Starting A Home-Based Business - 10 Tips

We started our business last year and I've received numerous emails asking for advice on taking the self-employed plunge.  I think a lot of us dream about starting a business, but of course, there's a lot of fear and intimidation involved.  Fear of not making it, fear of financial struggle, fear of how to run each aspect of the business and fear of the unknown.  While each situation is different, I think there's a number of things that are common to all start-ups.  Here's a bit of what I've learned over the past year.

1.  Don't Quit Your Day Job/Do Quit Your Day Job
I know, two contradicting statements.  But the purpose of that is that either can be true - it just depends on your financial situation and your comfort level.

I did quit my day job, initially, but not to start our business.  We had thought about starting a business and had a target date of Winter 2013/Spring 2014.  I had every intention of continuing to work my 9 to 5 while we slowly began selling our products.  However, things happen and I decided it was time to leave my 9 to 5 in Spring of 2013.  We decided to get the business off the ground and then I would return to work so the money the business makes can be put right back into it.  We have chosen to not take on any debt.  What I hadn't anticipated, was accepting a job that required me to be at work 9-10 hours per day.  Unfortunately, I didn't learn this until my second week of work.  Although not ideal, I'm making it work.  I wake early to work at home before heading out to the 9 to 5, and stay up late to also work at home.  Weekends, for the most part, are also devoted to the business.  It's a sacrifice we both feel is worth it so we are able to determine if this will be a business we will continue to grow or not.

One of the reasons many encourage quitting your day job is so you'll not only have more time to devote to your business, but so you'll work even harder at "making it" because you are forced to do so.  If you can handle the financial stress of that, then this may be the option for you.  I, personally, believe you can still have that strong drive to make it work because of the passion of eventually leaving your day job to work solely in your own business.

2.  Separate Work From Home
For any of you who work from home for your 9 to 5, you know how important this is.  You have to turn the business "off" at some point - for your sanity and to have a life.  Having a cut off time and a separate business phone that is only answered between certain hours can help.  Although there will certainly be times, just like at your 9 to 5, that you put in extra hours, you should have a plan for how to separate the two the majority of the week.

3.  You Will Wear All Hats
Unless you can afford to have employees or outsource tasks from the start, you will wear every single hat.  Even the ones you don't like or don't know.  You will be the creator, seller, PR person, marketing manager, accountant, customer service rep, and the list goes on.  If there's something you aren't familiar with, research it.  Get a good enough handle on how to do each job so you can complete it yourself until finances afford you to hire someone who specializes in that area.

4.  Pick The Right Business and Business Avenue
Seems obvious?  I know, but I've met a few people between the craft shows and farmer's market that weren't picking either the right business for them or the right avenue.  An example is someone who we met at the farmer's market who didn't enjoy it at all.  She wanted to make and sell her product, but having to spend hours at the market, talking to people in order to sell her product seemed like torture.  What she really should have done was wholesale only.  This way, she speaks to individual business owners, sells her products, fills orders, and delivers.  No dealing with the public, no weekends at the market.  We discussed this at length and she is now exploring that avenue.

And in this same category, I think it's important to keep an open mind and be flexible.  If not, you could be missing a huge opportunity.  The business you start out with may need some adjusting, fine tuning or even a complete overhaul.  Keeping an open mind could be the difference between running either a successful or a failed business.

5.  Price Your Product Right
If you are selling a product that you will potentially sell wholesale and retail, price it right from the beginning.  Research what wholesalers will need as a mark-up/margin {usually 50- 100%} in order to price your product to sell so that you can make money selling either way.

6.  Write A Business Plan
If you plan on taking out a small business loan, this will be required.  But even if you don't plan on taking on debt, this is an important tool in keeping yourself focused and your business moving in the right direction.  Nothing fancy is required, just a clear, concise vision.  Write it, read it frequently, and update it at least yearly, making changes as needed.

7.  Become A Master Marketer
Ok, so you don't have to become a master marketer, but you certainly have to figure out how you'll continue to sell your product.  You can have the best gizmo or gadget in the world, but if no one knows about it, it won't sell.

8.  Figure Out Funds
Both the funds for the business as well as living expenses, figure out a plan for starting the business and potentially supporting it for a couple of years as it gets up and off of the ground.  There are a lot of hidden costs that you may not be prepared for so take the time to make a list of those you can think of that may come up throughout the year.  This allows you the ability to help control costs so that as you make money, you are allotting it to the different needs of your business.  Similar to a home budget.  And don't forget to set aside money to pay your taxes - both sales and end of the year.

9.  Get The Proper Licenses, Insurance and Permits
Depending on your business venture and the state you live in, you may need different permits for your city than you need for your state.  If you have clients coming to your home, you may need additional insurances.  Look at all the potential scenarios and research what your needs will be.

10.  Structure Your Time
You know how on your days off there never seems to be enough time to get done what you'd hoped to get done?  Well, that happens in home-based businesses as well.  What also happens, is you get distracted by things within your home and the next thing you know you've stopped working in your business, and began doing laundry, cleaning, etc.  I'm a big believer in checklists - they keep track of tasks I need to complete, I can list them in order of priority, and check off things as they are completed allowing me to see that I've actually accomplished things that day.

If you have a home-based business, what types of tips have you discovered?

Additional Posts:
How To Sell At A Farmer's Market, Part 1
25 Ways To Make Extra Money On The Homestead
How To Start A Blog

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Lisa | Fresh Eggs Daily® said...

Great post. I agree with all your points. You have to treat it like a business or you won't succeed. You have to love it (or at least most of it!). I realized after writing my book that book signings aren't my thing - I would rather send out a newsletter or tweet to 'market' my book than sit at a feed store all day. Being flexible and innovative helps. Realizing it WILL become your life if you let it - the boundaries you talk about are so important. Some days I love it, others I just want to walk away from it all. But bottom line, I wouldn't trade it for the world. And p.s. I am DROOLING over your wooden crate/box storage!

Michaele said...

Interesting thoughts. A passion for what you are doing and believing in it is so important. I can see that you have both. I assume your spouse still works and provides insurance? You do a terrific job and I love all your updates!

Caitlin said...

Love these tips! I also think being passionate about what you make/sell helps lead you to success because consumers can pick up on seller's happiness level!

Unknown said...

One of the key ingredients to building your first online business is staying motivated throughout your journey.
And the easiest way to stay motivated is to build a platform around a topic that you're passionate about.

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