Starting a home-based business is a dream many people have, and for good reason. As millions have quit their jobs and businesses have failed during the pandemic, many people are taking matters into their own hands and starting home-based businesses.
And many are finding success and may never choose to go back to working in someone else’s business.
How to Get Started
Some simple but vital steps are necessary to start your home-based business. You may have a passion for an idea, but you want to ensure that your idea sells and that you meet all of the legal requirements to get things off the ground:
Assess Your Skills and Talents
You don’t necessarily have to have talent in an area for a home-based business but it helps. Some people have had an ongoing interest in something and they are motivated to learn more about it by opening a business. If you don’t have a clear idea of the type of business you want, take some time to write down your skills and talents.
Can the Business be Run From Home?
A home-based business requires more than an idea and a home. There are permits, licensing, bookkeeping, and the actual tasks of the business itself. Plus you need to consider the space allowances – will you and any other family members have room to continue living comfortably? If you have to do major remodeling to accommodate your home-based business, this expense needs to be factored into your decision making.
Market Research
Market research is a critical step to take in developing a home-based business. Investigate and research the demand for your service or product. Your competitors may be down the street or across the world. Find your competitors and evaluate their strengths and weaknesses.
Evaluate Costs
Determine your start-up costs. Some businesses will have low start-up costs and others much higher. The costs can range from the materials needed to create a product offering to the e-commerce software.
Write a Business Plan
Writing a business plan can be an overwhelming idea but you will need it if you plan to get a loan. Even if you don’t plan to get a loan initially, it is a good exercise for understanding and documenting your plans to share with your trusted advisors, such as your tax professional. In the process of writing your business plan, you will set goals, describe your product or service and provide a detailed financial analysis.
Home-Based Business Insurance
You may need more than one kind of business insurance depending upon the type of business you have. For example, if you are a consultant, you may only need liability insurance, but if you have machinery, equipment and vehicles related to your business venture, you will need more. No one enjoys paying premiums for insurance coverage, but if and when you need it you will be glad you have it. Here are some of the insurance types you may need:
- Liability Insurance: Liability insurance protects your business if the business is sued, it can provide coverage for your defense and legal settlements.
- Business Property Insurance: Business property insurance covers designated equipment or business property.
- Product Liability Coverage: Product liability coverage covers your business against damages caused to a person or property by your product.
- Business Auto Insurance: If you use a car, even your personal one for your business, your policy probably won’t cover you.
- Employee Insurance: If you have employees working for you then you might need worker’s compensation insurance.
- Other Insurance to Consider: Other types of home-based insurance to consider are plans to cover loss of profit, claims from employees, and insurance to cover data breaches.
