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Yesterday, in Part1, I discussed the “safe” and counter-cyclical occupations for the unfolding economic depression. Today, I’d like to talk about one specific approach: self-employment with a home-based business.

I posted most the following back in late 2005, but there are some important points that are worth repeating:

The majority of SurvivalBlog readers that I talk with tell me that they live in cities or suburbs, but they would like to live full time at a retreat in a rural area. Their complaint is almost always the same: “…but I’m not self-employed. I can’t afford to live in the country because I can’t find work there, and the nature of my work doesn’t allow telecommuting.” They feel stuck.

Over the years I’ve seen lots of people “pull the plug” and move to the boonies with the hope that they’ll find local work once they get there. That usually doesn’t work. Folks soon find that the most rural jobs typically pay little more than minimum wage and they are often informally reserved for folks that were born and raised in the area. (Newcomers from the big city certainly don’t have hiring priority!)

My suggestion is to start a second income stream, with a home-based business. Once you have that business started, then start another one. There are numerous advantages to this approach, namely:

You can get out of debt

You can generally build the businesses up gradually, so that you don’t need to quit your current occupation immediately

By working at home you will have the time to home school your children and they will learn about how to operate a business.

You can live at your retreat full time. This will contribute to your self-sufficiency, since you will be there to tend to your garden, fruit/nut trees, and livestock.

If one of your home-based businesses fails, then you can fall back on the other.

Ideally, for someone that is preparedness-minded, a home-based business should be something that is virtually recession proof, or possibly even depression proof. Ask yourself: What are you good at? What knowledge or skills do you have that you can utilize. Next, consider which businesses will flourish during bad times. Some good examples might include:

Mail order/Internet sales/eBay Auctioning of preparedness-related products.

Locksmithing

Gunsmithing

Medical Transcription

Accounting

Repair/refurbishment businesses

Freelance writing

Blogging (with paid advertising) If you have knowledge about a niche industry and there is currently no authoritative blog on the subject, then start your own!

Mail order/Internet sales of entertainment items. (When times get bad, people still set aside a sizable percentage of their income for “escape” from their troubles. For example, video rental shops have done remarkably well during recessions.)

Burglar Alarm Installation

Other home-based businesses that seem to do well only in good economic times include:

Recruiting/Temporary Placement

Fine arts, crafts, and jewelry. Creating and marketing your own designs–not “assembly” for some scammer. (See below.)

Mail order/Internet sales/eBay Auctions of luxury items, collectibles, or other “discretionary spending” items

Personalized stationary and greeting cards (Freelance artwork)

Calligraphy

Web Design

 

Beware the scammers! The fine folks at www.scambusters.org have compiled a “Top 10” list of common work-at-home and home based business scams to beware of:

10. Craft Assembly
This scam encourages you to assemble toys, dolls, or other craft projects at home with the promise of high per-piece rates. All you have to do is pay a fee up-front for the starter kit… which includes instructions and parts. Sounds good? Well, once you finish assembling your first batch of crafts, you’ll be told by the company that they “don’t meet our specifications.”
In fact, even if you were a robot and did it perfectly, it would be impossible for you to meet their specifications. The scammer company is making money selling the starter kits — not selling the assembled product. So, you’re left with a set of assembled crafts… and no one to sell them to.

9. Medical Billing
In this scam, you pay $300-$900 for everything (supposedly) you need to start your own medical billing service at home. You’re promised state-of-the-art medical billing software, as well as a list of potential clients in your area.
What you’re not told is that most medical clinics process their own bills, or outsource the processing to firms, not individuals. Your software may not meet their specifications, and often the lists of “potential clients” are outdated or just plain wrong.
As usual, trying to get a refund from the medical billing company is like trying to get blood from a stone.

8. Email Processing
This is a twist on the classic “envelope stuffing scam” (see #1 below). For a low price ($50?) you can become a “highly-paid” email processor working “from the comfort of your own home.”
Now… what do you suppose an email processor does? If you have visions of forwarding or editing emails, forget it. What you get for your money are instructions on spamming the same ad you responded to in newsgroups and Web forums!
Think about it — they offer to pay you $25 per e-mail processed — would any legitimate company pay that?

7. “A List of Companies Looking for Homeworkers!”
In this one, you pay a small fee for a list of companies looking for homeworkers just like you.
The only problem is that the list is usually a generic list of companies, companies that don’t take homeworkers, or companies that may have accepted homeworkers long, long ago. Don’t expect to get your money back with this one.

6. “Just Call This 1-900 Number For More Information…”
No need to spend too much time (or money) on this one. 1-900 numbers cost money to call, and that’s how the scammers make their profit. Save your money — don’t call a 1-900 number for more information about a supposed work-at-home job.

5. Typing At Home
If you use the Internet a lot, then odds are that you’re probably a good typist. How better to capitalize on it than making money by typing at home? Here’s how it works: After sending the fee to the scammer for “more information,” you receive a disk and printed information that tells you to place home typist ads and sell copies of the disk to the suckers who reply to you. Like #8, this scam tries to turn you into a scammer!

4. “Turn Your Computer Into a Money-Making Machine!”
Well, this one’s at least half-true. To be completely true, it should read: “Turn your computer into a money-making machine… for spammers!”
This is much the same spam as #5, above. Once you pay your money, you’ll be sent instructions on how to place ads and pull in suckers to “turn their computers into money-making machines.”

3. Multi-Level Marketing (MLM)
If you’ve heard of network marketing (like Amway), then you know that there are legitimate MLM businesses based on agents selling products or services. One big problem with MLMs, though, is when the pyramid and the ladder-climbing become more important than selling the actual product or service. If the MLM business opportunity is all about finding new recruits rather than selling products or services, beware: The Federal Trade Commission may consider it to be a pyramid scheme… and not only can you lose all your money, but you can be charged with fraud, too!
We saw an interesting MLM scam recently: one MLM company advertised the product they were selling as FREE. The fine print, however, states that it is “free in the sense that you could be earning commissions and bonuses in excess of the cost of your monthly purchase of” the product. Does that sound like free to you?

2. Chain Letters/Emails (“Make Money Fast”)
If you’ve been on the Internet for any length of time, you’ve probably received or at least seen these chain emails. They promise that all you have to do is send the email along plus some money by mail to the top names on the list, then add your name to the bottom… and one day you’ll be a millionaire. Actually, the only thing you might be one day is prosecuted for fraud. This is a classic pyramid scheme, and most times the names in the chain emails are manipulated to make sure only the people at the top of the list (the true scammers) make any money. This scam should be called “Lose Money Fast” — and it’s illegal.

1. Envelope Stuffing
This is the classic work-at-home scam. It’s been around since the U.S. Depression of the 1920s and 1930s, and it’s moved onto the Internet like a cockroach you just can’t eliminate. There are several variations, but here’s a sample: Much like #5 and #4 above, you are promised to be paid $1-2 for every envelope you stuff. All you have to do is send money and you’re guaranteed “up to 1,000 envelopes a week that you can stuff… with postage and address already affixed!” When you send your money, you get a short manual with flyer templates you’re supposed to put up around town, advertising yet another harebrained work-from-home scheme. And the pre-addressed, pre-paid envelopes? Well, when people see those flyers, all they have to do is send you $2.00 in a pre-addressed, pre-paid envelope. Then you stuff that envelope with another flyer and send it to them. Ingenious perhaps… but certainly illegal and unethical.

From all that I’ve heard, most franchises and multi-level marketing schemes are not profitable unless you pick a great product or service, and you already have a strong background in sales. Beware of any franchise where you wouldn’t have a protected territory. My general advice is this: You will probably be better off starting your own business, making, retailing, or consulting about something where you can leverage your existing knowledge and/or experience.

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In closing, I’d like to reemphasize that home security and locksmithing are likely to provide steady and profitable employment for the next few years, since hard economic times are likely to trigger a substantial crime wave. After all, someone has to keep watch on the tens of thousands of foreclosed, vacant houses. (If not watched, then crack cocaine addicts, Chicago syndicate politicians, or other undesirables might move in!)