How to Start a Home-Based Business

Everyone ever interested in working from home asks themselves how to start a home based business? As the internet grows every day, there are now more opportunities to work from home than ever before. In truth, multiple industries now offer the ability for workers to work from home and even starting a brand new business is now easier than ever before. Despite this, there is still some traps that some people fall into and it can cost the future of any potential business. For this reason, we have created a comprehensive guide on how to start a home-based business. Whether you want tips for the planning stage or the actual execution, we will have it all for you here.

Ultimately, there are three main steps to starting a home-based business. First, you have to decide what you’re going to do. Second, you have to complete a whole host of different planning tasks to ensure that the third stage of ‘execution’ actually goes well. Today, we are going to break these steps down, and you should walk away feeling more confident than ever before about your business.

Stage 1 - Deciding Your Business Type

Assess Your Talents - Before jumping into a business idea, it is always wise to assess your abilities to see what you would be good at. One of the biggest mistakes that people make is choosing to go for something they enjoy. However, if they aren't good at this niche, it won't work. With this in mind, you need to sit down and honestly assess your skill set and how you can best apply it. Once you have this, then you can move towards something you enjoy because this could be the job that consumes you for the next period of your life.

Assess Your Finances - Of course, reasonable start-up costs are a huge benefit of a home-based business, but you will still need a little money. Will you need a website? Do you need a starting inventory? How will you pay the bills while having no income for the first few months? Without savings, it may be possible to apply for a business loan, and this can help to get you started. If you want to steer clear of loans, it might be worth saving up for a little while before leaving your current job. As long you consider your finances fully, you will be in a great position to be secure.

Assess the Competition - If you were to enter a particular niche, who would be your competition? How many years have they been in the industry? Is there enough demand for you to come alongside the competing businesses? As mentioned previously, there are now more people working from home than ever before, so you will need to assess your market and decide whether there is room for you. If you choose early on that, there isn’t, try and evaluate your other options as opposed to going ahead anyway. Not only do you want to review the companies in your chosen sector, but you also want to look at their prices to see if you can compete here too.

Needs of the Market - If possible, conduct a few surveys of the people in your area so you can understand the needs of your target market. If you find something that many people are requesting in your local area, you may have just found yourself a niche that you can explore in more detail. Ultimately, every good business needs to fulfill a demand that has arisen from the consumer.

Research Employment - If, no matter how far in the future, you plan to hire some employees to help with the business, you will need to study the various employment laws that exist in your area. For example, is there a minimum wage, overtime pay, benefits, certain conditions, restrictions, etc. If you aren't sure and your research hasn't been helpful, seek out professional and legal help to make sure you abide by all laws.

Keep it Simple - If you’re struggling for ideas and cannot think of where to go, why not look into some of the most basic ideas? Although tax preparation, tutoring, consulting, and web designing aren't new ideas, there is sufficient demand for those services. The reason why these are so popular is that the demand is there so why not research one of these traditional markets? Rather than a massive investment, you will find that most of these ideas require simple personal skills.

Consider Space - Finally, you need to think about how much space you will need to operate. If you just require a desk, this will be okay but what if you need to manufacture a product? Will this require machinery? Do you have the space for this machinery in your home? Especially when living with other people, this will be a consideration that could threaten to ruin your business venture so think it all through carefully.

Stage 2 - Planning Your Business

Is it Profitable? - In the first stage of planning, you need to figure out whether your business is profitable. To start, you need to know your costs, and then you need to assess how much people will be willing to pay for your product or service. Don’t forget; you need to factor in your time if you plan on making this your sole source of income. Even if you have the best business idea on the planet, there is no guarantee that the business will be profitable so this is something that has to be assessed.

For example, you could offer a unique service that people are willing to pay hundreds of dollars for. However, if each project takes you a couple of weeks, you only have space for two orders a month, and this will limit the amount of money you can earn. Even if the idea is a brilliant one, you may not be able to see it through if it isn't profitable.

Create a Plan - If your business passed the profitability test, the next step is to build a full and detailed plan. When completing this plan, you should hold nothing back and every detail of your potential business should be discussed. When starting a new home business, many choose to skip this step or only do it in a small amount of detail but this is no good. Be sure to include a list of your products or services, a description of the market in which you wish to operate, goals,unique selling point, market analysis, marketing plans, employment plans, and everything else you can think of that relates to your business.

Research Legal Barriers - Are there going to be legal barriers that prevent you from running efficiently?If there are, most will be small, but it is worth checking with your city hall before continuing because this could save you a lot of time and money. In some areas, you may find you have to have a license to run a home-based business. So it may just be something simple like this.

In addition, consider any home owners’ associations in your street or neighborhood. If you’re selling a product or service from your home, will it lead to increased traffic or noise in the area?

Consider Insurance - Again. This may only apply to some areas, but you may need special insurance when running a business from home. As soon as you sign up for a website and everything else, you become exposed, so you don’t want something to happen only to find out that you’re not covered. All it takes is a simple trip to your insurance agent or even a phone call, and they will have all the information you need.

Stage 3 - Opening Your Business

Invest - Before you start anything else, you will need to spend a little to get everything set up. Whether it is the machinery you will need, an internet connection if you didn't have one already or anything else, the initial investment should be what you planned in the earlier stages. If you are running a business purely online, it might be wise to invest in a professional computer and a faster internet connection to allow your business to run at optimum speed. Nowadays, consumers want fast-loading pages so up-to-date equipment will enable you to open the best website possible.

Legal Entity Process - When deciding how to register your business, you need to consider how many people are involved in the project. For example, most new home-based businesses register as sole traders as it is just them in the business with no partners or anybody else. However, if you plan to find a partner or even employees in the near future, you will probably have to differentiate yourself from the business much like a corporation. This way, you will not use your Social Security Number for tax purposes but rather the business’ own details.

Furthermore, you will obtain an employer identification number (EIN) from the IRS which will help to keep all your information in one place. Incorporating is always a good option to consider if you want to remove the risk of losing personal possessions should the business not succeed.

Home Office - For many, this is the exciting part because you get to set up your very own home office. Despite popular belief, it is important to set your own work space in the home because you need to differentiate work from personal time. If you want to remain efficient in the long-term, you have to find a space where you won’t be distracted by family members or pets. Whilst some people can concentrate with noise around, most of us can’t so physically separating yourself from everything else is a wise decision. If you do this, you will also be more able to add office equipment and all other costs to your expenses when it comes to tax assessment.

Phone Line and Internet Service - If your business requires contact via the phone, it isn't necessarily wise to give out your home number as you will receive a mix of personal and business calls. What’s more, your family could end up picking up to a potential client which doesn’t look very professional. For this reason, you should create a whole new business line for your customers to use. As you can tell, running a home-based business is all about differentiating from home life and business because the more you can do this, the bigger rewards you will see.

If possible, you should also look to add an internet connection that is dedicated solely to your business. Of course, you should review your needs before making any big decisions, but it could be useful if you plan to stream videos as a part of your business.

Create a P.O. Box - Again, if you will be doing quite a lot of business through physical mail, a post office box would be a splendid idea. Rather than giving everyone and anyone your home address, a post office box will look far more professional and will help to keep you protected.

Launch - Once you have completed all of the previous steps, you should be ready to open for business and it might be time to take the jump. At first, it might be tricky to pull in customers but we will help you with that in the very next step. To start though, you can try and sell to your friends and family to get going. Although friends and family should never be your target because they will eventually stop buying what you have to offer, it is a good way to check that all the procedures for sales are in place. Do you have a sales invoice drawn up? Is the P.O. Box receiving mail? Do you have an end product? Is the phone line working? Does the website process sales correctly?

Marketing - When starting a business, this is often the hardest part but it doesn’t have to be the most expensive part as many people believe. If you only have a small percentage of your budget left, you don’t have to go all out and place a TV ad. In truth, the most effective marketing comes when you target your market in unique ways. Whether it is social media, a leaflet on the local noticeboard, or even a review on the local radio show, getting your first customers doesn’t have to be a chore. Once you start to build a reputation, you will benefit from the most efficient type of free marketing - word-of-mouth.

Another activity that will only take up your time is starting a blog; by doing this, you can build a following and even guest blog on other people’s sites. If you have something interesting to offer, people will take note, and you will see your orders increase by the day.

Be Ready to Adjust - More often than not, people start with a plan but have to adjust very quickly because not everything works out as it says on paper. If you aren't willing to adapt, you will end up failing because you won’t be providing a service that is required by customers. In the early stages of your business, you have to listen to your clients and be willing to make adjustments. If you receive any negative feedback, use it as an opportunity to learn rather than getting frustrated or upset.

Build a Customer Base—As soon as you learn to adjust, you'll gain happy, returning customers ready to come back time and time again. In the opening months of your business, your first customers are important for many reasons. Treat them well and cater to their needs (even if it means going above and beyond at times). This will ensure they return. Not only do you want to keep them returning, but their recommendations are extremely important. Although it is valuable throughout the life of your business, it is perhaps most pivotal in the beginning.

Conclusion

So there we have it, a fantastically detailed guide on how to start your home-based business. If you follow this guide, you shouldn't go far wrong. Remember, starting any business will take hard work, determination, and patience. So don't give up if you believe you have a genuinely good business idea. Ultimately, it may just be that you need to adapt a little more and meet your customer's needs. If you aren't sure, ask your customers for feedback, and you will soon learn what needs improving. Good luck!