Recent trends show that home-based businesses are becoming the wave of the future. In the United States alone, home-managed businesses are the fastest-growing segment of the U.S. economy, with an estimated annual growth rate of 10%. The drive for economic self-sufficiency has motivated large numbers of people to market their skills and talents for profit from home.
All around the world, people who want more control over their lives are starting home businesses. For many, the home office is becoming the location for a full-time job and the primary source of income. For others, it is a part-time venture providing extra income for the family. People are opting for a life wherein they can make their own hours, commute to work in seconds, make their own choices, and become their own bosses.
The rapid pace of technological innovations and developments, particularly the advent of the Internet, has certainly boosted opportunities for working at home. Many start on a part-time basis and carefully build these extra income efforts into full-time, very profitable businesses. Homemakers, hobbyists, retirees, people interested in a second income, and the disabled are just a few of the groups attracted to home enterprises. A young mother’s craft business began when she started appliqueing decorations on her children’s clothes. A retired government worker bought 36 beehives and sold honey to local health food stores and at craft fairs. One woman works from home designing and selling original patterns for fabric dolls. A journalist left his full-time job to publish a party and event planner guidebook from the first floor of his two-story home. A teacher did type and secretarial jobs for her husband and friends until she realized the potential market and opened a full-time secretarial service from her apartment.
Others have become home business owners by using their catering, counseling, teaching, daycare, sewing, writing, photography, consulting, market research, and landscape design skills. The increasingly service-oriented economy offers a widening spectrum of opportunities for customized and personalized small business growth.
However, starting your own small or home business is not easy, and success cannot be achieved by luck alone. It requires both skills in a service or product area and the acquisition of management and attitudinal competencies. There are many common characteristics and challenges to be considered in launching most home-based businesses, regardless of size. Some tasks are universal to all small business startups, while others are unique to a home-based business.
Special planning is required to know all the pertinent legal and tax issues, proper space utilization, and to establish time management discipline. Inadequate or careless attention to developing a detailed business plan can be costly for you and your family in terms of lost time, wasted talent, and disappearing dollars.
If the idea of working from home is appealing, but you do not know where to begin, this feature series is a comprehensive step-by-step guide to starting a home business:
Step 1. Decide What Part of the House to Use
Select an area for your home business that will allow you to concentrate, focus and do your work. The perfect space is a separate room (or perhaps the garage), but any area will do if it can hold all the business supplies and equipment and provide enough work space for desks, tables, or counters. If your situation permits, create a home office that is preferably away from the family activity so as not to get disturbed.
Read the following articles:
- How to Set Up Your Home Office
- 7 Rules for Setting Up Your Home Office
- How to Choose the Right Location for Your Home Office
- How to Create a Home Office that Works
Step 2. Determine How Much Time You Can Spend on the Business
Many people start a home business on a part-time basis while raising children or working outside the home. Others start full-time when family and finances allow. However you begin, figure out how many hours per week you can devote to the business. Make a weekly chart of your activities, examine it, and determine where the business fits. Don’t assume you have time, and find out later if you don’t.
However, it is important to remember that starting a business is easy; making it grow successfully requires time, patience, and lots of nurturing. While working part-time may work initially, the business may soon require more time and commitment from you.
Read the following articles:
- Starting a Business Part-Time or Full Time
- 10 Reasons NOT to Start a Home Business Part Time
- Balancing a Part-Time Business While Working a Full-Time Job
- How Moonlighting Can Help You Succeed in Your Business
Step 3. Decide on the Type of Business
Choosing a business means finding an area that interests you and where you are qualified or can qualify.
Make a list of things you like to do, your work and volunteer experience, and items you own that can be used in a business. Look at this line-up and, using ideas from it, list possible businesses to start. Eliminate any business that is not appealing or does not fill people’s needs.
Read the following articles:
- 7 Methods in Choosing a Business
- How to Choose a Profitable Business: 3-Step Process
- 10 Tips on Choosing Your Home Business
- How to Choose the Best Home Business to Start
Step 4. Choose a Legal Form
Choose the legal form of business that is best for you. Consult with your lawyer, accountant, and business advisor to help you decide which business structure best suits your situation. To help you decide, you should consider the following: tax implications, liability issues, plans for business growth, international exposure, exit strategy, family structure and involvement in business, relationship with potential partners, and litigiousness of customers, employees, and businesses in your area. Ensure you get your choice right from the very start to avoid many pitfalls.
The three basic legal forms are sole proprietorship, partnership, and corporation. The most common is sole proprietorship. Where one individual owns the business, it is the easiest to start and the least complicated to dissolve. If you are not going to incorporate or use your own name as part of the company name, you will need to obtain a fictitious name statement, or what is called DBA – “doing business as.”
Read the following articles:
- Choosing the Legal Structure of Your Business
- LLCs and C Corporations: Similarities and Differences
- When to Change Your Legal Structure
- S Corporation vs. LLC: Which Structure is Right for Your Business
Step 5. Determine Where the Money Will Come From
Whether you want capital for start-up costs, short-term operating costs, or long-term strategic development, your first step must be to estimate the amount of money you need accurately.
There are three ways to finance start-up costs: use your own money, obtain a loan, or find investors. If possible, it is better to start small, use your savings, and not worry about repaying a debt. Also, keep in mind that since you are home-based, chances of qualifying for a loan or finding investors are slim until the success of your idea is proven.
Read the following articles:
- 5 Strategies to Raise Capital for a Small Business
- How to Raise Money to Start a Business
- 12 Tips for Getting Your Bank Loan Approved
- Using Crowd Funding Sites to Raise Money for Your Small Business
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