How To Start a Home Based Business

Starting a home-based business is a dream for many people.  Some want a release from the daily grind of home-to-work-to-home, others the freedom of being "their own boss", and still others want the ability to make their own hours or have a flexible schedule.  Whatever your reason, there are several things to consider when starting your own home based business. 

The first thing to consider is whether you're ready to open a business.

  1. What are you qualified to do that you can do from home?  For example, if you are a CPA, you can easily work from your home by setting up a small office with a computer, fax/copier, and phone line.  If you are a machinist, you could work from home, but would need to set up a shop, purchase equipment, and possibly get permits or licenses.
  2. If you have skills in a field that would require a large capital outlay and serious infrastructure, you can still start a home based business -- but will it be worth it?  Or what if you don't have skills that translate to the home?  There are other opportunities for working from home that you may not currently be qualified for, but can acquire training in, and begin with relatively low start-up costs and a relatively short learning curve.  Businesses such as product consultants, sales, network marketing or light assembly fit this description.  Just be sure to thoroughly investigate all costs, product quality, training systems, fees and licenses associated with such businesses.
  3. Once you have decided on the type of business you think you can run from your home, you next must investigate the market.  Before jumping in with both feet, you should learn whether there is a need or demand for your product or service, and if so, how much competition is out there. 

    Are there dozens of people in your town doing the same thing?  Or if your business is online, how many pages of similar businesses show up on a Google search?  Also consider what it is that you offer that the competition doesn't.  Is your product or service of a higher quality?  Do you deliver results more quickly?  Do you offer more personalized attention?  Don't be afraid of competition; just be aware of it so you can market yourself better.

  4. Consider licensing.  Do you need a license, and how do you get one if you do?  Whether you need a license or not depends upon the type of business you are starting.  Most consulting-type businesses do not require licensing, but there are some typical businesses that do.  Usually, doctors, lawyers, contractors, and barbers (even if you barber from home) are required to be licensed.  Check with the appropriate local government agencies to be sure.  Don't start your new business off on the wrong foot.
  5. If you decide to operate your business as a sole proprietorship, but choose to use a name other than your own, you may be required to file a DBA, which means "Doing Business As", with your local County Clerk's office.  Again, check with that office to be certain.
  6. It is possible that your home based business idea might require more capital than you have available.  If you are not able or willing to enlist the help of a financial backer, you might consider obtaining a small business loan.  The Small Business Administration (SBA) is a government agency that works with lending institutions to help you obtain the financial backing you need.  For more information on this check out  Also check out the sidebar of this article for other helpful links regarding SBA loans.
  7. You now have a business you are qualified to run, or you've obtained training in a new business. You have researched the market and know your worth to your customers and how you outshine the competition.  Now what? 

    Arguably the most important aspect of running your own business is setting goals, and then working your plan.  It is easy when working from home to get distracted or procrastinate because there is no boss looking over your shoulder.  Make a schedule, and stick to it.  You have to be the toughest boss you've ever had.  It's all up to you, and only you.  If you don't work this business at least as hard as you worked at your job, you will almost certainly fail. 

    Yes, you have the freedom of flexibility, but you need to discipline yourself or the business will slip away.  Eighty-five percent of all small businesses fail within the first five years.  Discipline yourself to be in the fifteen percent that succeed. 

  8. Look into finding a mentor.  A mentor is someone with experience in your business who can help and guide you.  Their experience is invaluable, and can help you avoid some of the stumbling blocks and pitfalls that you might have fallen into otherwise.  The best way to find a mentor is to network.  Meet people, and make a friends. 

    Start by searching your community for business organizations designed for networking.  Most communities have them.  You can also join your local Rotary, Toastmasters, or take a Dale Carnegie course. You might be surprised at how often people are willing to share what they have learned.

  9. Lastly, consider running your home based business while continuing to work at your job.  This provides a safety net as you build up your business.  When the business seems large enough and stable enough that you can leave your job, then do so.  Until that time, even though it will be tiring, do both.  Additionally, as most of the tax laws in the US are geared toward business owners and not employees, a side benefit of your new business is that the legal tax deductions will help you to keep more of your job paycheck.  Only take legal can find out what deductions are acceptable by taking online courses in business finance and business law.

While there are challenges with starting a home based business, it can be one of the most rewarding things you will do.  If you feel you have what it takes, go for it!


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By Donald Willard