The COVID-19 pandemic blurred the lines between work and home. Between 2019 and 2021, the number of Americans working from home tripled, going from 9 million to over 27 million. Many of these newly minted remote workers used their skills to go into business for themselves—without having to leave the living room. And you could be next.
Learning how to start a small business at home is no easy feat. It takes months of research, planning, and effort. But if you’re ready to take the plunge, here’s everything you need to know, from developing your idea to getting your first clients.
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Starting a Business From Home: 6 Things You Need
Before you start a home business, it’s important to have a strong foundation. Here are the key things you need to set yourself up for success:
1. A Great Business Idea
Every successful business starts with a great idea. If you don’t have one in mind already, take some time to brainstorm. Think of a product or service that solves a real problem and has an interested audience. The best home business ideas combine your skills, passions, and experience so you know you can execute them well and will enjoy the process.
Some of the most common home-based businesses include:
- Freelance writing
- Online tutoring
- Ecommerce
- Graphic and web design
- Web development
- Virtual assistance
- Consulting
These fields typically have low business costs and don’t need a lot of space or equipment to get started.
2. An Understanding of the Market and Competition
Once you’ve settled on an idea, do some research to understand your target market and identify your competitors. Learn about potential customers’ needs, preferences, and buying habits. Look at your competitors’ strengths and weaknesses. Then, brainstorm ways to make your business stand out.
3. A Plan for Success
Draft an outline of a business plan that outlines your strategies, goals, and financial projections.
Having a basic plan in place helps you determine whether your ideas are viable.
4. A Dedicated Workspace
While it’s tempting to work from your bed or couch, you should create a dedicated home office space.
Choose a quiet area with good lighting and ventilation. Invest in a comfortable chair and desk, and keep your workspace organized with everything you need. Having a dedicated space helps you focus on work when you need to while maintaining a healthy work-life balance. Plus, you’ll work more productively without distractions.
5. The Right Tools and Technology
Make sure your home office has reliable technology and equipment. Depending on your business, you might need:
- A computer
- High-speed internet
- A printer
- A phone
- Specific software or tools for your industry
Having the right setup lets you provide great service instead of wasting time with subpar tools.
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6. A Separate Business Bank Account
Set up a dedicated business bank account to keep your personal and business expenses separate. This makes bookkeeping easier. It also helps you track your business’s financial health.
A separate business account also shows professionalism and builds business credit over time. This will be useful as your business grows, especially if you need funding.
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How To Start a Home Business in 6 Steps
With the essential components in place, it’s time to take action to bring your home-based business to life. Follow these steps to get your new venture up and running:
1. Create a Detailed Business Plan
Once you’ve solidified a viable idea, use your outline to develop a comprehensive business plan. This serves as a roadmap for the first few months of running your home business. You’ll also show this plan to potential investors if you decide to look for funding. Include the following key sections:
- Executive Summary. Provide a brief but compelling overview of your business. This includes your mission, products or services, and goals.
- Company Description. Describe the business in detail. Outline its legal structure, location, and key team members.
- Market Analysis. Present your research findings on your industry and target market.
- Product or Service Description. Explain what you’re offering and what sets it apart from competitors.
- Marketing and Sales Strategy. Describe your plan for promoting your offerings and reaching your target customers.
- Financial Projections. Estimate your income, expenses, and cash flow for the next few years. This shows your business’s financial viability.
- Funding Requirements. Detail how much money you need to start and operate your business and how you plan to obtain it.
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2. Choose a Business Structure and Get Registered
Decide on the best legal structure for your home business. The most common options are:
- Sole proprietorship
- Partnership
- Limited liability company (LLC)
- Corporation
Sole proprietorships are most common for single-person small businesses. They’re the simplest to run. But before you choose, consider factors like liability protection, tax implications, and paperwork. Some structures are more complicated, but they give you more tax benefits and government support.
Once you’ve decided on a structure, register your business with the appropriate state and local agencies.
3. Establish Your Financial System
Open a business bank account and set up a bookkeeping system to manage your finances. Consider using accounting software to streamline your financial management.
Keep track of your income, expenses, and invoices, as well as tax obligations. If you’re overwhelmed, consult with a financial advisor or accountant to set everything up properly.
4. Get Required Licenses, Permits, and Insurance
Research the licenses, permits, and insurance policies you need. These vary depending on your industry, location, and business structure. Common requirements include:
- Home occupation permit
- Business license
- Professional licenses
- General liability insurance
5. Build Your Online Presence
Many people look for businesses online, so having a strong digital presence is essential for a growing company. Develop a professional website that showcases your offerings and pricing. Set up social media profiles to update and connect with your audience.
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6. Network and Promote Your Business
Spread the word about your new home business. Attend industry events, join local business organizations, and connect with other professionals so people learn who you are and what you do. Plus, different marketing techniques can help you reach your target audience, such as:
- Email marketing
- Content marketing
- Paid advertisin
- Referral programs
- Partnerships with other businesses
Don’t get discouraged if business isn’t booming right away. Success takes time, and working with even one or two clients in the beginning is totally normal. Keep going.
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6 Tips to Run a Successful Home Business
Running a successful home business requires dedication, hard work, and a willingness to adapt. Here are some tips to help you thrive:
1. Embrace Continuous Learning
To stay competitive and grow your business, commit to continuous learning. Stay up-to-date with industry trends and best practices. Attend workshops, webinars, and conferences to expand your knowledge and skills. It’s also a good idea to read books, blogs, and articles about your field.
2. Offer Exceptional Customer Service
Providing outstanding customer service is key to generating positive word-of-mouth and standing out from the crowd. Respond promptly to customer inquiries and concerns. Go above and beyond to meet their needs and exceed their expectations. And above all, regularly seek feedback. Your customers are your best resource.
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3. Maintain Financial Discipline
If you want to keep your business up and running, you need to practice effective financial management. Keep accurate records of your income and expenses. Create a budget and stick to it. Don’t forget to set aside money for taxes, and consider working with an accountant to ensure compliance.
4. Adapt and Innovate
To keep up with the ever-changing business landscape, you need to adapt and innovate. Stay attuned to changes in your industry and be open to new ideas. Don’t be afraid to experiment with new approaches or technologies. By embracing change and innovation, you’re better equipped to seize new opportunities and stay ahead of the competition.
5. Prioritize Work-Life Balance
Running a home business can blur the lines between work and personal life. To avoid burnout and maintain a healthy lifestyle, prioritize work-life balance.
Set clear boundaries between work and personal time. Establish a routine and stick to it as much as possible, taking breaks throughout the day to recharge. Don’t let hobbies, exercise, and social activities fall by the wayside.
6. Stay Organized
Organize your time and your space. Use tools like calendars, to-do lists, and project management software to stay on top of tasks and deadlines. It might take some trial and error, but you’ll eventually develop efficient systems for managing paperwork and emails. This equips you to focus on growing your business.
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Win More Jobs, Increase Your Profit, and Support Your Clients With Homeowner Financing
Starting a business is complicated, whether you work from home or not. But Joist is here to streamline client relations for you.
With Joist, you can land more jobs, win more upsells, and get paid faster by offering your customers financing options on-site. Joist partners with some of the industry’s best lenders to offer your clients competitive personal loans with quick funding in as early as three business days. You’ll never have to worry about money coming in.