Break into Entrepreneurship and Start a Business from Home
For those individuals who are ready to step into entrepreneurship but not ready for a brick and mortar store, I suggest you try to start a business from home. A home-based business can provide a cost effective and convenient method of providing services and products to your customer. You may also find your home-based business provides many tax advantages.
In most cases, starting a business from home is really no different than starting a brick and mortar business. Yes, the locations are vastly different, creating different opportunities. However, the steps remain pretty much the same.
If you read my other articles, eventually you’ll come across my advice to write a business plan. It’s a common theme with me, and I encourage all my clients to do so. Writing a business plan is like a roadmap for your company’s growth and increases the chances of your business being successful. Your business plan will also help you determine if your business idea is feasible.
If the idea of creating a business plan overwhelms, I encourage you to check out LivePlan. The program simplifies the process through the use of a step-by-step wizard. This program will also help you through the financial portion of your business plan, will help you in the funding stage.
Determine Your Legal Structure
I don’t like to push my clients into any particular business structure. Each situation is different. However, I will say sole proprietorships are the most common form and simplest, and usually the least expensive way to register your business name. It also offers the least amount of protection, which makes it especially important to obtain business insurance. I recommend insurance for each type of business structure, but stress it even more for the sole proprietorship. Next common is the Limited Liability Company, and last but not least the Corporate structure.
Home-based businesses often have smaller start-up costs than brick and mortar businesses in the same industry. Smaller start-up costs can be a significant advantage for a new business. Having low start up cost can help small businesses survive the first few years, which typically are the most difficult financially.
That being said, options for funding vary on the type of industry, amount requested, credit, etc. Regardless of the source you tap into, most likely you’ll need a good set of financial projections. I’ve created free templates for the three main parts of the financial statements (balance sheet, income statement, and cashflow statement). Feel free to download them for your use.
Don’t Be Too Hasty
If at all possible, I encourage my clients to spend no or little money prior to having all funding in place. Some expenses can’t be avoid. For example, you’ll likely want to have your business name registered. There may also be other circumstances to spend your money prior than bank approval, but try to keep sending at a minimum. Why? Because you may need those funds to match or as a downpayment later. The goal is to put you in the best circumstance when you reach out for funding.
Starting a home-based business can be a great first step into entrepreneurship. Depending on your route, it can be inexpensive and have very lower risks. Above all, I encourage you to take time to properly plan in order to give your business the greatest possible chance of success.
What home business do you have in mind to start?