Many successful businesses get started from home. Starting a home-based business offers many advantages, including:
And much more. The freedom that comes from running a home-based business cannot be compared to working as an employee.
A home-based business offers a great deal of flexibility. However, home-based businesses are still subject to a number of rules and regulations. In addition, some home-based businesses fail to make money.
Starting a business involves planning, making key financial decisions, and personal commitment. The good part about starting a home-based business is that you don’t have to quit your present job until your business is on the solid ground and is successful. You don’t have to rent office space or hire people. Even some of the very successful businesses are being run from home. If you need help, you can always contract out.
The first step is to develop a well-thought-out business plan that addresses key factors. Here are the steps to help you make better decisions:
1. Type of Business
Gather information about the type, nature, products or services of your business. If no business ideas are coming to your mind, think about some of the tried and true home-based business types, such as word processing, desktop publishing, self-publishing, consulting, business coaching, counseling, web designing, graphic designing, interior designing, resume writing service, tax preparation, copywriting service, proofreading service, etc.
You also need to know what you enjoy doing. If you don’t possess personal skills, you should be willing to spend time to learn and to educate yourself. Remember that any business requires marketing, promotion, and advertising. The more you know about direct-response copywriting and marketing, the more successful your business can become.
2. Know Your Competition
You should check out your competitors on both online and offline. If you plan to provide a service locally, check the yellow pages and go online to see how many other businesses are offering the same service or product and at what prices. What type of promotion are they using? Is there enough business left for you? Can you make money?
If you plan to work online which you should if you plan to start almost any type of business, you’ll have to compete in a very crowded market. How do you plan to differentiate your business in order to successfully compete? What is your unique selling proposition? Better or cheaper product or service?
Remember that competition is good for your business. They already have paved the way for you. You can learn by carefully observing your competitors. If you look around, you’ll notice when one fast food store open in one area, others open their store in the same area because there’s a hot market in that location.
3. Write a Business Plan
Your business plan for short-term and long-term will help you discover how you will start and run your business successfully. It will also help you think of items that never crossed your mind. If it did, now you have to determine how to resolve them before you start. A short-term plan is critical, but your long-term plan may change due to many factors.
At minimum, a business plan should include the following:
4. Planning Your Business
Can you come up with a plan to make this business successful? How much time can you commit to your business? Can you estimate how much profit you can make for your time and investment? How much your time and your product worth, and how much people are willing pay for that?
5. Start-up Costs
Fortunately most home-based businesses don’t require a large amount of money to start. You will need a computer, word processing software such as Microsoft Word, and an Internet connection. However, you still need money for promotion and advertising for your target market to know your business exist. Your start-up funding could come from your personal savings, small business loans, or home equity loans.
6. Name of Your Firm
Once you have a clear idea of the type of business you want to start, you have to come up with a name for your business. The business name should be unique, sound professional, and relate to the type of business.
Before starting your business you will need to find out whether your home is zoned for the type of business you want to conduct. Check with your city’s zoning office and ask to see a copy of ordinances that apply to home-based occupations. Most rules limit the number of employees to reduce traffic or business size within the neighborhood. Others may prohibit delivering goods to your home-based business.
If you live in a planned residential area with a Homeowners’ Association, be sure to read the Homeowners’ Association Covenants, Conditions, and Restrictions. The rules cannot prohibit you from using your home to do business, but can limit activities that affect your neighbors, such as customer parking, added traffic, noise, and placing a business sign to display your business.
You should have a space in your home dedicated to your home-based business work area. Think about your current living space and see whether you can dedicate an area appropriate for doing business. Your extra room can easily be converted for your office space.
You should also think about the supplies you’ll need and include them as your budget for your start-up expenses. If you need extra space for your inventory items, you can use your garage or rent storage.
If you are meeting with clients on a regular basis or have to hire part-time or full-time employee, you’ll project a more professional image if you meet in an office setting.
9. Legal Barriers
Some areas have certain rules and regulations, depending on the type of business you plan to start. Check into those at your town’s city hall before investing time and money in your business.
10. Items for Your Business
Before operating your business, think carefully about what you need to efficiently run your business. For example, if you’re running an online business, think about upgrading your computer and Internet speed. You will also need a website or blog. You can design a simple website or blog using WordPress or hire a freelancer to design it for you. You may also need a printer. Fortunately laser printers are very affordable.
It is a good idea to rent a post office box to use as your business mailing address. In addition, you may need to set up a dedicated phone line because most businesses will require contact with customers over the phone.
11. Legal Structure of Your Business
Decide on the legal structure of your business to determine which form of ownership is best for you: Sole proprietorship, partnership, Limited Liability company (LLC), corporation, S corporation, or nonprofit.
You may need to consult a business attorney to determine what’s best for your type of business. Most businesses start as a simple sole proprietorship and may later change it to S corporation or Limited Liability Company (LLC)
12. Registering Your business
You must comply with your state’s law. Sole proprietorship is the simplest form of business structure. However, you still need to register the fictitious or DBA with county or the state government office.
Depending on your business, you may need to register the name. You may have to advertise your business DBA once-a week for a month before you can be allowed to open a business checking account and operate your business.
Some types of home-based businesses may require additional professional licensing from relevant state department. For example, if you plan to operate a daycare, most states require that you be a licensed child care provider. Make sure to check with your state department regarding any licensing requirements.
You will have to pay taxes for your business income. Open a business account to separate your business expenses and income from your personal.
If your business is partnership or corporation, you’ll need to apply for employee identification number (EIN) with the Internal Revenue Service. If you plan to work as an independent contractor or run your business as sole proprietorship, you can use your Social Security number. In order to be sure, consult your CPA or a business attorney.
Remember that running a business out of your home comes with many tax benefits, such as deductions for items used for your business, including the space exclusively dedicated for your office space. It is best to work with a qualified CPA to do all your taxes and provide you with detailed information about your deductions.
You’ll have to carry insurance to protect yourself and your business against liability. If you have products you store in your home, you may want to ensure they are covered in case of theft or a disaster.
Visit with your local insurance agent to determine if you need to carry any special insurance for your home-based business. You probably need to purchase a rider to protect your business assets.
15. Your Business Identity
Most businesses cannot compete effectively without a website. Almost everyone first go online to check for anything. Your website can promote your business and let people know it exist and add credibility. Your website can be a simple brochure to identify your business and the types of service or products you offer along with customers’ review.
You can also use social media to spread the news about your business. You can use social media like Facebook to promote your business and link it to your website. LinkedIn is an excellent social media to connect with other business people.
If you meet with clients, be sure to have business cards printed and ready. Your business card can show your name, title, business name, phone number, e-mail, and website address. You can check with office supply store or search online to check qualities and prices.
16. Lunch Your Business
When you have everything ready, launch your business and let the world know you’re open for business. Be sure to check your website to make sure everything running as it should.
17. Working Schedule
Running a home-based business can be very rewarding, but it is going to need some work. Most home businesses start out as a one-person or with the help of your immediate family. However, what you cannot accomplish, you can always outsource jobs.
In any case, you have to set schedule in order to run and manage your business, and stay away from your office space when you’re not working.
When you work for yourself, there’s some flexibility. However, if you want your business to be profitable, you have to exercise some discipline and set schedule. Consider how many hours per day you’ll need to run your business successfully. Plan ahead to work during your most productive hours.
18. Promotion and Advertising
No business can prosper without effective marketing. To bring more customers, you’ll have to advertise to your target market. If you’re working locally, advertise in local newspapers and local radio stations. If you work online, you’ll need to educate yourself about online marketing, search engine optimization and pay-per-click advertising.
Even if you outsource your online marketing, which could be expensive, you still need to have some ideas about online marketing and effective advertising in order to earn good profits from your business. Most businesses fail due to lack of knowledge about marketing and advertising.
Self-education is a must for any business owner, disregard of the type of business. Not only you need to manage your business properly, but you should learn how to market your business in order to succeed.
19. Build Your Customer Base
You have to provide good services or products. Always try to be honest with your customers. One key to success in your business is not only give what customers pay for it, but give more. Strive to build large loyal customers by responding to them and their needs.
If you’re honest, upfront, and provide the best service you possibly can, your customers will recommend you to their friends if they’re truly satisfied with your work. Remember that your business exist because of your customers, so treat them with optimum respect and give the best service you can.
20. Establish Professional Business Practices
From the beginning, try to do everything right. Make it clear to family and friends that you have working hours and stick to your schedule.
Keep track of business expenses and income and keep an accurate record of everything. You’ll need to know where your business is headed. In what areas to spend time or money and pitfalls to avoid? In addition, keeping accurate records will help when it comes to pay your taxes. Good luck.
By Paul Ziglar – 2019
Copyright © 2019 Allied Publishing
For additional articles written by Paul Ziglar, see alliedpublishing.com/home-based-business. John Wright is the author of How to Start and Operate Your Own Profitable Business At Home.