How to Start a Home Based Business
Are you planning to open a home based business? If so, start by giving yourself a pat on the back – not many people have the discipline or courage to tackle the world of entrepreneurship head on! With that said, you absolutely want to be prepared wherever possible. In the following guide, we’re going to walk you through the exact steps that you can follow when starting a business from home.
Step #1: Decide What Kind of Business You Want to Start
The most common mistake that people make when deciding on what type of business to start is creating their product or service before figuring out if there’s a market for it. In fact, it’s the “golden rule” of business startup: always base your product or service around an existing market – not the other way around.
While not impossible, it’s extremely difficult to create a product or service so revolutionary that it creates a new market out of thin air. In layman’s terms, don’t reinvent the wheel!
Step #2: Evaluate the Competition
New entrepreneurs don’t like competition, and even avoid profitable markets because of it. However, we’re here to tell you that competition is not always a bad thing. In fact, quite the opposite is true: competition means that there’s a lot of money that your enterprise can make from that market – otherwise, there wouldn’t be any existing businesses in the industry.
Is there a lot of competition for the at home business you’re starting? Rather than give up, find a way to do it better. If you’re looking for a profitable market with zero competition, then here’s a newsflash: there aren’t any!
Step #3: Determine Your Margins
Two questions must be asked when starting a home based business:
- “How much will customers pay for my products and/or services?”
- “How much does it cost me to deliver these products and/or services?”
Whether big or small, the success of all businesses boils down to something called “margins.” You can’t earn a profit if it’s costing you $100 to deliver $100 worth of products. If you do this, you’re only breaking even, which means you’ll soon go broke.
Step #4: Build up a Safety Net
Speaking of broke, unfortunately, there’s no guarantee that your home business will make any money in its starting weeks, months, or sometimes, even years. Therefore, before officially launching your company, you should have a minimum of six months’ worth of living expenses saved up. Having this safety net will allow you to fully focus on your business and grow it as quickly as you possible.
As a general guide, give yourself enough “room” to deliver your product or service and still have enough money left over to pay for business and living expenses.
Step #5: Create a Business Plan
If you’re on step four, it means that you’ve committed to your business idea. To flesh out a plan of action, you will need to start with a business plan. This is, essentially, a detailed outline of how you plan to operate your new home based business (margins, marketing plans, expenses, etc.) over the next five to ten years. The more details you include in your plan, the better.
Once your plan is set in place, it’s time to make your business legal before beginning operations. Remember that building a long-term and sustainable business is all about proper planning. It may sound cliché, but don’t rush the process.
Source:
1. 10 Steps to Starting a Business – https://www.sba.gov/starting-business/how-start-business/10-steps-starting-business
