You’ve likely felt the impact of COVID-19 over the last month or so. Whether that’s meant adjusting to working from home, being furloughed, or maybe even being let go, it’s been a dynamic shift with no clear end in sight. For those of you now at home, while it may not look like it, now is as good a time as any to consider starting a business.
Remote work and home-based businesses have slowly become a regular aspect of the modern-day workforce. While many traditional jobs still can’t function remotely, or have difficulty adjusting, many entrepreneurs have found success in starting a business from home. The reality is that you really don’t need an office space when starting out and can quickly get your idea rolling as long as you have a plan.
So maybe you have been longing to start your own business and are feeling extra motivated to make the most of this downtime, or your situation has you inspired to try something new. Whatever the reason may be, if you have an idea for a business and would love to see it come to fruition you’ll want to define the steps you’re going to take to get there.
Not sure where to start? We’ve put together this step-by-step guide to help you turn your idea into a fully functional at-home business.
1. Evaluate and assess your situation
The idea of starting a business can be exciting and invigorating at first, but can quickly become frustrating and fruitless if you don’t define why you want to do it in the first place. Do you want to be your own boss? Have a passion that you’d like to explore? Are you looking to make some extra money?
Be sure that you’ve evaluated your reason for starting first as it can help you define how much time, energy, and risk you’re willing to take on a home-based business idea.
Next, you’ll want to assess your current situation. Are you currently employed? Are you going to balance a full-time job when starting? Is your family supportive of the endeavor? Fully understanding your capabilities and external factors that may dictate how much time you can spend, is crucial when starting a home-based business.
If you have a family, you’re going to need to learn how to balance work and home life. You’ll have to establish clear boundaries regarding your workspace and working hours, and take some time to figure out whether this is the right option for you.
- Can I work and live in the same area?
- Is there a space I can make “my own” in my home?
- Is there enough physical space?
- Is this the right working environment for me?
- Are there adjustments I will need to make to create this personal workspace?
- Can I afford the cost of any adjustments that need to be made?
- Is my family OK with this?
- Assess your own strengths and weaknesses
- Make sure you can legally start a business from home:
- Check zoning laws in your area and ensure your home is “zoned” for business practices
- Find out if there are limitations on the size of signs you’re allowed to place outside your home, and if you’re allowed to do this at all
- Identify any technology needs you may have (and whether or not you’re equipped to meet them) such as:
- High-speed internet with a reliable connection
- A dedicated phone line
- Good lighting
- A computer or monitor that won’t strain your eyes
Realize that some of the current requirements and answers to these questions will change once the need for social distancing and effects of the pandemic subside. It’s important to make sure that what you are planning will work with your at-home circumstances long-term.
2. Conduct market research
Once you’ve determined that you’re ready and able to start a home-based business, you’ll need to conduct market research to see if your idea is viable. Start by researching any potential competitors. What are they currently doing? How does your business differ or improve on their solution? Is there a need for a different approach?
You’ll also need to determine if your business can function as a fully online option, even if you plan on having a physical storefront at some point in the future. Not only is it necessary due to the coronavirus, but it could potentially give you a strategic long-term advantage against current competitors and help you avoid massive overhead. If the idea of working from home sounds a bit difficult, be sure to check out our work from home checklist for insights into how to establish your workspace.
3. Develop a Business Plan
It’s been proven that planning makes you more successful. Beyond writing a business plan to acquire funding (if that’s what you need), a business plan can help keep you on track to meet your milestones and goals.
Your plan doesn’t need to be a lengthy document either, especially if you follow a Lean Planning methodology. And, if you combine it with a monthly plan review meeting when you’re up and running, you’ll be doubly equipped to handle whatever comes your way.
Determine what type of business plan is right for you
When developing a business plan, you want to decide on a model that fits your needs. Not everyone needs a formal business plan to start, especially if you’re only using it internally. But if you’re planning on pitching to investors to obtain funding, a formal plan and thorough executive summary may be necessary.
Now if you’re looking for an active plan that you can edit and adjust over time, you may want to consider creating a lean plan. This type of plan follows the same standard outline as a formal plan, but in a streamlined format that isn’t quite as time-intensive to create. It can even start as a one-page pitch document that eventually evolves into a full business plan.
There’s no wrong answer when choosing a business plan type, all that matters is that you work with a model that serves your needs. You can always go back, revise, rework, or even start again if necessary. If the idea of writing your own business plan feels a bit daunting, you may want to look into a business planning platform like LivePlan.
LivePlan makes planning easy with a step-by-step process to help you build out your business plan. With fill in the blank templates, powerful financial forecasting tools, and lender approved pitch designs you’ll go from template to a full business plan in no time.
If you’re not quite ready to commit to a business plan platform you can also check out our library of over 500 sample business plans and download our free business planning template to get you started.
Establish milestones and metrics for your business plan
A business plan isn’t just a representation of your business, it can also act as a roadmap if used correctly. To make your business plan work for you, you’ll want to incorporate milestones and metrics from the start. Doing so ensures that you have at least a handful of goals and measurable outcomes in mind that can help you determine if your business is successful or if you need to pivot.
Having milestones and measurable results are also necessary when looking for funding. Investors want to see that you have a long-term gameplan in place for your business and an idea of what success looks like. Now, these can be as general or as detailed as you want, but having any sort of forward-thinking plan in place, will make your business more attractive to investors and loan providers.
Think about an exit strategy
You’re just starting a business, so having an idea of how you plan to leave it one day may not make a whole lot of sense to you. But establishing an exit strategy is another important piece that forces you to look toward the future of your business. It’s also another component of your business plan that will give you a better chance of winning over investors.
Like the rest of your business plan, your exit strategy does not need to be set in stone. Depending on the trajectory of your business you may stick to it, find a new exit strategy, or eliminate the idea entirely. But it’s worth having one in mind to showcase your long-term planning capabilities and intent to solidify your business.
4. Begin building out your working environment
By now you’re getting pretty excited. You now have a plan for your business and you’re almost ready to actually start doing business. Before you can open your doors, however, you need to get your home office in order.
Here’s a basic list of the things you will need to consider purchasing.
- Computer, laptop or tablet
- Point of Sale system (if necessary)
- Credit card processor (if necessary)
- Landline phone or mobile phone (VoIP if you’re doing a lot of international business)
- Business phone system
- Headsets or earbuds
- A printer, scanner, copier, or fax machine (depending on your needs)
- Important software:
- Business planning and management software
- Antivirus software
- Microsoft Office, or a similar suite with word processing, spreadsheet, and presentation functionality
- Accounting or bookkeeping software
- Invoicing software
- Customer relationship management software
- Project and resource management solutions
- Internet connection
- Buy a good wireless router
- Buy an external hard drive or organize cloud-based backups of your data
- Stationery (pens, pencils, paper, staplers, tape, hole punch, sticky notes, laminator, and so on)
- Desk or work table
- Ergonomically-correct desk chair
- Lamps (though good natural lighting in the day is important)
- Ergonomic equipment: wrist rests, monitor risers, footrests, and so on
- Additional seating if you’ll be bringing clients into the office (you may also need a meeting table if this is the case)
- Filing cabinets or a storage system
- Storage space if you’re selling goods
- A “do not disturb” indicator of some sort (maybe a sign for the door so family members know not to disturb)
- Shipping and packing materials
- Boxes, envelopes, bubble wrap, tape, stamps
- Postal scale
- Online mailing account (this will let you print mailing labels at home and schedule your packages for pickup)
- Additional equipment specific to your industry
- Make your business official
Now you’re certain you want to (and can legally) operate a business out of your home and have a plan in place, it’s time to knuckle down and get your business registered with the appropriate authorities.
- Register your business name
- Choose a legal structure for your business and register your business (sole proprietor is a popular entity for many home-based entrepreneurs)
- Obtain the appropriate licenses and permits
- Obtain your federal business tax ID number (often referred to as your EIN) if necessary
- Set up a business bank account
- Protect any intellectual property you may own by applying for copyrights, trademarks, or patents
- Find an attorney if you need help with any aspects of getting set up legally
5. Legitimize your business operations
One of the difficulties of launching a business from home is coming off as credible. While not impossible, you may have to work a lot harder at this than someone who has a separate office.
That said, there are a number of things you can do to establish a professional reputation.
- Obtain a business mailbox—this will give you a street address and help you get found in search results without giving away your home address, or an impersonal P.O. Box address
- Invest in printed marketing materials
- Create a website
- Set up a business email account
- Build an active online presence (be your own PR person!)
- Share customer stories and experiences
- Find good business partners and people who will refer you
You’re basically looking to establish multiple avenues of communication with customers through digital and traditional channels. You may not have a physical storefront, but you have a killer website, an active Instagram profile, and a business email that you actively chat with customers through. It may seem like a small and possibly unnecessary addition when you’re just starting out, but it can help give your at-home business the credibility and exposure it needs to rise above the competition.
6. Open for business and start marketing
By now you’ve dotted all your i’s and crossed your t’s, and you’re ready to start doing business! Of course, people may not yet know you even exist.
It’s on you to start getting the word out. Here are some of the things you can do to expedite the process (be sure to read the Bplans Opening Day Checklist too).
- Create a marketing plan
- Network, a lot!mplans.com
- Alert the press (reach out to local newspapers, radio stations, businesses, and so on)
- Come up with a compelling social media campaign to build brand awareness (a competition perhaps, or a giveaway)
- Start doing guerilla marketing
- Create a paid advertising campaign
- Order good offline marketing materials (signs you can place outside your home may be particularly important)
- Host an event (be sure to publicize the event after the fact to get that extra press)
- Feature discounts, special sales, or limited-time offerings
7. Practice good management from the start
The hard work isn’t over now that you’re up and running. In fact, it’s essential to have good management practices right from the start.
Some of the things you’ll need to do include keeping receipts and documentation of those things you might want to claim as business expenses, conducting a regular review of your business plan or Lean Plan, and keeping customers happy. Read the Bplans First Year in Business Checklist too!
- Keep your business plan updated
- Conduct a monthly plan review meeting (it might just be you in the meeting if you’re a sole proprietor, but it’s still important to review your plan regularly)
- Set tangible benchmarks for your business and keep them updated
- Track your key metrics and know your numbers
- Stay on top of your bookkeeping
- Keep an eye on important tax dates and save all records in the event you’re ever audited
While the steps to starting your own at-home business may seem daunting, home-based businesses are likely to start popping up now more than ever. If you are out of work or simply have more time on your hands to really begin something you’ve always wanted, take advantage of this home-bound time and start your own business today!