The majority of American entrepreneurs start their businesses from home. Getting started with a small business from home is easy if you follow these six steps.
Develop your own business idea
The first step towards starting a small business is to come up with an innovative business idea. Your business venture should be something you are passionate about and meet a market need.
The best way to do this is to identify a problem that frustrates you. Is there a problem that you continually encounter that you wish someone would fix? You might be able to turn that into your next business venture.
It is not necessary to reinvent the wheel every time. Consider the existing businesses and ask yourself how you could improve on them. Are there any gaps in the market that you could fill?
Decide what you’ll sell
It takes a lot of work to start a business, but the first step is to determine what you will sell. Whether you succeed as a business depends on your ability to sell products or services.
Make a list of products and services you can offer. The following questions should be considered from there:
- Does this product or service have a demand?
- What are the benefits to my customers of this?
- Would I buy this product or service?
- Is there a reasonable price I could charge?
- How much demand is there for my product to make a profit?
Prepare a business plan
It is then necessary to prepare a business plan. If you decide to apply for small business financing in the future, a business plan will help you gain clarity as you start up.
Most business plans fall into the traditional or lean startup categories, according to the SBA. The traditional business plan goes into great detail. Almost all lenders and investors require lender and investor plans to be several dozen pages long.
As opposed to a traditional business plan, a lean startup plan presents an overview of the business at a high level. Your business summary will be about a page long, and it will cover everything you need to know about your company. It will be much faster to create this, but investors may want more information if you seek funding.
Choose a legal structure for your business
The choice of the right legal structure is crucial to the success of your business. A sole proprietorship may be the right choice for you if you want to start quickly and with little hassle.
You’re in complete control with this type of business model since there are no partners or executive boards to answer to. It’s important to remember, however, that you are responsible for any debts and lawsuits the business incurs.
Limited liability companies (LLCs) provide more flexibility and create a legal separation between you and the business. However, they require more paperwork and state registration.
Register for an EIN
Employer Identification Numbers (EINs) are federal tax identification numbers that identify your business. Your business will need an EIN when it becomes an LLC or hires employees.
Your Social Security Number will be used for identifying your business without an EIN, so you can protect it by obtaining an EIN. The IRS website allows you to apply for a free EIN and receive it within minutes.
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Open a bank account for your business
Establishing a business bank account is the next step after you’ve established your business entity. It is important to keep your personal finances separate from your business finances.
The best way to establish a personal relationship with a bank is to join forces with a local institution. It is often found that smaller banks are more helpful and can respond quickly if a problem arises.
Consider insurance options
When you run your own business, you run the risk of lawsuits, data breaches, and business interruptions. The first thing you should do is make sure you have the right insurance.
The best way to get started is to look into a Business Owner’s Policy (BOP). There are three types of coverage included in this type of insurance:
- General liability insurance: It provides coverage for injuries to people, property damage, and property loss.
- Commercial property insurance: The equipment that your business depends on is protected by commercial property insurance.
- Business income insurance: This insurance can pay for necessary expenses such as payroll if you’re unable to run your business.
You should speak with an insurance agent for business-specific recommendations.
Organize your home office
Setting up a dedicated home office is a good idea if you plan on working from home. It can either be an empty room in your house or a designated corner in your bedroom.
It is important to choose an area that offers a certain amount of privacy. Be mindful of the background, especially if you will be conducting client calls frequently.
Consult an accountant
Taxes are confusing for most people, and they become even more complicated when you run a small business. Furthermore, you need advice on how to structure your business, how to manage payroll, and how to monitor expenses. That’s why you should hire an accountant.
You can get help with all of these issues and ensure your business is compliant with the latest tax laws by working with an accountant. If your business is audited, an accountant can guide you through the process.
Make sure all legal requirements are met
You should always check your state and local requirements before starting a new business. A business license or permit may be required by some states, and you could be fined if you don’t comply.
You may need to check local zoning laws depending on the type of business you plan to run. After you’ve selected your business structure and registered with your state, check to see if there are any other laws you need to know about.
Plan your marketing strategy
Creating a marketing plan is crucial to building a successful business, but many business owners fail to do so. It is because of this lack of planning that they often waste a lot of money without seeing any real results. Or worse – something works, but they can’t reproduce it.
It’s for this reason that a marketing plan is essential. How you plan to spread the word about your new business will be outlined in a marketing plan. Typically, it includes:
- Your marketing goals in a nutshell.
- Your target market and customers should be described in detail.
- The timeline for completing tasks.
- Monitoring key metrics along the way is important.
It is then possible to outline what you intend to do with your company’s website, social media channels, and branding.
Put your idea to the test
Now that you have your business idea, it’s time to put it to the test, which means focusing on making sales. Profitability is what determines whether a business is successful.
There is no perfect way to launch your business, and you may encounter many missteps along the way. You can gain more exposure and grow faster by partnering with more established businesses.
It is essential that you are prepared to adjust your strategy as you go regardless of what strategy you choose. Make sure your solution fills a need for your customers and is relevant.