Most WAHMs that I know do Pampered Chef, Mary Kay or run small businesses making baby/children things (mostly slings, accessories, etc.).
I'm in the same boat as you. Desperately want to stay home with my little one because I know its best. But we won't be at that point financially for a couple of years.
Most of the moms that I know that WAH do a MLM type of business. I sell Southern Living, but mostly as a hobby. I have a very good friend that sells Tupperware that makes darn good money. She has 4 kids and works around their schedule. MLM can really work for you--if you work it as a business. I would stick with a well-known company, b/c they already have the business module that works.
It's not just you. A whole LOT of people are interested in this. I hope we see some good suggestions.
Used to work at home (I am a programmer). I recommend going through a big name company that you recognize.
As nuts as it sounds I always sort of wanted to hand raise exotic birds or ball pythons. They are both demanding of your time and have their requirements. Plus you'd have to get going very well to switch to actually making a living from it.
Do you own your home, if so do have a large backyard?
I've worked from home for many years. Currently in worldwide marketing for a huge computer corporation; a large percentage of their gigantic employee force works from home, as well.
Companies save a LOT of money, and workers tend to be far more productive (in a sense, I'm ALWAYS 'at work'). I will never go back to a cubicle. Ever.
Highly recommend it.
At least in my profession, you can not look at it as an alternative to daycare. This is especially true with young children. Just because my office happens to be in my spare bedroom, does not mean that I still do not have to work 40 hours a week, and I do have a quota that must be met (I am on my morning break right now). Another piece of advice, Make sure you are working for an established company. There are many "fly by night" companies out there. The company I work for has been in business for 20 years, they have established contracts, they pay all of expenses, provide computer and material, etc. and they carry liability on me.
Good luck!