking and grocery shopping can help you carve out
    time to focus on the business. If you can’t afford to pay for help, look for
    programs offering free activities for kids in your area. Contact your local
    Chamber of Commerce.

  17. Have an exit strategy. Can you sell the
    business, pieces of it, or license the product if you no longer want or can
    afford to continue?

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