A recent study by the Office of Advocacy for the SBA (U.S. Small Business Administration) suggests that $102 billion in annual revenue is generated by America’s home-based sole proprietors.
Now that number was staggering to me and probably to you as well. This offers great hope to those looking to start a business from home.
The home based business entrepreneur must first however take the proper steps before embarking on this journey. Let’s take a look at some of the things to consider when starting your home based business.
Where do I fit in?
What’s important for a first time business owner is to find out whether you have what it takes. What do I mean by this? Well, it’s simple.
Are you creative, a problem solver, do you take life by the horns, are you willing to take risk, are you afraid of failing, and are you persistent?
Most entrepreneurs are self-motivated. If you look at this list and can pick one or two, you may be on your way. If all of these qualities describe you, what are you waiting for?
Know that determination and drive will help to develop all of the above if you feel you don’t have these qualities yet.
Next, we want to look at your strengths. The best business to open is one that you are already doing. This may sound strange but make note of the things you love to do, have experience in, or even volunteer for.
If you get stuck ask a friend or family member that you share with what they believe you would be good at.
You also want to consider your finances. Are you in the position to go full time or is part time better for you? Starting off part time may take longer to turn a profit, but this option will incur less debt.
This option also gives you time to test your market and products without the stress of turning a profit looming over your head.
Take into consideration the time that your business will take from your normal daily interactions with family. Consider also when and where you will work your business.
Discuss these things with your family. It’s best to have their full support.
Your “magic” key to success will be finding “Market Niches”. When choosing a product or service it’s necessary that there is a demand for them.
Size-up your competition. This allows your business to stand out. Are there any gaps in what large companies are offering that you can fill with your product or service?
If your product or service can solve a problem, or save time or money you will have an edge.
Should I Incorporate?
When starting your home based business it is necessary to handle all of the legalities first. The last thing you want is to have your hard earned profit go towards lawyer fees.
There are a few structures to choose from. Explaining these could very well make up the content of several large books, but that is not the focus of this article.
Let’s look at them briefly. These structures include: a sole proprietorship; partnership; a corporation; or a limited liability company.
Choosing what’s right depends on factors such as, tax issues, if you have employees, your level or liability, and other aspects. Do your homework on this one. Just make sure that what you choose meets your business and personal needs.
One thing that some of us do not consider is consulting an expert, someone that has already done what your trying to do. This is a very important step. The expert will keep you from making costly mistakes.
Assemble your team. Think about having a lawyer, bookkeeper, accountant, and an insurance agent. All of these may not be needed for every home based business model but it’s still nice to have them at your disposal.
Begin to network with other business owners and organizations. There may be opportunity for collaboration or outsourcing of your skill or vice versa.
Though this may seem like a lot to consider for the first time entrepreneur remember that you’re starting something new and there is a learning curve.
Give your self a chance to learn as you go. Take small steps until larger ones are more manageable and you will soon be on your way to Maximum Profits.