Of the 543,000 new small businesses started each month, approximately 52 percent of them are home-based.
It’s no surprise really when you consider the primary reason for starting a business from home has to do with money (or lack thereof). According to Peterson’s Ultimate Home Office Survival Guide, most entrepreneurs who work from home start with less than $5,000.
Whether you’re starting a home-based business due to financial considerations or for another reason, you can use this checklist to help you figure out firstly whether or not it’s the right option for you, and if so what you need to do to get set up officially, including creating a great working environment.
If you’re reading this checklist and still wondering whether or not you have what it takes to be an entrepreneur, take the Bplans quiz, Are You Entrepreneur Material? Or, start with our checklist to help you Become Your Own Boss.
1. Assess your situation
Running a business from home is not for everyone. For one thing, if you have a family, you’ll have to establish clear boundaries regarding workspace and working hours. Not only that, but you’ll need to know whether or not the at-home factor is for you.
For some people, the social isolation can be off putting. Before you take a look at the legal side of starting a home-based business, take a look at your own situation to determine whether or not this is the right move.
- Take some time to figure out whether this is the right option for you. Ask yourself:
- 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?
- Are my neighbors OK with this?
- Will I have a lot of foot traffic? Do I have the setup to accommodate bringing clients or customers into my home?
- 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
2. Make your business official
Now you’re certain you want to (and can legally) operate a business out of your home, 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
3. Plan for success
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.
- To begin with, determine what type of business plan is right for you
- If you’re writing a plan to obtain funding, opt for a formal business plan
- Follow the standard business plan outline in this event
- If you don’t have a business plan event, start with a One-Page Pitch
- Once you’ve built out your Pitch, continue working on creating your Lean Plan
4. Begin building out your working environment
By now you’re getting pretty excited. Your business is a real thing—legally speaking—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. Take transportability into account so that if you ever get cabin fever and need to work away from home, you have the option.
- 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
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
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!
- 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
- 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
If you’re excited about the prospect of working from home, be sure to read our guide on launching a home-based business.
If you have a story to share or have suggestions to help us improve this checklist, we’d love to hear them in the comments below!