I work in advertising, but have several clients who are moms who work from home with various companies- here is the best advice I can give you:
1) A LOT of people are trying to bring in extra income right now this way. I literally get hundreds of calls each month from people starting this type of business and I can usually tell very quickly who can make it and who can't.
The people who succeed at it set up a business plan, are organized and treat it like a 'REAL' job. Have some money set aside for start-up costs and don't expect to make a thousand dollars your first month, no matter what you are told. It's possible, but not likely. You need to build up your clientele steadily- it just doesn't happen all at once.
2)'Luxury' items are not doing as well- scented candles, jewelry, etc. Moms want to pamper themselves, yes, but the reality seems to be that even those smaller luxuries are just not affordable for a lot of families right now.
3)The Home based businesses that I see doing really well right now are things that people need and use everyday: Mellelucca (cleaning and household products) Pampered Chef (cooking pans and supplies).
The exception to this rule is Mary Kay cosmetics, but there is a reason- I have a couple of clients doing really well with them, because they have both built up loyal clients who automatically reorder from them instead of buying makeup at the drugstore. As one rep pointed out to me: "the great thing about makeup ( or cleaning products too) is that you use it up. You will always eventually need to get more!"
4) Data entry is another thing entirely- if that is what you like to do, I would recommend getting into medical billing. A lot of places let you work from home and although it can be difficult to break into, once you establish a good relationship with a hospital, doctor or dentist's office or clinic, it can be a steady and very decent paycheck. If data entry is your strength-play to it! Take a refresher course at a community college in your area, type up some nice sample patient records, revamp your resume just like you would for an in-office job and start taking it around to companies.
Good luck- working from home is getting more and more common. You have to be able to manage yourself and your own time, but it is so rewarding!