A home-based business makes you the boss.
Over the past few years, the number of home-based businesses globally has dramatically increased, primarily due to advances in technology and the need for flexibility.
The best home-based business is one that captures your passion and creativity giving you a solid foundation to succeed.
Whether it’s a side hustle or a full-time business, working from home has become an attractive option for many people. However, just like a traditional business, a home business needs lots of personal commitment and planning.
Benefits of Starting a Home Business
1. Low Risk
Home businesses carry less financial risk.
One of the biggest overheads you encounter when starting a traditional business is the cost of securing premises. Whether you are buying or renting, office space takes up a big chunk of your start-up capital.
When you start from home, you just set aside space within your home to carry your business.
Additionally, many of the usually applicable materials like computers and cell phones you need, you may already possess.
2. Personal Freedom
A home business gives you the freedom and the flexibility to work within your schedule and attend to your personal life, free from traffic and the hassle of commuting and asking your boss for time off (and running out of leave days, especially if you need to take prolonged time off).
Plus, no more dress code and set work schedule. All you need is good time management, discipline and personal drive.
So, how do you get started on a home business?
1. Assess your talents
We have millions of home-based business ideas in the market, with some industries more feasible than others. So, start your step by assessing your talents.
Your talents play a vital role in creating a successful home venture but keep in mind that the things you enjoy and your skills are different. It is critical to brainstorm on your talents, those you naturally love doing, things like making jewelry, baking, stitching, or even a professional skill.
Remember to relate your talents to your personality traits. This is vital in determining which business is suited to you. Some of the typical characteristics for successful home ventures include:
- Openness to experience
- Motivation towards achievement
- Comfort with risk
- A quick learner
To create the right path for your business, be honest with yourself as you assess your personality and talents. You will spend most of your time running up your home business, so build one you are excited to work at.
2. Examine your skills
We are all born with talents, but we develop our skills over time.
For example, a creative person can adopt excellent design, artistic, or writing skills, while a detail-oriented person may have strong organizing and accounting skills.
As you brainstorm, you manage to get a sense of which talent and skills you can turn into a viable business and which to ignore. Remember, not all talents can become successful business ideas, but combining your skills and talents creates the best foundation for a profitable business idea.
3. Determine if your idea works
Not all home-based businesses ideas can make money.
Starting a home-based business, just like a traditional one, requires considering different factors like legal restrictions, zoning, family needs, work style, personality, and licensing.
For example, it’s illegal to start an industrialized business in a residential area. Narrow down the list of business ideas while considering the above factors. Doing this leaves you with a practical business idea.
4. Conduct market research
After narrowing down on a practicable business idea, conduct market research to determine the demand for your service or product. Through this process, you understand the market needs. Keep in mind: every good business idea should satisfy and fulfill the needs of people.
Additionally, during market research, you will learn about your competitors, their pricing strategies, and whether there is enough room to maneuver and become profitable.
5. Consider financing
Think of the start-up costs before deciding to run with your home business ideas. Although the starting up capital of the home business is relatively low, you still need money.
For example, a business-like freelance writer needs minimal capital, such as internet and a computer, which you may already have. On the other hand, for a drop shipping business, you may need money for a website and hosting, packing, inventory, shipping, among others.
If your capital is limited and you don’t have enough savings, opt for home business financing options like loans.
6. Understand your local employment laws
If you plan on hiring contract or full-time workers, you need to understand the labor laws. The standard labor laws include overtime, minimal wages, required benefits, and other market compensation regulations.
7. Test your idea
Pre-testing your idea enables you to decide whether it’s a worthwhile investment.
For example, for a service-based business, opt to test the market by offering your services for free. Likewise, you may advertise or test it out on a selected group of individuals on crowdfunding platforms for products.
8. Consider your business space
Think about the working space needed for your business. For example, you may need storage space for a product selling business. Consider if your business will be displacing your family members and if your home can meet the requirements for your business before moving forward.
Ensure your home-based space and office don’t disrupt your family life.
9. Select your business name
Find a name that reflects the nature of your business.
Coming up with the right name that matches your business is one of the most important variables to a successful venture. Avoid obscure names. Choose a name that gives your customers a clue, and a clear outline of the products and services you provide.
Keep in mind that the clients can piece together the nature of your business through your business name. Remember:
- Before choosing your perfect business name, check out your competitors to ensure you don’t copy other people’s names, thus violating legal trademarks. Avoid having a business name that is too similar in the same region to avoid confusion.
- Consider the spelling and length of your business name. Keep the title short and easy. A longer name is hard for your clients to remember, while uncommon words may make your business harder to find, primarily online.
- File for legal copyrights and trademarks to protect your business name from being stolen by others.
10. Create a detailed business plan
Creating business plans lets you determine if your chosen idea can become successful. Make a detailed and viable detailed plan that includes:
- A managerial summary of your home-business venture
- Marketing strategy outlining who your ideal customers are, how you plan to reach them, and the competition.
- Financial planning: What your capital is, where it’s coming from, and how you plan to utilize it.
The thinking and research you conduct as you work through your business plan enable you to refine and plan for a successful launch without costly errors and trials. If your business plan shows that your current idea is not viable, shelve it and choose another one, and restart the process again. It’s better to waste time restarting (although the time is not truly wasted as you will apply the learnings the second time around) than deal with future losses.
11. Determine the profit margin
To achieve success in your home venture, consider profitability. Your idea may blend well with your skills and talents but still lack selling power. So, before venturing out, consider:
- How much are the potential clients willing to buy or pay for my services or products?
- Can your idea bring sufficient income?
For example, suppose you want to start a sewing business of making homemade quilts. Due to the time required, you can only manage three quilts per month. You then discover your potential buyers are only willing to pay $400 per quilt. That’s revenue of $1200 per month, minus the operating costs, including labor, advertising, and quilt materials.
If you aim to top up your income doing what you love, you may consider this, but if it’s for making a living, such profitability may not be enough for survival.
You can of course outsource areas of your business such as manufacturing to toll contract manufacturers, to increase efficiency and production and reduce overheads such as labor costs. It will also give you the ability to focus on building other areas of your business during this start-up period.
However, it’s also true that most businesses do need enough time to generate good income. Give yourself enough window of time and consider if your idea has the capability of reaching your income targets for your business to flourish.
12. Check out your business legal barriers
Some localities have specific regulations and rules on operating a home-based venture and before you start, check in with your city hall or the local chamber of commerce to identify which licenses and permits will be required for your particular type of business.
Consider also checking with your homeowner’s associations for any regulations, especially if you will be getting increased traffic. Don’t forget the local zoning laws.
13. Get insured
Starting a home venture may leave your family and friends exposed to many risks. As such, you may want additional insurance. Other trouble may arise like data breaches, lawsuits, or business interruptions.
That said, consider looking into a business owner policy that covers general liability insurance, commercial property insurance, and business income insurance.
14. Launch your business
When everything is ready, it’s time to launch your business and take in your first customers. They may be your neighbors, family, friends, or even outsiders. Keep in mind to positively take any suggestion or feedback, and remember that entrepreneurs learn as they progress.
Adjust your products and strategies to satisfy your customers’ needs as feedback pours back.
15. Build your trusted customer base
By adjusting and satisfying your customer’s needs, you create trust, thus building your customer base. Keep in mind; your clients are your best form of advertising through their recommendations and referrals.
Satisfied customers will become repeat customers, thus growing your business rapidly and creating a consistent revenue pipeline.
Are you ready to start your home business?
Some flourishing businesses like Amazon started in a home basement.
You can turn your talent and skills into a profitable venture by following the above tips.
However, regardless of the business strategy you use, be flexible, be prepared to learn and adjust. It is important to create a solution that not just fulfills your client’s needs but also works for your personal situation.