How to start a home business: The 4 VRIO questions

When considering how to start a home business, many people are tempted to sign up to suspicious schemes promising high earnings with little work, or multilevel marketing companies selling online products.

Forget all that!

As with any business, you need to discover something that’s valuable to other people. Something you can provide to them with the resources you have.

Usually, for those who are considering a home-based business, resources are not exactly plentiful.

And this requires, among other things, planning.

So, you might be a professional, like a lawyer, accountant or decorator, or a professional who wants to become a consultant, like a programmer, engineer, or marketing analyst. In any case, you need to carefully study how to give your goods or services a perception of value.

What can you offer from the environment of your home office.

You could knit hats and sell them online? Write articles? Perform private language, education or musical tutorials? Create a culinary blog? Make confections at home and sell them to local cafes and businesses?

The possibilities are numerous. And this is one of the problems for most people who start thinking about how to start a home business:

They think about what they are going to do and not about what is valuable to their customers!

Therefore, we are going to pass on to you a renowned methodology, which is even used by companies: the VRIO method of discovering your great talent and how to open a home business with it.

Let’s check it out!

See also: Business Decision Making Process: Rational and Intuitive

How to Start a Home Business: The VRIO Method

Created by Professors Jay Barney and William Hesterly in their book Strategic Management and Competitive Advantage the acronym VRIO summarizes 4 criteria that companies or individuals wishing to open a home-based business should use to assess its feasibility:

  1. Value
  2. Rarity
  3. Imitability
  4. Organization

So, rather than looking for an activity, look for something valuable, rare and difficult to imitate.

You must also be able to organize it inside your home, and it needs to be something you know how to do and can turn into a business.

So, discover your VRIO, your talent, and the rest will be much easier.

See also: What are some of the challenges faced by small businesses?

Let’s get to know each of these concepts a little better

To do this, let’s use 3 home business examples:

  • A lady who makes cakes, via internet orders and delivers them in her neighborhood
  • A structural engineer who wants to become a project consultant and
  • A Violin teacher who wants to give private lessons at home.

Which of these situations has VRIO?

1- Value

In this case, value doesn’t mean expensive. It refers to a value your future customers perceive.

Chocolate cakes are not overly expensive, but they have a value to people who want to throw a party.

The engineer’s opinions are certainly expensive, but how will customers know if they’re valuable? If this is a famous engineer, or a renowned professor, then yes they have value.

In fact, the violin teacher (and the cake maker) must also achieve this value.

Let’s start with the assumption that everyone is proficient in their areas and their services have value.

2- Rarity

It’s clear, cakes are very common. Their ingredients and recipes are available to everyone and with a little effort it’s possible to become a good pastry chef.

Structural engineers and violin teachers are rarer skills, one point for both!

3- Imitability

To know how to start a home business, you need to know if your products or services are easy to imitate.

Surely the cakes are. Unless they have a secret special recipe (like KFC fried chicken) or have a desired brand, such as Nespresso, for example, cakes are easy to imitate.

Making structural reports is a little more difficult to imitate and to be a violin master, even more so.

4- Organization

By organization, we mean whether it’s organizable, whether processes can be modeled in a possible way to produce what you want to sell.

For example, it shouldn’t be difficult to organize a small-scale home-made cake production.

But what if the business grows, is it even possible to keep the business at home?

In addition, depending on the laws of the city, you may not be allowed to sell food products without licenses or special facilities.

As for the engineer, is it possible to make reports and form opinions without visiting work sites? And you’re going to need special analysis software, do you have enough money to purchase it?

Ultimately, giving violin lessons at home seems like something very easy to organize.

So the only ‘how to start a home business’ idea that caters to the 4 VRIO criteria is giving violin lessons.

Giving violin lessons is Valuable, Rare, Inimitable and Organizable.

To help you test your home business ideas, use this table that rates each ideas competitiveness in:

  • Disadvantage
  • Parity
  • Temporary advantage
  • Unknown advantage
  • Sustainable advantage

The first two and the fourth are not competitive, the third can be improved or used for a short time only.

The last one is the best option.

Valuable? Rare? Hard to copy? Organizable? Competitiveness
NO Disadvantage
YES NO Parity
YES YES NO Temporary Advantage
YES YES YES NO Unknown Advantage
YES YES YES YES Sustainable Advantage


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