Debra Cohen, one of the moms featured in Mom, Incorporated, initially wanted to contribute a few hundred dollars a month to her household income so she could afford to stay at home full-time with her infant daughter. Today, she not only owns Home Remedies of NY, Inc., but she’s created a nationwide network of independent referral companies using her business model. We asked her to tell us more about her company.
MomIncorporated: Provide a quick synopsis of the steps you took to get the business going.
Debra: First, I informally interviewed a few contractors and homeowners in my area to see if they’d be interested in using this type of service. Once I felt confident about my idea, I brainstormed a business name. Once I came up with the name “Home Remedies,” I knew there was no turning back. Naming my business somehow gave it an identity of its own.
I interviewed lawyers, accountants, insurance agents and contractors to get their input on liability issues and the best way to structure my company. I also asked them if they’d be willing to be a part of my Board of Advisors so that I could turn to them with questions as I launched my business.
With a $5,000 loan from my husband’s retirement savings plan, I created my legal structure, bought a computer and set up my home office in my basement (adjacent to my daughter’s playroom).
To build my initial contractor base, I networked with real estate and home-improvement-related professionals in my community to find reliable contractors. I screened each one of them based on the feedback I’d received from my Board of Advisors and my own research.
To create my marketing materials, I hired a retired senior citizen (who used to work as a graphic artist) to help design my logo. A colleague from my job in corporate America helped me write and design my direct-mail campaign. I did some research to find a mailing list that would target my prospective customers and, within three months, I was in business.
MomIncorporated: What were the biggest challenges you faced, and how did you overcome them?
Debra: My biggest challenges were that 1) my husband and I had just moved and were new to the community and 2) I love to decorate and renovate, but I didn’t have any technical home-improvement experience at all.
In hindsight, these were actually my biggest assets:
- Not knowing anyone forced me to get out and network.
- I realized that my area of expertise wasn’t in the technical aspects of home improvement. My contractors are the experts in their field and really don’t like third-party interference when it comes to their trade. My expertise is in sales and marketing, which is where most contractors fall short.
MomIncorporated: You’ve been in business 15 years. What has changed – and what remains the same?
Debra: Ironically, the core of my business has remained the same. This is still a people business, built on relationships with both my contractors and my homeowners.
Also, over the course of 15 years, I’ve worked through quite a few changes in the economy, and this business has remained recession-proof. People will always invest in their homes but, in a down economy, they take on more moderate projects and are a lot more careful where they spend their renovating dollars.
Also, homeowners who once thought they would upgrade to a larger home are staying put and renovating instead.
Mom Incorporated: Which is now your primary business – the referral business, or the business opportunity for others starting their own business?
Debra: I would say it’s a 60/40 split. I spend approximately 60 percent of my time consulting with new HRN owners.
MomIncorporated: What’s the difference between running the business on your own – and helping others start and run their own businesses?
Debra: Both are gratifying because I get to help people in two different ways, but I do have a passion for business and really enjoy the consulting side. Also, each HRN owner brings a unique personality to his or her business, and I find that I learn new things from them as well.
MomIncorporated: What questions are the most frequent from those who buy your startup packages?
- What happens if a contractor does a bad job? If a homeowner isn’t happy with a job, then the HRN owner’s role is to facilitate communication between the contractor and the homeowner so that the job is completed to the homeowner’s satisfaction.
- Is it hard to get contractors on board? Since there are no upfront fees, contractors are pretty open to working with my HRN.
- What size commissions should I charge? Commissions can range from 6 percent to 20 percent, depending on the size of the job. In some cases, I take a flat finder’s fee.
- How large of a market should I plan to cover? This is really a local business. Contractors don’t want to travel too far outside their immediate area for a job. The quality of the market is more important than the size, and it’s better to start local so you can keep tabs on your contractors and their jobs’ status.
- What are the operating expenses in the first year? This is a very big word-of-mouth business, and operating expenses are minimal. Basic month-to-month expenses include a phone, computer, mailing list and postage. On average, I spend about $250 to $300 per month.
MomIncorporated: What are you top tips for a mom who wants to start a home-based business?
- Chose a business that allows you to do something you love on a day-to-day basis, and you’ll have a much greater chance of success.
- Working from home can be challenging, especially if you have small children. To work efficiently and maintain a balance, try and break your day into blocks of time devoted exclusively to your business, your family and (most important) yourself.
- Owning and operating your own business requires you to wear a lot of different hats (in addition to being a mom), and it’s impossible to be an expert at everything. Outsource the tasks that don’t fall within your area of expertise, and focus on the money-making aspects of your business.