A home-based business enables you to enjoy a number of benefits that you can’t draw from a storefront business. You don’t have to worry about buying or renting office space, the daily hassles of commuting to work are eliminated, and it’s possible to deduct home expenses such as mortgage interest from your income taxes. It is, therefore, not surprising most upcoming entrepreneurs choose to begin their businesses from home. According to a 2012 Global Entrepreneurship Monitor report, as much as two-thirds of entrepreneurs in the United States start their business at home, and 59% of established home-based business owners don’t even bother to rent out commercial spaces!
However, starting a successful enterprise from home requires you to pursue a business opportunity that’s a perfect fit for you – and here is how to find it.
Follow Your Passion
When running a business, passion is one of the greatest motivators. It supplies you with the motivation to wake up every morning and do your craft, and the power to keep pushing on when the business isn’t going good.
To find a home business idea that is right for you, begin by listing down your hobbies and interests, and the potential businesses that could grow from each. If you love cooking, for instance, you could start a baking, catering, grocery delivery, or home restaurant business. If you love reading, on the other hand, you could do with a bookstore, a freelance book review or editing service. Or if you have a knack for gardening, you can turn your passion into a lawn and yard care enterprise. Similarly, art lovers can turn their creativity into photography, painting, sculpting or drawing businesses, and people who are passionate about kids can begin child care units.
After matching your passion with potential business ideas, embark on assessing how your lifestyle affects the commercial viability of each idea. How will the business affect your family or immediate neighbors? Will you need to make any structural adjustments to your living space? Is your home in a suitable location? For example, if you live in an apartment on the fifth floor and you love cooking, you will find it extremely challenging to smoothly run a catering business. But if you live in a standalone bungalow, the idea of a food business can work. In general, your lifestyle and living conditions should make it easy for you to start and operate the business.
Work on Your Professional/Occupational Skills
Passion alone is not enough to start a successful business. You need to blend it with a strong general business acumen and, in most cases, professional skills. For instance, you need more than a passion for kids and a good business sense to run a child care business. In many jurisdictions, you will need to undergo professional childcare training and obtain certification before you can be approved by local authorities to provide childcare services. In other cases, professional training may not be a mandatory requirement but it will enable you to complete certain tasks competently. For example, baking aficionados are not typically required to obtain any professional certification in order to bake and sell cakes. They do, however, need good knowledge of human nutrition, a solid grasp of baking techniques, and good culinary skills to bake cakes that customers will love. These skills can only be obtained through successful completion of a professional course.
Therefore, when looking for a suitable home-based business idea, consider whether the opportunity you have set your eyes on requires any professional training. If you lack the skills, attend a short course to improve your ability to provide competent services or make quality products, or you can explore another opportunity.
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Consider the Startup Costs
Different business ideas require varying amounts of startup capital. Calculate the amount of money you need to start your preferred home business. In your calculations, factor in the cost of:
- Acquiring raw materials, ingredients, equipment, and other supplies;
- Making structural adjustments to your home;
- Acquiring relevant licenses, permits, and insurance;
- Hiring support workers;
- Packaging and/or shipping your products; and
- Maintaining an emergency fund (Cash to take care of hidden or unforeseen costs).
With a rough estimate of the startup capital, compare it with what you had set aside to start the business. If the costs exceed your budget, the business idea may not be the right fit for you. At this point, you can start the same business but on a smaller scale, or launch an alternative business that fits with your financial needs.
Evaluate Your Entrepreneurial Goals
Your short and long-term goals can greatly affect your choice of home-based business. It’s important to evaluate the reasons you want to start the business. Do you, for instance, want a business that will enable you to earn a living as you transition into another career, or start an enterprise that could grow into an empire?
With short-term prospects, avoid businesses that could be difficult or costly to sell or close down later on. If the business requires you to make major structural adjustments to your home, it will cost you a lot of money to revert the space to its original state. However, if you are in it for the long-term, feel free to invest as much time, space, and money as you can afford into turning your idea into a functional business.
Creating a business plan, meanwhile, can be beneficial here. You’ll be able to convey your goals, the strategies you’ll follow to meet them, potential problems that may arise and ways to solve them, and the organizational structure of the business. You should also consider looking into business templates which could make the whole process a lot easier and help you get your business off the ground.
Follow Government Regulations
Running a business from your own home doesn’t necessary mean it’s beyond big brother’s reach. Although the level of government regulations for home-based businesses may vary from jurisdiction to jurisdiction, you need to understand the local regulatory requirements that apply to your preferred idea.
Find out whether your business needs to be registered by a local authority and whether licenses and permits are necessary. Read about relevant taxation policies, insurance and bond requirements, advertising minimum wage for employees, workplace safety standards, zoning restrictions, and environmental impacts assessment and reporting. If the business you want to start is heavily regulated or taxed, the government probably considers it a high-risk establishment, so you may have to weigh the benefits of starting the business against the downsides. Your ideal home-based business should face minimal government regulation.
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Research Availability of Materials/Proximity to Suppliers
Another aspect you need to consider when choosing a home-based business is the availability or proximity to production resources and other inputs that are necessary for daily operations. For a small home business to thrive, it should be located near key suppliers and providers of services such as distribution and shipping. Identify all the production inputs you will need to keep the business running and assess the ease of obtaining them.
Let’s take an example of a grocery delivery business. Ideally, you should own a delivery van and live near farm producers of vegetables and fruits. This will make it easy for you to obtain fresh produce from the farmers and deliver it to your customers who can be grocery stores, restaurants or individual shoppers. But if you live hundreds of miles away from the producers, the business will become untenable due to high transportation costs.
Consider Your Target Market and Competition
You may have a brilliant home business idea but without a well-defined target market, chances of failure are quite high. Before starting your business, explore your neighborhood to know your potential customers and whether they are easy to sell to. Don’t assume your offerings will fly off the shelves just because your family says you brew wonderful coffee or bake the sweetest cakes. Walk from household to household, offer samples, and ask for feedback. You can also put up posters in residential areas (you may need a permit for this) and evaluate the response you get. How many people called in to make inquiries? Did they sound enthusiastic or just curious?
Examine population demographics. If you are planning to launch a long-term child care business, residential areas largely inhabited by young couples or growing working-class families will be perfect for your business because there will always be parents looking for care services. On the other hand, if your idea is to provide care services for the elderly, then you need to be located in a neighborhood with an aging population.
After establishing there is enough market for your products or services, shift focus to studying your competition. Know who they are, what they are offering and how they run their businesses. Gathering this kind of information can help you to make your products and services stand out. If your business opportunity has no competition, don’t rush into starting up. Focus on giving your business a solid foundation and building quality products. One of the most effective ways to build customer loyalty is to create a good first impression for your products and services.
Long gone are the days when home-based businesses were a preserve of stay-at-home moms. Today, these businesses have gone mainstream. Even though they are easy start and they afford you the flexibility to live your life while making money, it’s important to pursue an opportunity that’s a good fit for you. Start a business you can easily fall in love with. Remember that the business is moving into your home, so love, passion, and commitment are vital to yielding a successful relationship!
Do you have anything you’d like to add? Are you a home-based business owner and have some tips and tricks you’d like to share with up-and-coming entrepreneurs? Join the conversation below!
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