If daily commutes and coworkers don’t suit your fancy, launching a small business from home may be right for you. But, like a traditional business, it takes planning and preparation to ensure the success of your venture.
It’s also important to consider the structure of your company, which influences liabilities and capabilities. This will help you determine the proper licenses and permits.
1. Decide on a Business Idea
Choosing the right business idea is one of the most important steps in starting a business. The best business ideas are at the intersection of what you are good at (your skills), what you like and are passionate about, and what people are willing to pay for. A profitable business idea that fits who you are will give you a better chance of success and help sustain you during tough times.
If you’re not sure what sort of business suits you, take some time to research the different types of businesses. If possible, visit a few small businesses in your chosen industry. Spend some time talking to employees and customers. This will help you get a feel for the business and whether or not it is something you would enjoy doing as a full-time job.
Also consider how much money you would need to start the business and how long you’d be able to keep it running for before needing additional capital. It’s also helpful to create a budget, which will force you to examine the costs of your business ideas in more depth. You may discover that some business ideas are not financially viable at all. In that case, it’s a good idea to come up with other ways to fund your business. This could include finding angel investors, crowdfunding or applying for a small business loan.
2. Create a Business Plan
A business plan is a comprehensive description of your business and its goals. A well-written business plan can help you gain investors’ confidence and show that you’re serious about your startup. If you’re not seeking investors, a business plan can still serve as an excellent tool for planning and organization.
While a business plan can vary in format and content, there are typically four key elements in most business plans:
Company Overview: Provide an overview of your business including its history, legal structure, location and industry focus. Also, include a brief description of your business model and how it will be unique in the marketplace.
Management Team: Include short bios of the company’s leaders and highlight their relevant experience. This is particularly important for any startup that seeks investment, as investors place a lot of value on the people who run a company.
Market Research and Analysis: Outline your target audience and the competition, focusing on the local market rather than broad-based statistics for the industry as a whole. This section can be a powerful way to set yourself apart from the competition, as it helps you position yourself as an expert in your niche.
Operations and Logistics: Describe how you will produce and deliver your product or service to the customer. This includes identifying suppliers, logistics, pricing and any potential issues that could arise. This is an especially crucial section for any business that seeks to sell physical products.
3. Find a Business Name
Your business name is an important part of your brand. It should describe what you do, be distinct from your competitors’ names, and be a good fit for your audience and business model. Brainstorming, rethinking and seeking input from others can help you find the right business name.
When brainstorming potential names, consider your target audience, the emotions you want to evoke and the feelings you hope to inspire in your customers. A great business name should also evoke your core values and be easy to remember.
A lot of big businesses use a set of initials in their names because it’s easier for people to remember. For example, UPS is the abbreviation of “United Parcel Service.” Or, you might choose to go by a nickname instead of your full business name. This is a common strategy for small business owners because it’s less formal and allows you to be more creative with your business name.
Once you’ve narrowed down your business name choices, make sure to do a comprehensive trademark and domain name search. Ditch any monikers that sound too similar to an existing company name because it will confuse your audience and potentially lead to a lawsuit for trademark infringement.
Additionally, do a general internet search to see if anyone else is using the business name you want as their handle on social media or other platforms. Most states require new businesses to register their name with their Secretary of State, and you should do this before you start advertising your business.
4. Register Your Business
Depending on the legal business structure you choose and local laws, you may have to register your small business. This could include registering a home occupation permit, property use permits, obtaining a DBA (doing business as), a general business license or filing articles of incorporation.
Your business registration may also include setting up a bank account for your business, applying for an EIN number and other tax forms. Lastly, you’ll want to get the right insurance protection. While this might not be one of the first things you think about, it’s an important step that can help mitigate risk and protect your personal assets if something goes wrong.
Before committing to a business idea, it’s a good idea to do market research and find out how many people are likely to be interested in your product or service. This will give you an idea of how much capital you’ll need to start your business and whether it’s financially viable.
You’ll also need to determine how much you can charge for your product or service, based on what competitors are charging and what customers are willing to pay. Finally, you’ll need to decide on a legal business structure, such as a sole proprietorship, partnership, corporation or limited liability company. This will affect how you’re taxed and how much risk you face.