Money is usually the biggest obstacle that people face when wanting to start a home based business. To determine if you can afford to start a home based business now, follow these three steps.

Step 1: What do you own already?

Make a list of what you own (these are called your "assets"). Include bank accounts, real estate equity (this is the difference between what you owe on a piece of real estate and its current market value), retirement accounts, and other assets.

Step 2: Figure out how to use your existing assets

Once you have your list of assets, figure out how you might use them to help you finance your business. Do you want to use your savings? Sell anything? Use assets as collateral for a loan?

Step 3: Figure out startup costs

"Start-up costs" refers to what its going to cost you to start your business and run it for the first six months. Why six months? Because that's the average amount a time it takes a home based business to get organized and start bringing in money. Keep in mind that your start-up costs need to include at least a minimal salary for you, because you do need to continue to pay the mortgage for that home based business!