Did you know about 5 million people work from home?
Given the current climate, more people have been forced to work from home, and many have lost their jobs. It has forced people to find creative ways to earn money.
If you have dreamt about the idea of working from home and running your business, now its time to leap.
Read on to learn how to start a home based business.
1. Come Up with a Home Business Idea
If you’re ready to start a new venture and run a business from home, the first step is to come up with an idea. You might have a general idea of what you want your business to be based on your skills, but you should narrow it down.
While there are plenty of businesses you can start, some work better from home than others. Take some time to sit down and write down all of your ideas.
Start by making a list of your skills and your passions. Next, you should dot down how you can translate your skills and passions into a business. Third, you should decide if your business idea can work from home.
Once you’re sure your skills can translate into a home business, you need to perform market research.
During your market research, you will get an idea of whether or not there’s a demand for your product or service. For example, if you want to sell gifts for cat lovers, make sure there’s a demand.
As part of the initial planning, you also need to get an estimate of startup costs. For example, if you want to start a freelance blogging business, all you might need is a computer and internet connection.
However, if you want to start an online store business, you will have a higher startup cost.
2. Write a Business Plan
After you have a solid concept for your home business, you will need to write a well-thought business plan.
A business plan is what you will present to a lender (if you need a business loan), so it has to be detailed. There are plenty of moving parts to business plans, so you need to take it step by step:
- Executive Summary
- Overview of the business
- Market analysis report
- Full description of product or service
- Sales and marketing plan
- Financial projections
Having a business plan is beneficial to your business, even if you don’t need to obtain a business loan. It will also help keep you on track and guide you through the process.
3. Pick a Name and Select a Business Entity Type
No business plan will be official without picking the name of your business. Keep in mind you will want the business name to be memorable.
It might take you a few tries to find the name that suits your business. Before you make the name official, you should ensure the name is available by visiting the U.S. Patent and Trademark Office.
After you have settled on a name, it’s time to pick the entity type and business structure. Keep in mind that your business will get taxed depending on the type of business entity and structure you choose.
Some of the most popular business entities are:
- Sole proprietorship
- General partnership
- Limited liability corporation
You should choose the type of entity that best suits your business.
4. Register Your Business
The next step when starting your home business is to register it with your local government. Keep in mind if you’re registering an LLC or C-corp, you will need to find out with the state if you can run the business from home.
Because the requirements vary from state to state, you should visit your local secretary of state to find out all of the requirements.
You also need to obtain an Employer Identification Number (EIN) from the federal government. Having an EIN is necessary to hire employees, open a bank account, filing taxes, and more.
5. Get the Necessary Licenses
While you don’t need to obtain the same licenses as a restaurant, bar, or nail salon, chances are your home business might require licenses. Start by checking with your local business on whether or not you need a license.
Some of the common licenses you will need to include for your home business include the following:
- Home occupation permit
- Property and zoning permits
- General business licenses and permits
6. Business Bank Account and Credit Card
If you want your business to thrive, you will need to separate your business from your personal finances. Even though it might take some time for your home business to make a profit, you should open a business bank account.
Having a business bank account and credit card will allow you to keep track of your finances, expenses, and profits.
While you could use your personal credit card to pay for your business expenses, having a dedicated business card will help you establish credit. You will also be able to enjoy the business perks of having a business credit card.
One of the perks of running a business from home is you don’t have to worry about leasing space, paying utilities, or hiring employees. However, most businesses will require funding to pay for startup costs.
For example, if you want to run an online store, you will still need funding to pay for a website designer, merchandise, shipping supplies, and even pay for your livelihood while you make a profit.
8. Start Running Your Home Based Business
After you complete the aforementioned steps, you’re ready to start running your business. Because you will be responsible for doing the work, you have to establish productive habits.
Start by designating a quiet area where you can work without distractions. Ensure you have all of the tools and software necessary to run the business.
You might also want to establish a work schedule and stick to it.
Are You Ready to Start Working from Home?
Now that you know what it takes to establish a home based business, you’re ready to take the name step.
Remember to come up with the right idea, pick a name, register the business, obtain funding, and creating a consistent work schedule.
If you enjoyed these articles and would like to learn more business tips, check out the rest of our blog.