The are many reasons to start a home-based business: to earn extra income, to supplement an existing salary, looking to new horizons after leaving a permanent job through redundancy or company downsizing or to fulfill a lifelong dream. Whatever your motives, thanks to the growth of the internet and the changes in the way people work, there has never been a better time to start your own business. You too can take advantage of the freedom offered by running a business from home, with its lower costs, reduced travel expenses and the flexibility to choose both the environment and hours that suit you.
Top Tip: You are in good company as Apple Computers, Lush Cosmetics, Facebook and even the Ford Motor company are just some of the household names that started as small home-based businesses! So, let's get started.
Step 1 - Make A Solid Commitment To Your New Venture
Ask yourself a question: how many of the success stories that you have read about were founded by people who simply sat back and dreamt about it? The hard truth is that if want to achieve something then you need to make a commitment - for as long as it takes to succeed. It's highly unlikely that you are going to make your fortune overnight, but if you persevere you will succeed. It doesn't matter if you can only commit 15 minutes a day, what is important is that you make those minutes count by always giving 100% effort.
Top Tip: Apparently Thomas Edison took 1,000 attempts before he invented the light bulb. He never said I failed 999 times; he said I spent 999 learning how not to invent a light bulb!
Step 2 - Have You Got What It Takes To Become Your Own Boss?
The answer is yes! It helps if you enjoy taking risks and the responsibility that goes with it. It also helps if you like hard work, making decisions and the challenges that come with owning your own venture. And finally, it's extremely useful to be well organised, have the ability to stick to deadlines and can work with figures. But the fact is if you don't have all of these qualities (and very few people do), then simply find someone who does. So, for example, if you aren't familiar with the requirements surrounding keeping records, hire someone!
Top Tip: Success is 5% inspiration and 95% perspiration.
Step 3 - What Business?
It could be that you want to start your own nail salon, a pet grooming service, be a language tutor, physiotherapist, landscape gardener, affiliate marketer, eBay seller, create self-help videos, set up an ecommerce website... the list is almost endless. The fact is that it doesn't really matter. Because the steps to success are the same for every business. What does differ is the way that you manage and respond to the needs of your particular business or sector. If you haven't yet decided upon a particular business, then there are literally thousands of ideas for business, covering every imaginable product and service. Whichever you choose, ask yourself the following questions:
Is there an identifiable gap in the market for your product or service?
Have you identified a product or service that you just can't seem to find?
Can you make a living from your hobby or something you are passionate about?
Can you offer a product or service better than someone else?
Top Tip: At this initial stage it's also worth exploring the common mistakes that start-ups make and how to avoid them.
Step 4 - Developing Your Business Idea
The next step is to dig a little deeper and define exactly what products and services you intend to sell and, equally importantly, who you are going to sell them to. Even if you already have a fixed idea of what you want to sell, you still need to focus more intensely. It's not enough to say you are going to sell pet products, you need to focus on what types of pets and as a consequence what products those pets would need. Marketing your product and conducting a little market research yourself can make all the difference between success and failure. You can discover the buying habits of your target market, geographical location and even who your competitors are. You can gather a great deal of this information, by simply spending some time searching the internet and gathering a list of businesses that are already trading in your chosen field. In addition you can scour the ads in local newspapers and shops to see who is out there or even conduct your own market research by asking people in the street if they would be interested in your services.
Top Tip: Your family and friends often say it's a great idea, even if they think otherwise, just so they don't hurt your feelings. So ask some independent people.
Step 5 - Do You Need A Business Plan?
The good news is that not every business requires a formal plan, especially if your home-based operation doesn't require any outside funding. Click here to learn more about Sources of Funding for Start-ups. The problem with a business plan is that not only will you have to learn how to put a plan together, they can also take weeks to prepare, time that may be better spent concentrating on getting your business off the ground. In fact, studies have shown that having a formal business plan for a small home-based venture really makes no difference to the ultimate success of the business. The time when you may need to produce a business plan is when you're looking for potential financial support. It's not just for banks, but also if you have to approach family, friends or business connections. The clearer your vision and the more organised you look, the more likely you are to get the support you desire.
Top Tip: Matt Coffin, founder of LowerMyBills.com, secured funding of $4 million from investors simply by using a 10-page PowerPoint presentation!
Step 6 - Initial Start-up Costs
OK so let's assume you have your idea, have spent some time examining the sector and its market potential, now is the time to make sure you have all the tools necessary to carry out the first phase of your venture. Below is a list of the most common items that a home-based business requires to starting functioning:
A computer and associated software
Internet access
Build a website
Fixed and/or mobile phone
Business cards
Access to sufficient stock - if you're selling products
A designated space, preferably in a quiet location
A desk
It's not a long list and can all be obtained without breaking the bank.
Step 7 - Additional Finance And Funding
It may be that you are starting up a business while you are still employed or have another source of income to cover you while the business finds its feet. If you don't require any outside funding then skip this section for the time being and move on to the next. But there are a number of reasons why you might require funding, above and beyond simply paying for office equipment, website development, advertising etc. One of the main requirements is sufficient funds to cover personal expenses while the business gets under way and your customers start paying you! As a rule of thumb, many business advisors suggest that you should have at least three months' money squirreled away, as it may be this long before you start seeing any returns. So where do you go for funding? Well to start with there are your own savings (if you don't have faith in your idea, who will?), then there are family members, friends and business associates. A little further afield there are additional sources of funding, such as bank loans, grants and equity funding from private investors. In these instances you are strongly advised to produce a business plan in order to persuade and secure the necessary funding.
Step 8 - Keeping Records
Not the most enjoyable aspect of running a business, but nevertheless essential. It is extremely important to keep an accurate record of your income and expenditure from day one - start as you mean to go on and introduce a proper system. Not only does it enable you to keep a close eye on how well your business is progressing, it's also a legal requirement!
A few tips:
Retain and file all your invoices and receipts that relate to your business (if in doubt, keep them anyway and ask your accountant if you can claim on them)
As you will be using part of your home for business, keep copies of the utility bills so that you can work out how much relates to your business
You need to be able to show what you have spent personally and what is spent on your business. So having a separate bank account will make life a lot easier
If you are employing staff, then you must keep records of their wages and tax and National Insurance you have deducted and paid to HM Revenue & Customs (HMRC)
Keeping good records will pay huge dividends in the long term as you will reduce your overall tax bill, make filling in tax returns much easier and help ensure you pay your tax bills on time and avoid any interest or penalties.
Step 9 - Promoting Your New Business
People used to say "build the best mousetrap in the world and people will beat a path to your door". But today there are so many businesses offering such a wide variety of products, how do you know which door to open? You have at your disposal a vast array of both online advertising services and more conventional offline advertising services, which when combined create a powerful weapon to attract and retain those all-important customers!