Starting a home-based small business: tips, ideas and resources

Below is a list of various questions to ask yourself when starting a home-based business. These questions can help guide future business owners and entrepreneurs down a successful path.

What is your winning idea?

Before starting a home-based business, you need a winning idea. Is there a niche in the market you think needs to be filled? Or is there a demand for a product in your town that's not being met? These are the questions to ask yourself before opening the doors to your new at-home company.

What are your skills and hobbies?

After coming up with your concept, you'll have to visualize how you can implement it. Your skills and hobbies are the cornerstones of your home-based business. Think about what you do best and how that can resolve an unfilled demand in the market.

What business skills do you possess?

The amount of business skills you possess is a very important consideration to make. If you're new to running a business, there may be matters that you'd be better off outsourcing. For instance, all businesses must consider their finances to stay afloat. Speaking to a certified accountant or some other form of financial assistant can help ease the process of opening a home-based business. They may navigate you through purchasing decisions or even help you find a small business loan.

Can your business be conducted at home? 

Of course another important consideration you'll have to make is whether your business can be conducted at home. Not every business can fully operate from the comfort of a home and may require some different location, building or setting. Businesses that involve tutoring, personal training or making crafts often thrive at home. Other businesses - such as catering - may be more difficult to run out of your home due to certain laws and regulations.

Do you have the focus and motivation to run a business from home?

Running a business from home requires a lot of self-accountability. From getting it started to following through, it will be on you to make sure things go smoothly. You'll be responsible for providing your products or services, dealing with any administrative concerns and interacting with customers, among other common business tasks.

Does your lifestyle and home life fit with a home-based business?

Whether your lifestyle works with a home-based business is an essential question, especially for families. Your answer will ultimately determine if a home-based business can truly become a reality for you.

There can be many benefits of home-based businesses, such as: 

• No commute: A home-based business can provide you the opportunity to wake up and already be in the office. While some may find it difficult to separate home and work, if you can manage to distinguish the two you’ll reap the benefits of not having to commute every day. 
• No rent: If you’re a homeowner, you won’t have to worry about rent payments. Working from home won’t cost you any more than your current living expenses — except maybe an upgraded internet package. 
• Flexible schedule: You get to set your own hours. Running the business yourself means you can start work or leave work early, on your terms. This is a great perk for people with children. 
• Lower start-up costs: With a home-based business, there’s no need to worry about a lot of start-up costs associated with an out-of-home business. The location and utilities are two start-up costs that are already taken care of. If you’re starting a freelance writing business, for instance, all you need is your computer and an internet connection.
  • Lower start-up costs, while common, are not a certainty for every home-based business. Certain businesses will require a significant amount of start-up costs. If you're looking to sell items through Amazon, for instance, you have to take into consideration the costs of inventory, packing and shipping.
• Tax benefits: The IRS offers a home office tax deduction to qualified homeowners and renters. If you use part of your home to conduct business, the expenses associated with running it may be covered. 
• No office politics: A home-based business can also mean no office politics. It’s your company so it’s your rules. You’ll decide who to hire, what the dress code is and what the general mood is at the company.

Market research, budgeting and finding merchant services are just a few of the components necessary for developing your home-based business. Each of these components entails its intricacies, difficulties and necessities. Read closely to ensure that you start your business thoughtfully and legally, so that it may grow unencumbered.

Market research and testing your idea

No business plan can be developed without first conducting a little market research. Once you settle on what your home-based business idea is, you must make sure it's doable. Whether you comb through journals on the internet or speak to locals in your community, you must perform some level of market research.

Your research should include who your target audience is, as much as it includes what your products or services are. Find out who is interested in what you're offering and how to reach them. At the same time, you'll want to establish yourself as a professional in that field to better appeal to that audience.

Performing market research will also allow you to test your idea. This could incorporate anything from building a prototype to running it by a group of critics. Find out if your idea works and if people are interested in it to ensure a successful opening.

Start-up costs and budgeting

Every business costs some amount of money to start-up and to keep running - whether it's operated from home or not. Some costs to keep in mind include a faster internet connection, marketing services and shipping and handling.

Calculate the costs and then budget accordingly. Make sure you set a realistic budget and that you have the funds to cover it.

Legal requirements for your business

Like any other business, there are legal requirements you must follow to open the doors. Most of them are quite basic, so don't feel overwhelmed by the legalities of operating a home-based business.

Below is a list of some of the common, basic legal requirements business owners face:

• Naming your business: First and foremost, attach a name to your company. This is not only so customers can find your business, but also so you can register it.
• Pick a business structure: The business structure you choose greatly influences your operations. It also plays a role in taxes and how much of your personal assets are at-risk.
  • Business structures to choose from include, but are not limited to: sole proprietorship, partnership, limited liability company, corporation and cooperative.
• Get licensed: After you choose your business structure, you’ll need to figure out what licenses or permits you may need to legally conduct business.
  • Licenses and permits to choose from include, but are not limited to: general business license, professional or trade license, home occupation permit, sales tax permit, health and safety permit, sign permit and construction permit.
• Check your local zoning laws: Ask your local zoning board any questions you may have regarding licenses and permits. Not every home-based business will require a license, but it’s always safer to check.

Merchant services, payment options and order fulfillment

After you handle all the budgeting and legal requirements, it's time to think through how you'll process and fulfill orders. For home-based businesses in the U.S, two common shipping partners to choose from are FedEx and UPS. These companies can print out mailing labels, track shipments and arrange for pickup and delivery.

As for payment services, you'll also want to find a reputable partner. Look for a service that allows for a variety of payment options. These can boost sales by making it easier for your customers to purchase your products or services. Some options to choose from include Stripe, Due, Elavon and WorldPay.

Once the logistics are in order, dedicate a space for your home-based business. Setting aside a specific space can help you separate work life from home life. The last thing you want to do is find yourself folding laundry when you should be fulfilling orders. While a home-based business provides you a comfortable amount of flexibility, you’ll want to ensure that flexibility doesn’t impede your business responsibilities.

You’ll also need to figure out what you need in your workspace to keep productive. Some home office essentials may include a desk, a comfortable chair, filing cabinets, pens and pencils, a computer, a printer and an internet connection. Of course, different businesses will require different supplies, but these items tend to be universally applicable.

Industry-specific equipment

Industry-specific equipment is often required for many different fields. Some of the best equipment for creative arts professionals to invest in may include a microphone, headsets and or a stylus. A web developer may need the appropriate software for designing and developing websites. A florist may need a good selection of not only flowers, pots and soil, but also a payment software solution.

Tech, devices and software

Most home-based businesses rely on some level of tech to produce or sell their products and services. While a woodworker may not need a computer to cut, sand or polish wood, it would most likely benefit their ability to sell their crafts.

Any home-based business professional can benefit from tech like a trustworthy smartphone or a fast and reliable internet connection.

While the above information is intended to help you get your home-based operation off the ground, you may benefit from additional research into local and regional programs organizations or networking opportunities with other entrepreneurs. The following resources can help you cover the basics and serve as a starting point for you to discover more information about your specific business, community or work-from-home solution.

Government programs and resources

Below is a list of government resources for entrepreneurs and small business owners:

• Small Business Administration: The Small Business Administration (SBA) is the hub for all things small business. From counseling to loans, the SBA can help you get your home-based business up and running. Use their site to find the information, links and resources you need.
• Small Business Development Centers: The Small Business Development Centers are located at several different locations across the U.S. These centers supply small business owners and entrepreneurs with expert advice, business planning assistance, tech development and access to financing, among other forms of support. 
• National Association For the Self-Employed: The National Association For the Self-Employed offers a variety of resources to small business owners and entrepreneurs. They help owners cut costs on products and services such as legal help, home office insurance and healthcare insurance, among other significant business costs. 
• National Women’s Business Council: The National Women’s Business Council provides independent advice and policy recommendations to the U.S. government, including the SBA, on economic issues related to women business owners. 
• Minority Business Development Agency: The Minority Business Development Agency is dedicated to serving minority business enterprises. The agency offers industry-focused services, loans and other forms of support.
• SBA Veteran-owned Businesses: The SBA also features a hub for veteran-owned businesses. The SBA offers support to veteran business owners in the form of funding, training and federal contracting opportunities.
• IRS Self-Employed Individuals Tax Center: The IRS Self-Employed Individuals Tax Center assists with filing, returns and other tax obligations for self-employed business owners and entrepreneurs. 

Home-based business resources

Below is a list of resources specifically dedicated to home-based businesses:

• Home Business Magazine: The Home Business Magazine features all things home business. Entrepreneurs and business owners can read up about current trends, business strategy tips and the stock market, among other important information. 
• My Own Business Institute: My Own Business Institute (supported through Santa Clara University) provides free online courses to entrepreneurs. Their goal is to help entrepreneurs start and grow their businesses around the world. 
• Power Home Biz: Power Home Biz provides a directory of resources for home-based business owners, as well as articles related to business growth and development. 

Business law and legal resources

Below is a list of nongovernmental legal services and resources for entrepreneurs and small business owners: 

• FindLaw Small Business Center: The FindLaw Small Business Center provides legal resources, including a search tool to find lawyers. 
• Employment Law Information Network: The Employment Law Information Network provides resources and advice on federal and state employment law, including guidebooks for HR. 

Market research and demographic data

Below is a list of market research resources for entrepreneurs and small business owners:

• Census Bureau Data: The U.S. Census Bureau provides data that can help small business owners and entrepreneurs conduct market research on different demographics. 
• FedStats: FedStats is a hub for statistics from over 100 different U.S. government agencies. This resource can be used to perform market research.