Best Home-Based Business Ideas

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Doesn't that require the entrepreneur to have education or some special training?

Yes, you do need to know about the federal laws that cover debt collection and small business, and those specific to your state and any other states where you'll be doing collections. There are also laws that are specific to home-based businesses and what they can do vs. what office-based businesses can do in terms of debt collection. The best way to familiarize yourself with the whole arena might be to get a job working for an established debt-collection agency for a while. That's also a good way to figure out whether it's something you are good at and enjoy doing.

Related to that idea is another outsourced service: doing background checks for employers who are considering potential hires. Small businesses with limited resources understand that pre-employment screening is becoming mandatory because of security concerns and issues like workplace violence. But they don't have a human resources department that can do this. So they are turning to background-check companies to handle reference checking, criminal background investigations, and due diligence. This business is ideal for startups who want to operate from home and provide a vital service to companies. Again, they will need to understand the legal requirements involved, particularly those having to do with privacy.

Here's another idea that you think is going to pop in 2007: pet sitting.

Right. Providing companionship for pets while people are out of town is another great home business idea that doesn't require specialized education, just a love of animals. People don't like to keep their pets at veterinary clinics in a cage, but they may be reluctant to impose on their friends and neighbors if they travel a lot. There's a $34 billion-a-year industry in pet services in this country, and 135 million dogs and cats in the U.S., so again we know there's a huge market out there.

Digital photography also provides what you think might be a huge market in "scrapbooking." But hasn't that trend already peaked?

You're right that people have been teaching scrapbooking workshops and selling products for several years now. But our idea is a twist on that, as an opportunity for the home-based entrepreneur to market herself as a professional scrapbook artist. The reality is that we all have these digital cameras that take beautiful pictures, but they're all stuck online or in a computer or a camera and nobody ever looks at them.

Also, most of us don't have the time or the talent to download the photos and put them together to make a tangible memory or a gift for a relative or friend. Someone creative who has done this for herself as a hobby could turn it into a business. We suggest they get started by doing things like donating their services to their kid's school as part of an auction, or teaching a summer class through a community college or local recreation center. Once they can show potential customers their work, those people will hire them to do the same thing with their own photos. It's a great gift business for holidays and birthdays.

Finally, you also recommend that creative types get into the business of providing children's art education.

Yes. The tutoring market alone is around $4 billion annually, so home-based businesses that create products or services aimed at educational companies should find a lot of customers. Schools long ago reduced art budgets, but parents are recognizing that creativity and innovation are important skills for their kids to have. And art, music, drama—these all foster those kinds of skills.

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.