Every entrepreneur’s reason for starting a home-based business is different, but flexibility is usually a key factor. There is freedom in running a business from home that other positions don't always offer.
With flexibility and low overhead, starting a home-based business is a very appealing route. Read on to learn the considerations one must have in mind before starting a home-based business.
1. Come up with a business concept.
What are you interested in doing? What skills do you have? Take a look at what you have to offer, and see if there's a way to use those skills to fill a need in the marketplace.
Also keep in mind that not every business can be home based. For example, some industries (e.g. remote consulting, web design and e-commerce) are better suited for home while others may require a physical space.
2. Research the market.
Once you have determined the kind of business you want to start, conduct market research to understand your competitors, customers and positioning.
Market research will help you develop a differentiated offering. Research is also important for setting pricing. Learning how to start a small business at home will require data to ensure that you can fill a market need.
3. Develop a business plan.
Create a business plan that accounts for short-term and long-term goals. You'll also want to identify a business structure that works best for you early on.
Do your research.
Developing a business plan requires a lot of up-front research and strategy. You’ll want to know your customers, competitors and product or service inside and out. You may need to consult outside help to stay up to date on regulations, licensing and insurance.
Build a roadmap.
Outline the vision and mission of your business with clarity. List your goals and hone in on the purpose of your plan for both the short and long term. This should be a living document to update regularly and help you avoid challenges by thinking about the future.
With cloud-based software, running a home-based business is easier than ever before. You can do everything from managing your books to managing your inventory all from your home.
A big part of starting a business is also keeping an eye on the future, so your organization can remain competitive and relevant.
Tell your story.
One of the most significant aspects of your business is why you started it in the first place. How does your product or service fill a need? You should be able to provide both a quick and long-form description of the history of your business and what you do and why. Include that summary in your company profile.
Let people know your story. Don’t shy away from making a powerful statement. Having a strong voice can help you stand out and make a more meaningful connection with your target audience.
Organize and document the details.
Organize your business management structure and document expenses, cash flow, projections and licensing. A good bookkeeper can help you stay on track and ensure your finances are in order.
Develop a marketing and sales strategy.
Strategy should lead all of your efforts for your business. Come up with a plan for launching products and services, pricing and boosting sales, as well as maintaining strong connections with your clients, vendors and partners.
Once your business is in place, revisit your goals often and prioritize the processes that will best support the kind of growth you envision. This can mean abiding by a tight budget, setting up systems to automate certain tasks and/or hiring a core team so you can delegate work. You want to be able to stay in front of growth opportunities after all.
4. Test your idea.
Host a gathering with people in your target audience or hire a consulting group to perform demographic testing. Asking friends or family to serve as initial customers, or "soft launching" in your immediate area is a beneficial way to learn about and improve your product before incurring additional expenses.
Your ideal customers will provide honest feedback you can use to ensure viability or to improve your product or service before releasing it to the market.
5. Identify cost-effective marketing tactics.
Sales and advertising are an investment in your business, but that doesn’t mean that it has to break the bank. There are creative ways to identify and utilize cost-effective marketing tactics. You can hire a team, a media manager, a consultant or you can automate the process yourself.
Social media's ROI depends on your business and the platforms you use. You can sell directly to customers or drive traffic to your website, but keep in mind that social media is best as a portfolio for your brand. The most important aspect of this medium is connection and transparency, not necessarily sales.
Email and Newsletters
Leverage your contacts by keeping them informed. Emails and newsletters that are personalized, short and engaging help your business stay top of mind.
Pay-Per-Click (PPC) Marketing
Digital marketing allows you to meet your customers or clients where they are online. With PPC marketing, you can determine the budget and scope, then leverage popular search and display ads to help you connect with potential customers who are searching for products or services.
6. Consider your incorporation options.
Incorporating your home-based business requires that you follow certain laws. You will want to have a thorough understanding of the costs, codes and paperwork required before choosing the incorporation option that works best for your business. The SBA offers substantive advice on what structures to choose from, including whether your business is right for sole proprietorship, Limited Liability Company (LLC), or certain kinds of corporations.
Hiring a lawyer to make sure you are doing the right thing when it comes to the kinds of incorporation, tax laws and insurance you need will help you make an informed decision.
7. Build out a hiring (or contracting) plan.
When deciding how to start a business, it can be helpful to identify the tools that you need to support it. With cloud-based software, running a home-based business is easier than ever before. You can do everything from managing your books to managing your inventory all from your home.
Also, keep in mind that even a home-based business relies on people for all of these services. Your vendors, employees or contractors are also partners. It doesn’t hurt to lead with strong, human communication. Surround yourself and your business with people who support what you’re about.
Read more articles on planning for growth.
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