One of the major decisions you’ll need to make as you plan to launch your company is where you’ll locate it. Are you going to set up a storefront or work from home? However, there are unlimited benefits to running a home-based enterprise. It eliminates the need to commute, you can multitask, you don’t have to pay rent, enjoy tax incentives, have low startup costs, and even allows you to have more control over your schedules.
Indeed, starting a home-based business can be an exciting and rewarding venture. However, all your efforts might go down the drain if you fail to plan well. Therefore, you should be careful when launching your enterprise to ensure long-term success.
That said, there are many important steps to take to start a home-based business. They include the following:
1. Decide On A Business Idea
The first and one of the most important steps in starting a home-based business is to determine exactly what products or services you want to sell. There are several business ideas out there you can launch from home. However, it all depends on your passion and the skills you possess.
However, you must settle on a niche that’s in high demand. Therefore, you must conduct market research to know which products or services you can sell. After deciding on your business idea, it would be good to test it with a select group of people to collect feedback before you start.
2. Write A Business Plan
After you have settled on a home-based business idea, your next step will be to develop a business plan. This is a document you create to describe your company’s objectives, marketing strategies, and financial position. It also guides your daily operations.
Besides being a guiding tool, a business plan can help you raise finances for your enterprise. Most lending institutions, sponsors, and investors will want to see a business plan before pledging financial aid or support. Therefore, before you launch your home-based business, ensure you’ve got a comprehensive business plan. The most important sections of a business plan include an executive summary, an overview or description of the business, market analysis, a marketing plan, and financial projections for the next few years.
3. Select A Name And Business Entity
Just like any enterprise, you have to find a name for your home-based company. You need a name for clients to identify your firm with. For that reason, ensure you choose a unique name but also something that provides a clear picture of what products or services you sell.
Once you’ve decided on a particular name, you’ll have to confirm whether it’s actually available. You can do that by navigating the business bureau website or calling their office near your area. You can also use a tool like a Trademark Engine to check whether your preferred business name is already being used. And if available, you’ll have to pay a reservation fee to ensure no one else uses them.
In addition to selecting your business name, you’ll need to decide on the entity type to define your business structure. The business structure you select will have various effects on your home-based business. For instance, it determines your profit share (if you have a partner) the tax rates you have to pay, and the extent of your personal liability if your business defaults on certain obligations.
There are four major business structures you can consider for your home-based business. These are sole proprietorship, partnership, corporation, and limited liability company. But to help make the right decision, consider partnering with experts like a lawyer who can give you advice and help you pick the right structure that suits your needs and goals.
4. Register Your Business
After choosing a business name, you have to register with the state. This is important since the government requires this. If you don’t register your business, you’ll be penalized or even face serious legal consequences.
The exact steps to follow when registering a company are usually unique to a specific state or location. Therefore, you may want to consult with your state’s business bureau office for guidelines on how to register your company.
5. Organize Your Finances
As noted earlier, launching a home-based business will cost you less because you don’t have to spend on office space rentals or commercial leases. But you still need to have enough money. For instance, you need capital to buy equipment, hire service providers, employ workers, register your business, etc. That’s why you need to organize your finances.
To organize your finances, you can start by creating a budget for your business. That involves listing all the items necessary for launching your enterprise and their cost. That gives an estimate of the amount of capital you need to launch your home-based business.
Once you know how much you need, you can decide how to raise capital or business funds. If you already have enough funds to start your business, then you don’t have to worry about this. But for those who still need more funds, then you need to exert more effort in raising capital.
You can try taking a bank loan, applying for government grants, finding angel investors, or asking for financial aid from relatives and friends. Ensure you select the most suitable method for your enterprise.
6. Obtain Business Licenses And Permits
Registering your business with the state enables you to get a master license. That’s a document showing that your firm has legally been established. But that isn’t enough to launch your enterprise. You need to go the extra mile and comply with other licenses and permits specific to your industry. Aside from general business licenses and permits, your home-based business might need home occupation permits, property use and zoning permits, etc.
7. Set Up A Home Office
After completing all the other steps, you’re now about to start running your business. But you must first set up an office. This can be either an empty room in your house or just a designated corner in your kitchen, sitting room, or bedroom. It can be situated on whatever side of the house as long as it is a conducive area for working.
Setting up a home-based business might not be as complicated and demanding compared to opening an office or store business, but certain preparations are still needed. You still have to comply with basic requirements such as choosing a business name and registering with your state.