According to Forbes, approximately 543,000 new businesses are started each month. Of those, an estimated 52 percent are home-based. The trend of leaving the outside office behind in favor of working from the comfort of home isn’t all that hard to explain. Entrepreneurs can customize their work spaces, set more flexible time schedules, determine what, if any, dress code is necessary and, best of all, avoid the two biggest threats to their sanity: long commutes and office politics.
While we are spouting off statistics, one more is worthy of our attention. Although about 543,000 businesses are being born each month, an even greater number are dying. Assuming that the folks who started them were probably as idealistic and excited about launching their companies as you might be at this very moment, aren’t you wondering what went wrong? Is it possible that at least some of these entrepreneurs jumped the gun and didn’t put sufficient preparation and time into the project? In a similar vein, are there things you can do as an aspiring home-based business owner to prevent your endeavor from suffering a similar fate? Read on to discover 10 things you should definitely know before starting your home-based business.
Establish Your Business Purpose
This may sound silly, but you can’t get up and running successfully until you have a solid understanding of what your company will be selling or what service you will provide. Do you want to operate online or have a home showroom? What do you love to do? How can it benefit others, and how can you convince people that they need what you have? What can you learn from the successes and failures of others? Are there low-risk ways you can test your idea? Spending some time and soul-searching on these inquiries can help you chart the course of a potentially successful business.
List Your Needs
Now that you know who you are and what you want to do, you need to figure out if you have the skill set it will require. Are you qualified and knowledgeable about your product or service? Are there additional licenses, certifications, or insurance plans you need to acquire for your insurance plans? Would you prefer to hire someone who has these credentials, focusing your attention on other aspects of running your business? Make a written list of all the skills, credentials and equipment you will need. Then set about making it happen.
Research Governmental Requirements for Home Businesses
It should come as no surprise that opening a new business can’t be done without notifying your state and federal government, even if you’re working from a home office. Because each state has its own unique set of protocols, your best bet is to go to your Secretary of State’s website or even your local county courthouse or city hall. Don’t omit this step; you don’t want to risk running afoul of the IRS or your state’s department of revenue.
Examine Your Finances
It’s time for more soul-searching and brutal honesty. It is vital that you quantify how much money you will need to start your business. If this is your first time swimming in these waters, chances are good that you have only the sketchiest of ideas. Remedy that by doing tons of online research about similar businesses that have been started in the recent past. Your local library is another excellent source of information, as are business owners in your community. Although these people may not be totally forthcoming with details, they may furnish you with some helpful firsthand information with a local twist.
Project Your Revenues
Now that you have made it through the scary questions about start-up costs, allow yourself to think ahead to a time when your baby business is all grown up and successful. In terms of revenue, what will that success mean? To get a sense of potential minimum and maximum incomes, you can once again visit your library or do some online research into your specific business genre. Also, don’t overlook industry associations if they exist for your type of business.
Reach Out for Help
It’s no secret that running a business is a difficult path to travel. Fortunately, you don’t need to be a trailblazer. Find a mentor who can give you expert advice and provide a sounding board when times get tough. Help can be had from a variety of sources, including government mentoring programs such as SBDCS, volunteer programs like SCORE and even your local Chamber of Commerce.
Make a Marketing Plan
If you don’t know how to attract your customers, how can you possibly expect them to buy anything from you? To that end, it’s worth your while to write a marketing plan. This document will help you set forth just exactly who your target customers are and specify how and by what date you propose to reach them. Assistance with your marketing plan could come from the mentor you found in the previous tip.
Write Your Start-up Business Plan
This is just part of your larger business plan, but it’s absolutely crucial. In this document, you specify all of the steps you need to take to open your doors. That includes zoning permits, licensing, signage and anything else you can think of. At this point, your entire business plan should be written, even if you are not applying for a loan. Finalize all of your research on pricing and arrive at figures of how much you will charge for your products.
Make Technology Your Business Partner
Any business owner will tell you that there just aren’t enough hours in a day to get everything done. That’s where tools such as accounting and customer relationship management software can truly come in handy. The more you can hand over the tedious, routine tasks of emailing customers and managing newsletter subscriptions, for instance, the more time you can spend on growing your business.
Complete Your Exit Strategy
But wait, you’re thinking, why be so pessimistic? Isn’t designing an exit strategy akin to admitting defeat before you even get started? The answer is simple: no. Your exit strategy is your plan for reaching your initial goals as well as how, when and under what circumstances you will close your business, sell it or pass it down. This involves thinking about how to maximize its attractiveness to investors, buyers or even your own children.
In many ways, starting your business is a huge leap of faith. There are variables you cannot possibly control no matter how meticulously you plan. However, being proactive and thoughtful about your endeavor long before your doors open is one of the best predictors of your eventual success. Good luck!