Starting a small business today is easier than ever. There are many profitable home business ideas that don’t require a lot of upfront money or a storefront.
As easy as it is, it can still seem daunting, and there are things to keep in mind that will ensure your home-based business is organized and set up for success from the start.
Table of Contents
- Create a Business Plan
- Get Legal
- Create a Budget for Your Business
- Build Processes and Keep Your Business Organized From the Start
- Don’t Forget About Taxes
- Market Your New Business
1. Planning for Success
Most home-based businesses can be classified in one of two categories, products or services. And, if you’re reading this post, you probably have an idea of which type of business you want to start. But do you know your market?
Market research will help you identify if your business idea is solid and who your ideal customer is. You may have a great business idea, but you should always validate it.
You also need to understand who your ideal client really is. You have to understand their pain points and problems to tailor your products and services to solve those issues. In addition, developing your client avatar defines who you need to focus your marketing efforts on.
Ways to do Market Research 📑
- Google the problems you want to solve and review the results
- Search Amazon as well – review the product results and customer reviews
- Post questions on social media and in groups for feedback
- Interview your ideal clients
- Reach out to organizations like SCORE that offer small business assistance
- Identify your competitors and review their successes and failures
Start a successful home-based business today with this FREE guide and checklist
Create a Client Avatar 🙋♀️
Information on how to create a client avatar can fill up an entire post (or more), but I’m just going to touch on the basics here.
Your client avatar is a personification of your ideal client. You need to know WHO you’re pitching to, WHAT they struggle with, and HOW you can help them. Try building this person out as specific as possible.
What is your ideal client’s:
- Age range
- Occupation
- Gender
- Income bracket
- Family status
- Favorite hobby or pastime
- Specific problem that you are solving and exactly how are you doing that
As you build out your business and marketing plans, you want to talk directly to the person that you developed as your client avatar.
Now that you know your business idea is a good one, and who your clients are, it’s time to create a business plan.
Business Plan 📝
Business plans can be as simple or complex as you like. When you’re just starting out as a home-based solopreneur, a one-page business plan may be all you need to get started. They take less time to write and are easily modified, helpful traits when you’re still fleshing out your business details.
Things to include in a one-page business plan:
- Business name and type
- Your client avatar
- Your client’s main pain points or problems
- Products or services you’re offering to solve those problems
- How much you’ll charge
- How clients will pay you
- Marketing strategies
- Success milestones
2. Get Legal
As a solopreneur, you have several options to organize your business. Typically, solopreneurs choose between a sole proprietorship or Limited Liability Corporation (LLC).
Sole Proprietorship ☝
The simplest and least expensive business structure is a sole proprietorship. As a sole proprietor, you are the only owner of the business, and your business and personal accounts and properties can intersect.
That being said, you really should always keep your business funds separate with a business bank account and credit card that you use just for business expenses.
Keep in mind, however, as a sole proprietor; you are personally and fully responsible for any liabilities. Your personal property is not protected from your business debts or litigations.
There is no cost to starting a sole proprietorship; it is formed automatically when you begin conducting business.
Limited Liability Corporation (LLC) ✌
Forming an LLC provides a layer of protection between the business and your personal assets. It costs, on average, $1,000 to form an LLC.
For solo business owners with no employees, taxes are calculated and filed the same for both business types.
There are other options as you grow; partnerships, limited partnership, corporation, s-corp, and co-op are a few. You can always start off simple and change your business structure as you grow.
A business is like a living thing, evolving and changing over time. You’ll constantly be testing, evaluating, and updating your processes. The important thing is to get started!
Employer Identification Number (EIN) and Fictitious Name 🔢
Applying for an Employer Identification Number (EIN) is simple and free. An EIN is not required for all types of business set up since you can use your social security number as a sole proprietor or LLC without employees. But it gives you an extra level of security by protecting your social security number. If you plan on hiring employees, you are required to have an EIN.
You can learn more about the EIN and apply for one on the IRS website at https://www.irs.gov/taxtopics/tc755.
If you pay state taxes, you may need a state tax identification number as well. Check your state website for their requirements.
If your business is going to be named anything other than your legal name, you are required to register your fictitious name. Even if you use your name, but add words, i.e., Sara Jones Bookkeeping, you’ve created a fictitious name and must register it.
Learn more about choosing and registering your business name on the SBA website https://www.sba.gov/business-guide/launch-your-business/choose-your-business-name.
Local Requirements 📍
States, counties, and cities may have additional requirements. Depending on the type of business you’re launching, you may be required to pull a permit, publish a public notice, or collect sales tax. Start off with your state’s website and work your way down.
Don’t get discouraged or think that these steps are overwhelming. Most of the requirements are relatively inexpensive or free and can be completed online. Don’t forget; you may have free small business support in your area from organizations like SCORE.
3. Create a Budget and Find Funding
Now it’s time to make a list of the things you’ll need to start and run your business. Do you need to source products, materials, or equipment, or are you offering services? If you’re offering online services, do you need to update your computer or Internet connection? Do you need a landline phone or an update to your cell plan?
A lot of home-based businesses can be started with equipment you already have, but keep in mind updates and upgrades you may need, such as:
- Computer backups
- Additional security and virus protection
- Material for bulk product orders
- Reliable Internet and phone service
Are these costs that you can absorb, or do you need to research a small business loan?
Last but not least, do you have an income buffer? Take some time to calculate your monthly expenses and set a savings goal that you’re comfortable with. It may be three months or six months of expenses, but it’s a good idea to have some money to fall back on when you’re just getting started.
This number may be different if you’re starting your business as a side hustle and still have your 9-5 income, but the future is never guaranteed! It’s always a good idea to have some money set aside to cover expenses when something unexpected happens. Check out my post that outlines 7 easy ways to get started saving today.
4. Organize and Create Processes
It’s so much easier to keep your business organized if you build it that way! Set up your bookkeeping and accounting processes now to save yourself time and aggravation later.
Accounting 💲
There are plenty of online accounting options available at a wide range of pricing options. The program that works best for you will be determined by how much you want the program to do. Wave, Freshbooks, Xero, and QuickBooks all offer free versions, or free trials, and different levels of paid versions. Take some time to take a couple for a free test-drive and see what you think.
You can always reach out to other business owners, either in person or through social media, and get their recommendations as well. Once again, the program you start with may not be your forever choice! And, don’t’ forget, bookkeeping is fairly easy to outsource.
Expense Tracking ✅
Don’t forget to keep track of all your business-related expenses, like networking events, mileage, monthly subscriptions, and supplies.
Whatever system you choose to go with, make sure you set aside some time weekly and monthly to keep your information updated. Keep track of your weekly expenses and tally them once a month when you calculate your monthly expenses.
Costs to track weekly:
- Events
- Seminars
- Mileage
- Webinars
- Supplies
- Classes and courses
Costs to trach monthly:
- Rent
- Insurance
- Monthly subscriptions
- Organizational Dues
- Social media fees
- Website hosting (if paid monthly)
You will probably have some annual fees as well, such as website domain registrations and virus protection – if you pay for these with a yearly subscription. Some networking groups and computer programs offer annual plan options as well. Make sure to keep track of these as well.
Last, and again not least, you’ll need to keep track of your income. When you’re calculating your monthly expenses, calculate your income. This will help you stay on top of how well your business is doing and provide the information you’ll need for quarterly tax payments.
5. Plan for Taxes
You may or may not already be paying quarterly taxes, but now that you have a business, you probably should be. Check out the IRS website for instructions and filing dates.
Do you pay state taxes as well as federal? Review your state’s website for additional tax requirements.
Does your state require that you collect sales tax? Product-based businesses are more likely to have sales tax requirements, but check your state’s website for sales tax laws as well.
Don’t forget; you can always seek professional advice to get these parts of your business structured properly. You should be able to find an attorney or accountant in your area or online that can answer any questions you have about accounting and taxes.
6. Ways Market Your New Business
Now that you know what you’re offering, who you’re offering it too, and how to keep your business organized, let’s get it out there. There are some simple and FREE ways to start marketing.
Natural Market 👋
Reach out to friends and family members to let them know about your new business. They may or may not need your services or products but may know someone who does, so make sure to mention you’re looking for referrals. And, since they already know you, they know how awesome you are.
Warm Market 👋
Reach out to existing business contacts that fit your client avatar. Be specific and explain how your business can solve a problem they are experiencing. Make sure to remind them of who you are and how you’re connected. Don’t forget to ask for referrals as well!
Cold Pitching ⚾
Cold pitching is basically the same process as the above two methods, except you’re reaching out to people you don’t already have a connection with. Using your client avatar, identify people you’d like to work with and send them a pitch! Always be specific and make sure they understand exactly how you can make their life better.
Social Media 💻
Is it real if it’s not on Facebook? Toss your “now open for business” post on your profile. Tag friends and family that might be interested or know someone who is.
Search for Facebook groups that your ideal client is likely to use and get involved in them. Don’t go in guns blazing and try to sell right away, but get to know the people in the group. When there’s a question or comment that relates to your business, chime in. If someone mentions a need that matches your skills, reach out to help.
LinkedIn may be one of the most important social media platforms for businesses, especially B2B. Build your profile completely and make sure to specify exactly how you help people in your about section. Add your photo to build trust and then start networking.
You can use LinkedIn’s free search tools to identify potential clients and connections. When you ask to connect, add a personalized message. Once again, do not try to start selling right away. If you focus on building your network and relationships first, sales will follow.
Pinterest, Instagram, and YouTube can also be fabulous free marketing for all types of businesses. Your main focus for any social media platform should be to make sure people know exactly how you can make their lives better and building relationships.
You don’t need to be active on every social media platform all at once. Pick one or two that fit your market or that you already have traction in and focus on those first.
Face-to-Face Networking 🤝
Even if your business is completely virtual, you can still benefit from connections made at face-to-face networking events.
Check out your local Chamber of Commerce, Meetup, and search for other local networking groups or events in your area. There are typically plenty of free or inexpensive options to get you started.
In addition to building your warm market, many groups have some sort of directory that you can get your business posted to. And, let’s face it, working from home can get lonely sometimes. It can be rejuvenating to get out and socialize from time to time.
Starting and marketing a new home business as a solopreneur doesn’t have to be complicated or scary! In this post, I’ve explained the basics for how anyone can get started today.
Download a FREE condensed version of this guide with checklists to get started
Keep in touch! If you’ve taken the plunge or if you have any tips or tricks to share, please comment below. 👇
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