Home based businesses run the whole range from scam to legitimate. Almost everyone has received an email claiming one can be an overnight success for a small (or sometime large) one time investment. Needless to say, most of those emails go right into the trash folder.

How does one find a real legitimate and profitable home based business? Over the years, three basic principles have applied for starting any business and they hold true for home based businesses too.

The first key to finding a profitable home based business is locating a product or service that is in demand. This is probably the most obvious step, but it is definitely the most overlooked step too.

The first thing most people do is pull out a calculator and a sheet of paper to start figuring out how much income they can make. The first step should be looking at the product or service.

One of the best ways to see if the product or service deserves further consideration is to make a list of all the features and benefits. The benefits should be numerous and unique if possible. As the number of benefits increases, the broader the market will be for the products or services.

The second key to finding a profitable home based business is evaluating the competitive landscape. The list of features and benefits one made earlier will pay off here. Google makes this step very easy and quick now.

Simply go down the list of features and see what shows up in Google. A second time through the list pairing benefits with features should help one fine tune the research process. A pattern should start emerging showing that there is either a lot or no competition.

If there is strong competition for that product or service, it should become evident whether the product or service in question has a unique twist or special pricing that allows one to be successful. If the product or service is over-priced or not unique, it is time to start looking for the next program to evaluate.

The third key to finding a profitable home based business is looking at the current marketing system. A proven marketing system is worth it's weight in gold. Most people looking at a home based opportunity lack sales and marketing training. It is a skill set that takes time to learn and starting a business while learning sales and marketing is very difficult.

A customizable website, advertisements, testimonials, sales letters, postcards, flyers, business cards and training on how to use these assets are necessary for a basic marketing system. If these do not exist, it takes lots of time and money to create them. If the product is unique and has a competitive advantage, it may be worth the time and money to create the collateral. Otherwise, it is time to start evaluating another product or service.

In summary, a good home based business is one built on good business principles. Sound principles apply to a $500, $5,000 or $5,000,000 business. If the business does not meet these principle tests, it is time look for another business to evaluate.