7 Things You Need to Start a Small Business at Home
Starting your own small business is a significant step. Choosing to operate that business from your home can be a smart move — provided you take some time to ensure the proper elements are in place. Want to know how to start a small business at home? Here are seven non-negotiables to help you get started.
1. The Right Head Space
When you’re working from home, you’ll spend quite a bit of time alone. What’s more, you’ll be doing so in a familiar environment teeming with distractions. It’s all too easy to decide to stream one more episode of the show you’ve been bingeing before settling in to get your work done for the day. Friends know you’re home, so they’ll call to say hello and invite you to come visit.
In other words, you have to be capable of focusing on the work at hand to the exclusion of everything else around you for a specific period of time each day. You’ll get out of your home-based business only what you put into it. This means you’ll need to be capable of juggling self-control and time management with your independent work style. You’ll also need to be adept at thinking for yourself, solving problems, and troubleshooting minor tech problems on your own.
2. A Product or Service You Understand and Love
When you love what you do, every day is an enjoyable day — even when there are tricky problems to solve. What’s more, working in an area of personal strength makes selling your product or service easier, which carries you one step closer to success.
Odds are, you already have an idea of what you’re going to do if you’re entertaining home-based business ideas. Still, it’s crucial to take some time to understand all of the challenges presented by your chosen field before quitting your day job and devoting your life to it.
As you’re considering how to start a small business at home, remember: You’ll be working alone and putting in long hours. Doing something you love is strong motivation to keep on pushing when adversity obfuscates your path.
3. A Dedicated Work Area
As we mentioned above, your home is full of potential distractions — this is especially true if you have a spouse or children. When you’re operating a home-based business, your family needs to know you’re doing what’s needed to support the family when you’re working. They need to afford you the space you’ll need, just as they would if you got up and drove to an office or worksite every day.
Establishing an area of the house that’s reserved for your business gives you a zone into which you can retreat. By contrast, trying to work at the kitchen table with family members passing through will be both difficult and potentially frustrating. With that said, it’s also unfair to expect your family to compromise their comfort at home to accommodate your desire to work there, so make every effort to keep your work area and your living areas separate.
4. A Workable Business Plan
Developing a business plan will help you cultivate the guidelines within which you’ll manage your enterprise. It will also give you an opportunity to contemplate whether your idea has legs.
Your plan should include the following components.
A definition of your target audience: Who needs your services? What sort of person are they? Where do they work? What is their income level? How much education do they have? What problem(s) do they have that you can help solve?
Market research: How much demand is there for what you intend to offer? How much competition is out there already? How have competitors positioned themselves? What can you do to stand out from the crowd? What can you provide that your competitors have overlooked?
Marketing plan: How will you attract customers? Where will you advertise and promote your business? How will you conduct sales? What are your core values and how will you convey them? What is your unique selling position and how will you leverage it to generate attention?
Financial analysis: What will it cost to get your business set up? Think in terms of the equipment you’ll need, licenses, fees, and materials for sales and promotions. Include marketing costs, insurance coverage, your salary, and any other anticipated expenses.
It’s important to forecast your expenses, as this will help you determine what you should charge to ensure your effort is profitable. Generate some financial projections based upon what you know about your product or service and the market you’re entering. This will give you a benchmark by which to measure your success and will come in handy if you seek outside financing.
5. Business Licenses and Permits
Before you open up shop, you’ll need to be certain that operating a business in your neighborhood is permissible. If you’re offering copywriting services or something similarly benign, you’ll probably encounter little resistance. However, you may run into objections if your work involves noise, hazards, or a lot of traffic in and out of the neighborhood.
Check your local zoning ordinances before you go too far in your planning to be certain you can move forward with your home-based business. You can sometimes get a variance, even if your neighborhood is a strictly residential zone. It’s also a good idea to consult the leadership of your homeowner’s association if your neighborhood has one.
You’ll also need a business license and perhaps a professional or trade license, depending upon the nature of your business. You might also run into the need for a health and safety permit or a sales tax permit if you’re selling a product. Keep in mind, you could be responsible for collecting sales tax, even if your state has no such requirement. If you’re selling online and shipping to states that do collect sales tax, you can bet they’ll come looking for their share.
6. An Accounting System
You’ll need a plan for paying your taxes on an annual or a quarterly basis. You’re going to need to keep accounts of your expenses and income to get an idea of how much you’ll owe, as well as to determine your profits and losses.
This also helps you “keep score” so you can see whether or not the effort you’re expending is paying off. Fortunately, there are all sorts of software packages and professionals for hire to help you with this.
Operating a business without insurance means leaving your future up to chance. A General Liability policy will cover many of the basic threats you’ll encounter — like unintentional bodily injury, property damage, and personal/advertising injury to a third party. However, you must be careful to look into what other types of coverage you’ll need for your particular venture.
If you drive your car for business, you’ll need a commercial auto policy. Similarly, counting on your homeowner’s policy alone to cover your office equipment, furniture, and supplies could leave you in the lurch.
Nailing these seven things you need to start a small business at home will help you build a solid framework for your company. You’ll have a clear-cut path to your goals and the protection you’ll need to defend your assets should issues arise.
Are you looking for flexible coverage to protect your small business? Learn more about Verifly and get a General Liability insurance quote today!
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.