Finance

Learn How to Start a Small Business at Home

Four of the most powerful words in the English language are “Be your own boss.” As humans, we’re explorers, innovators, and achievers by nature. So what could be more beautiful than the unbridled freedom that comes from running your own business?

But many aspiring entrepreneurs are met with a rude awakening upon launching their endeavors. Not only are they their own boss, but also their own human resources, talent acquisition, marketing, public relations, facilities, and events. The price to pay for unlimited freedom is a substantial amount of responsibility.

You’ll increase your chances for success (and your enjoyment level) if you make your entrepreneurial efforts realistic and scalable. You don’t need to start small, but you definitely need to start smart. In the early stages, efficiency is the name of the game.

“If you’re looking for the fastest and simplest way to get started in entrepreneurship, consider becoming a freelancer or consultant,” recommends small business owner Rob Allen.

“You can be in business with as little as a smartphone and laptop (sometimes even less). You don’t have to spend months building a product or creating an online course. You can charge money for your services, starting as soon as today. And you can leverage the skills you already have. You just need a reputation for getting results. For example, I don’t have a degree in marketing. I write copy for a living and I never studied English or grammar. But it doesn’t matter, because as a freelancer or consultant, all you need to do is deliver results. That’s what people pay for.”

Perhaps you want to be a freelancer or consultant, or you could have your eyes set on other goals. Whatever you decide, seriously consider working from your home. In sports, they talk about home field and home court advantage, and that’s exactly what you can give your business when you base your operations out of a place that is stable and familiar.

Start With a Homegrown Plan

Launching a business without a plan is like heading out to sea in a rudderless boat. Some might call that bravery, but most of us would describe it as foolish. Not to mention unnecessarily risky.

When starting your business from home, your plan will have a decidedly homegrown feel to it. For example, in the executive summary you can state some of the distinct benefits you’ll enjoy from working out of your home as opposed to an external location that would only complicate matters and add costs.

After you’ve written the executive summary, which serves as your elevator pitch, you can pick and choose from additional business plan section options such as:

  • The product or service you offer
  • Your financial projections
  • Your market analysis
  • Description of your management
  • Your marketing and sales

Running a home-based business will be a relevant factor in the creation of all these sections. And if you’re seeking financing, your ability to turn the location of your business into an advantage will attract the attention of prospective lenders and investors.Free training button

Establish Your Online Home

Even if there won’t be an ecommerce element to your business, you need to lock down your online presence. Find the ideal domain associated with your business name and buy it as soon as possible. The last thing you want is for a cybersquatter or competitor to snag it before you.

A common mistake for entrepreneurs is to promptly purchase their domain, then forget to renew it when the time comes. You can prevent this by setting up autopay. If that isn’t possible, at least add a reminder to your calendar so you’ll always know when the renewal date is approaching.

To promote your business and protect your brand, you’ll also need to create accounts on Twitter, Instagram, Facebook, LinkedIn, and YouTube. You might not have plans to use these platforms right away, but it’s advisable to have the accounts in your control so that nobody else can create accounts to pose as your business.

Get Some Help For Your Home

As a home-based entrepreneur, you’ll need to enlist the help of as many digital tools as possible. Why? Because when you are burdened down by wearing too many hats, the likely results are a headache and the inability to turn your head from side to side. It’s a miserable way to live.

Modern technology has plenty of pleasant surprises that can automate tasks and simplify things for small business owners. The timesaving capabilities are huge, but you also shouldn’t underestimate the cost savings and reduction of human error.

Popular digital tools for home-based business include:

Talk to other entrepreneurs to find out which apps and software solutions have worked best for them. If you can automate just 5-7 tasks a day, you’ll be amazed by how much it changes both your business performance and your outlook on life.

Successfully Managing Your Home Office

While working from home offers a fleet of benefits, it also brings its share of challenges. There are unique temptations when it comes to working from home, and without a clear line of demarcation between your private and personal lives, it’s easy for things to get blurred together.

For example, let’s say that you’re running an ecommerce shop from your home. As you head into your office to start the day, your oldest child might come in and ask for a ride to school (she missed the bus). After returning from the school, you notice that the kitchen is a total mess. Even though you have work to do, you spend 20 minutes cleaning up breakfast.

Upon sitting down at your desk, you hear your dog barking frantically in the backyard. You go out to investigate the cause of the commotion, but it appears that he was only excited about some birds flying nearby.

You’re able to get some work done before lunch, but then your partner comes into the office and asks if you can help with a quick project. This effort takes longer than expected, and it’s well after 1pm before you’re done.

Crunched for time and unable to make a proper meal, you grab some potato chips and crackers from the pantry and rush back to your computer. Perhaps these food choices weren’t great, because you start to feel drowsy. To wake yourself up, you turn on your favorite TV show. But an hour later, you realize that you’ve wasted more than an hour in front of the television.

You’ll never encounter all these obstacles during your days at home. But you’ll face your own unique challenges, many of which didn’t appear in this scenario. So it’s essential that you lay out strategies for effectively and realistically balancing your work and personal life.

Let’s review some proven strategies.

Designate an Office

Resist the urge to just work from wherever feels comfortable in your home. Sure, it’s nice to kick back on the couch from time to time. But you have to create an office where you can work consistently free of distractions. Your home office should preferably be a distinct room that has a locking door.

Make sure the lighting is good, you have a quality chair to sit in, and you have stocked your desk with whatever tools you’ll need for the job. By keeping things professional in your home office, you’ll project to the world how serious you are about success.

Build Your Network

Although it can be harder to network from the confines of your home, there’s never been a more important time for you to branch out and make valuable contacts. Your home should be the nerve center for your business, not some sort of isolated bunker. If you’re able to attend live networking events, do it. Strategically choose in-person events that will allow you to meet the right people and build momentum for your business.

When you’re in your home office, use LinkedIn and other social media to maintain your presence and share important news. When you’re communicating with partners, clients, suppliers, and others, be sure to offer a bevy of options. For example, Slack can be a powerful way to share multi-day dialogue. And Zoom and Microsoft Teams are perfect for times when you want facetime with others, which should always be a priority for your business.

Stick To a Routine

Knowing how to start a small business at home often starts with learning how to develop positive habits outside the organization of a traditional office. If you like rolling out of bed at odd hours and watching TV whenever the mood hits, you’ll never build a business that makes a difference in the world. It takes discipline and consistency to set your business on the right path. Choose a wakeup time that works for you, then make it a habit. If enjoying your morning coffee on the deck is an important part of your morning, then definitely make time for it.

You’re the master of your schedule, so it should contain all the important things and conspicuously block out the bad habits that could threaten your success. The added benefit of a routine is that it helps your friends and family respect your work time. They’ll know that when you’re in your office it is work time, so they’ll be less likely to interrupt you. But if you’re just as likely to be watching fun videos on your computer as working, it’s no wonder if people feel emboldened to barge in.

Don’t Deprive Yourself

All this “stay away from the TV” talk is probably sending the wrong impression—you don’t need to live like a monk when running a home business. If you have a favorite show, set aside some time to watch it. If you let off steam by playing video games or going for walks or curating your stamp collection, go for it.

The point is to manage your time effectively so that you can accomplish what you need to, then reward yourself. This approach puts as much emphasis on wellness as work tasks. If you tackle work projects for a few hours, then it’s important to enjoy a break so you can decompress. You’ll be happier, healthier, and more effective if you approach your days as a series of sprints instead of one giant marathon.

By taking proactive steps to structure your time and set yourself up for success, you’ll avoid many of the challenges that other home-based entrepreneurs. Here’s what business writer Emily Blackwood says about her own experience:

“I look back on the first few weeks after learning I was going to work remotely the same way I look back on my high school graduation. Full of hope, optimism, and the sense that I was about to embark on a grand adventure […] Prior to that, my working life was ruled by timesheets and check-ins from my boss. All of those hours I spent working within the confines of someone else’s schedule were now rightfully mine to take back. It felt like I was finally in control of my life, and the only person who could stop me was me. And guess what? I totally did. Without the structure I was used to, I found myself working more hours than I had ever worked in an office. With my computer and who knows how many unread emails just a few feet away at all times, I never really clocked out. And I hardly talked to anyone.”

As long as you’re building your network, collaborating with others, and treating yourself to rewarding experiences, you can make your home-based business thrive. There will always be compromises that you make not being in an office, but the end result should be that your home actually magnifies many of the best parts of your work life.

Don’t Forget the Deductions

There’s so much that can be added to your life by learning how to start a small business at home, but we also need to talk about the deductions. As in, tax deductions. Also known as write-offs, these expenses can lower your tax bill because they’re tied to your business.

For example, let’s say you purchase a new computer and printer for your home office. New technology can be expensive, but as long as the computer and printer will be used for your business, you can deduct the cost from the amount you owe on your taxes.

The specifics of tax deductions vary from region to region, but the general rule of thumb is that the expense needs to be both reasonable and clearly tied to your business. So you can’t just buy a new ski boat and then claim that you’re using the boat for occasional work retreats to the lake.

Before you can accurately begin tracking your work expenses, you’ve got to once again create a line of demarcation between your personal and private lives, this time from a financial perspective. This means separate bank accounts, mileage tracking for your automobile, and in general, a studious approach to your monthly expenses. Tax officials have never taken kindly to the “I just got a little mixed up” defense.

You’ll want to work with a tax professional to get expert insights and ensure you’re crunching the numbers correctly. Not only will they keep you out of trouble, but they can also suggest new deductions to save even more money.

Let’s review some of the common business expenses that can be converted into deductions.

  • Property tax
  • Utilities
  • HOA fees
  • Home repairs
  • Business license
  • Sales tax
  • Payroll tax
  • Training events
  • Training webinars
  • Work-related magazines
  • Work-related books
  • Childcare

It’s doubtful that all these expenses are deductible for you, but this list is a good place to start as you begin approaching your business expenses more strategically. Your tax professional can help you identify the best ways to lower your tax burden while also staying safely within all relevant tax laws.

Want more resources to help build your home business into something special? We offer a library of free masterclasses that cover everything from advertising to sales growth to handling finances. Simply click below to learn more about the various courses.

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