Lesson 3: Work from home

Small Biz Booster: Founded by Yvonne Shortt with $865

Last June Yvonne Shortt left a six-figure salary at American Express to launch a marketing firm from the cramped, toy-strewn basement of her home in the Queens section of New York City.

In a mass e-mail to people she had met through networking groups and a previous venture, she introduced Small Biz Booster, which provides marketing advice to small companies. The pitch promoted services ranging from market research to direct mail at prices starting as low as $500 per month. Soon she had eight clients and was hiring a small army of interns and part-timers to help her.

A year later, Shortt has 25 regular accounts, averaging $2,150 a month. She now has five full-time employees, who, like Shortt herself, work from home. "My business is virtual," says Shortt, "and I hope to God it will always be that way."

But don't you dare call Shortt a "lifestyle entrepreneur." Though her original goal was to spend more time with her kids, she is also highly ambitious. In 10 years, she hopes to have a $25 million firm "with New York, Chicago, and Los Angeles on the letterhead," she says. At that point, she figures she'll buy

the house next door and, zoning regulations permitting, run the company from there.

Labor Strategy

In launching Small Biz Booster, Yvonne Shortt staffed her business in stages:

Her Husband

Richard West, a software consultant, spent 30 hours a week with Shortt for the first nine months. He's since taken a new full-time job and scaled back his role.

College Interns

Next, she hired local students who worked 10 to 12 hours a week for credit and a $50 stipend.

Part-Timers

These are, by and large, women -- friends and friends of friends -- who left the corporate world to start families and value flexible work schedules. Shortt pays them $12.50 to $50 an hour.

Full-Timers

Shortt recently hired five employees -- including an L.A. rep, a marketing specialist, and a salesperson -- to handle increasingly complicated work. "We were doing too much work with the students," Shortt says. Full-timers work from their homes as well, and she plans to hire three more people this summer.

Her One Luxury

"Some people buy Mercedes-Benzes," says Shortt. "For me, it's my Steinway." The Model S baby grand (retail: $40,600) is the focal point of her living room. When they visit her home, workers sometimes take turns playing it.

Satellite 'Office'

Shortt thinks her strategy can be replicated outside the New York area, and plans to hire affable, well-connected, and entrepreneurial representatives -- that is, people like herself -- starting in Los Angeles.

The challenge is to make sure that her agents aren't so entrepreneurial that they walk away with the business themselves. To that end, she wants the L.A. rep to handle client relations primarily, while the New York office maintains control over functions such as cold-calling, research, and writing press releases. "We want to keep the core work here," says Shortt, though she admits, "we're still figuring it out."

Read on: Lesson No. 4