Starting a business from home might seem like a daunting prospect when you’re still in the planning stages, but there could not be a more perfect time to turn your small business dreams into reality.
In the US, 69 percent of all entrepreneurs start their businesses out of home. Also, the recent shift in work culture has created a renewed invigoration for these kinds of at-home business opportunities. So how do you start your own business from home? Here are the basic steps you need to take to plan, organize and thrive.
How to Start Your Own Business from Home: A Step-By-Step Guide
1. Have a Great Idea
This might seem like a no-brainer, but a great idea is the first step when considering how to start your business from home. Don’t worry if you don’t have an idea, however – there are hundreds of home-based business opportunities out there, all offering various different degrees of engagement and activity.
Choose something that suits your lifestyle and interests – your home business might be a side hustle, or you may be eager to grow it into something more long-term and full-time. Below we have provided a few ideas to get you thinking.
6 Home-Based Business Ideas To Get You Started
a. Buy and sell products in bulk
Buying products in bulk and selling them individually online for profit is typically how many large businesses run, but it’s also something you can also easily do from home. Maybe you have found a gap in the market or a unique item you think you can sell to a niche audience. Buying products wholesale and selling them forward is a great way to harness the spirit of traditional commerce from home.
b. Make and sell homemade products
From bath bombs and soaps to pet accessories and confectioneries, making and selling items from home is both a creative and lucrative business idea that will help you turn your hobby or passion into profit.
c. Start a dropshipping store
Dropshipping is the business model that allows entrepreneurs to sell products without ever having to stock the items themselves. Rather, the entrepreneur connects the product to the buyer, and then the order is shipped directly from a third-party seller.
Dropshipping is a low-risk approach for independent businesses to test out new product ideas without owning and paying for the product up front.
d. Leverage your social media following
Are you already someone with a large social media following? Do you use it to document your life, art, interests or passions? If so, there are plenty of ways to make money – and all you need is a phone and a passion for content creation.
Tiktok, for example, has a creator fund once you hit 10,000 followers, and Instagram offers lucrative opportunities through brand partnerships and affiliation. Even smaller users (1,000-5,000 followers) can find opportunities as micro-influencers. Instagram stores can also be lucrative and don’t rely on follower counts.
e. Offer online classes or coaching
If you have a particular interest or skill, online courses or classes are one of the best ways to share your knowledge – and it’s an incredibly easy business to run from home. Turn your unique interest into income by creating guides, white papers, articles, or YouTube tutorials. You can further your income by offering classes or workshops. Another benefit of creating online material is that it could become a source of passive income. Once you have put in the work to produce the content, it can be resold over and over with little to no effort on your end!
f. Start a print-on-demand service
Similar to dropshipping, print-on-demand services don’t require you to keep any products or stock at home. Instead, sellers only need to focus on marketing and design, before choosing a fulfillment company that will send their customers their product once they receive an order. You can print onto anything; t-shirts, hats, pillows, totes, cards, etc.
2. Questions to Consider When Starting Your Home-Based Business
When working on your idea, there are a few things to take into consideration which may help you nurture the direction of your business. Here are four questions to answer while you’re in the planning stages (plus get inspired by our small business tips for 2022).
- Do you have any skills or talents that can translate into a business idea?
If you’re already investing a lot of time into a craft or interest, why not take it a step further and turn it into a business opportunity. Perhaps you knit in your spare time, know your way around Photoshop, or help your friends with their social accounts – whatever it is, accessing those skills and talents could help you work towards your goals.
- Can it easily be done from home?
It’s important to consider whether or not your small business idea really is feasible from home. If you decide to make and sell things online, do you have enough storage space for your materials? Do you have access to all the tools you’ll need? Have you considered start-up costs?
- Have you done your research?
Don’t overlook the research phase of your business! You will want to ensure there’s a market demand for your product or service. During your research you’ll want to consider who your competitors are, what your value proposition is, and what your target market looks like.
- Who is your target market, and how will you reach them?
Speaking of target market, this is another area you’ll want to consider carefully. You’ll want to outline exactly who will be buying your product, and what their purchasing behaviors look like. Can you use social media to reach them? How best will you get your product or service out there?
3. Create a Business Plan
The next thing you will want to do is create your business plan! But what is a business plan? A business plan is your plan of attack. It is a written document outlining your business’s future, key goals, and strategy. You’ll take all the answers to the questions above, and put them together into one cohesive document.
Writing a business plan can be very time consuming, but it’s arguably one of the most important parts of starting your own business from home because it will contain all the information you need.
Business plans are important because not only will they help you understand and guide your business, but investors rely on these plans to evaluate the feasibility of a business before funding it. This is especially important if you need a loan. Even if your home business doesn’t need funding, a business plan creates the foundation on which to build.
When writing a business plan, consider providing a market analysis, marketing and sales plan, and financial projections.
4. Choose a Name and Business Entity
Now comes all the legal jargon, which might not be the most exciting part of setting up your business from home, but it is very important. You’ll first want to decide on a name for your small business. You will want to try and think of something memorable that is related to your product or service. Also, make sure no one else is using it or has trademarked it; you can do this through a simple Google search. If you plan to have a website, check that the domain name you would like to use is available.
Next, you will need to choose your business entity. The business entity you decide upon will affect how your home business is taxed and what legal risk you’ll be exposed to, as well as whether or not you need to officially register your business with the state.
Types of business entities:
- Sole proprietorship: You are the only owner, and there is no distinction between you and the business. You will be personally responsible for all business debts and liabilities.
- General partnership: Similar to a sole proprietorship, except you work with at least one co-owner.
- Limited liability corporation (LLC): This type of business entity protects you from personal responsibility for its debts or liabilities. It is owned by one or more individuals. Requires state registration.
- C – Corporation: Owned by shareholders. Also protects you from personal responsibility for debts or liabilities. Requires state registration. Less flexibility than an LLC.
Working out which legal business structure is right for you is important for creating the bedrock of your business. Every business structure offers different benefits for personal liability, ownership, taxation, and funding, among other aspects.
5. Get a Business License (If You Need One)
The next step is to procure a business license. A business license grants the owner the right to start and run a particular type of business in the city, county, state, or country that issues it. It is a type of permit indicating the company has the government’s approval to operate.
Most states don’t actually require a general business license just to do business in that state, so it’s important to know the rules and regulations in your city, country or state regarding business licenses. You can find this out through your state’s Secretary of State office, Department of Revenue, or similar agency that issues business licenses.
If you do need a business license, small businesses from home will likely fall under the following:
- Home occupation permit: This allows you to legally establish or enact limited business operations from within your home.
- Property use and zoning permits: Some residential areas have strict zoning regulations that may limit home-based business activities. Check with your local or city government office to find out what regulations apply to you.
- General business license: The most commonly required license to run a business.
6. Understand the Financials
One of the first things you will want to do is separate your personal finances from your business expenses. This will make it a lot easier to organize your personal and business taxes, figure out deductibles and for general bookkeeping and organization. You may also want to look into loans if you need a little starting capital.
You’ll want to open a business bank account. This will automatically help you keep expenses separate. Then you can apply for a business credit card that will also be important for establishing your credit and can be used for any transactions related to your business. There are also numerous software products you can use to help you. Of course, there is Excel, but there are other useful tools such as Shoeboxed for tracking receipts, or Shopify Payments to stay on top of orders.
7. Create the Perfect Home Office
Lastly, you’ll want to create a work space in your home that’s comfortable, quiet and well-lit. Invest in the right furniture and take steps to minimize distractions and maximize productivity. Some things to consider when setting up your home office shape include:
- Choosing the right space: Find a space that isn’t too cramped, has lots of natural light. Choose a room that can accommodate every aspect of your business (bookkeeping, supplies, tech, and equipment). You’ll also want somewhere quiet so you can conduct meetings without distraction.
- Invest in software, furniture and tools: remember anything you spend money on for your business counts towards your tax deductibles at the end of the year; whether you purchase social ads, a standing desk, or second monitor.
- Decorate your space: your home office space doesn’t have to resemble a corporate cubicle! Make it a space you enjoy spending time in.
8. Start Your Business!
Now that you’ve covered all the relevant start-up steps, the rest is up to you! Building a successful small business is both challenging and hugely rewarding; so have patience, keep grinding, and keep believing in your ideas and talents. If you need any further tips for success, here are 15 more to take your small business to the next level.