Do you dream about quitting your job and starting a home business of your own? Are you stymied, like I was, trying to figure out what kind of business to set up? Here are a few tips to help you separate your dream home business from the nightmares:

1. Do Something You Know. The well-known investment advisor, Peter Lynch, recommends that you buy stocks of companies you know. That’s a good way to think about your home business.

For example, if you’re an administrative assistant, you could become a “virtual assistant,” offering your services via phone, email, and fax to other folks with home businesses. Try out the idea by spending some evening and weekend time online, helping out someone you know with a small business. Even if you have to barter your time, you’ll gain valuable experience.

Basing your business on something you know means you can:

• Avoid the learning curve.
• Use your contacts.
• Gauge the workload and fees.
• Show a proven track record.
• Set up your business more quickly and turn show a profit faster than a brand-new line of work.

The danger? Too much of the same old, same old. You don’t have to love every aspect of running your business, but you must do something you enjoy. So if you hate the line of work you’re in now, choose another approach.

2. Cash in on a passion or hobby. Imagine feeling more motivated, happier, and richer -- just by focusing on one of your real interests. Doing something you love can be tremendously rewarding. Some entrepreneurs find themselves asking, “You mean I can get paid to have this much fun?”

Any hobby can become a business: cooking, flying, fishing, sports, stamp collecting, carpentry, electronics, music ... . Some pay better than others, and some are easier to start than others. As long as you remain open-minded and optimistic, you can have fun while you try some out.

Be careful, though. Turning your hobby into a profit-making venture can quickly turn fun into a burden. Find a way to invest a minimum amount of time and money into giving it a shot. If you aren’t having a ball, you can drop the idea without regret, or modify it without too much cost.

For example, once I thought about starting a greenhouse business, so I volunteered to help transplant seedlings at a local nursery. In exchange, I got all the plants I wanted, answers to all my questions, and a lot of hands-on experience. Turns out it wasn’t the business for me, but it didn’t cost me anything, and I’ve put my greenhouse expertise to use in my own backyard.

3. Try something new. Maybe you’ve always been chained to a desk, longing for a job outdoors. Perhaps you want to try something more creative than what you’re currently doing. Or maybe you’re just itching for a change.

While starting a completely different business offers tremendous opportunities for both personal and professional growth, it’s obviously harder than staying with something you know. You won’t get referrals from people already familiar with your work, and you’ll have to do a lot of research to get up to working speed.

But if you keep at it, you may ultimately develop a brand new set of skills – and your dream business. Find low-cost ways to sample some alternatives. For example. say you want to open a store. Ask some store owners to let you be shopkeeper for a day.

Want some more tips on setting up a business? Click here. Let us know about your dream business!