04/ 14/ 2006
by Steve Strauss
Q: Could you give me a basic outline for the fundamentals of how to start my own home-based business?
A: Sure. Starting a business from home is a great way to go for a couple of reasons:
- It’s less expensive. Since keeping your overhead low is a key to business start-up success, a home-based business is smart because you have no rent to pay and no commuting expenses.
- It’s fun. Working at home works because you can easily make your own schedule, and you get to see your family more.
Here are seven steps to starting your own home-based business:
Step 1: Personal evaluation. Begin by taking stock of yourself and your situation. Why do you want to start a business? Is it the money, freedom, creativity or some other reason? What skills do you have? What industries do you know well? Would you want to provide a service or a product? What do you like to do? How much capital do you have to risk? Does your business idea translate into a suitable home-based business? Your answers to these types of questions will help you narrow your focus and pick a business.
Maybe you don't know what kind of business to start. If that’s the case, you can find ideas in many places. Look through the Yellow Pages. Go to trade shows. Buy industry magazines. Check in with the Small Business Association. Read the business section of the newspaper.
Step 2: Analyze the plan. Once you decide on a home-based business that fits your goals and lifestyle, you need to evaluate your idea. Who will buy your product or service? Who would be your competitors? What do your spouse and friends think of your idea?
Step 3: Draft a business plan. If, as is likely, you will be financing your new business yourself, you still need a business plan. A business plan will help you figure out how much money you will need to get started, what needs to get done when, where you are headed, and how you will get there.
Step 4: Make it legal. There are several ways to form your business––it could be a sole proprietorship, a partnership or a corporation. Although incorporating can be expensive, it’s usually worth the money. A corporation becomes a separate entity that is legally responsible for the business. If something goes wrong, you cannot be held personally liable.
You also need to get the proper business licenses and permits. Depending upon the business, you may have city, county, or state regulations, as well as permits and licenses to deal with. You must be sure that the type of business you want to start is legal as a home-based business in your area. This is also the time to check into any insurance you may need for the business and to find a good accountant.
Step 5: Get the money. Most home-based businesses begin with private financing from credit cards, personal loans, help from family, etc. As a rule of thumb, you should also have at least six months’ worth of your family’s budget in the bank, in addition to your start-up costs.
Step 6: Set up shop. Pick a room to set up the business and get it ready. Get a separate phone line installed. Have stationery printed. Set your prices. Throw a “grand opening” party.
Step 7: Trial and error. It will take awhile to figure out what works, and what doesn't. Follow your business plan, but be open and creative. Advertise! Don't be afraid to make a mistake. And above all, have a ball––running your own home-based business is one of the great joys in life!
