When I started my first home-based business over 15 years ago I was looking for an opportunity to try something new on my own. In addition to making some extra money, I also saw it as an opportunity to broaden my horizons a bit and test my skills at running my own business.
What I didn’t realize at the time was that starting that first home-based business would become a catalyst for my future endeavors. Over the course of the last 15 years I have flipped products for resale, renovated two houses, rented two homes, run an equipment rental business with my son, and now I am blogging and writing eBooks.
All of these ventures, with the exception of this blog, were started while I was working a full-time job. Navigating the time constraints and learning the ins and outs of managing a home-based business has been a journey. One I have enjoyed doing immensely.
As with anything new it can be intimidating to just get going, or even knowing where to start. And running a home-based business is no different. Regardless of whether you are interested in starting a home-based business as a part-time gig, or want to make it a full-time job, here are five things I have learned that should help you take that first step.
Passion – Walk Your Why
Your interest in starting a home-based business may start out with the desire to make money, or maybe it’s just taking that hobby you love and expanding the opportunity to do more of the same. However, making sure you’re passionate about what you’re going to be doing – “walking your why”, is equally important.
Walking your why is a term often used in relation to defining and creating your own path in life. It involves understanding your individual goals, desires, and beliefs about what you want to do.
(If you’re not familiar with the walking your why concept, I highly recommend reading Emotional Agility by Susan David)
The thought of working out of your home to make money can be an alluring dream for many. Work when you want, take breaks when you want, wear what you want, watch reruns of MASH or the Big Bang Theory when you want. The flexibility of doing your own thing is one reason many start a home-based business. However, starting something new that you have never done before can also be a challenging task.
That’s where the passion comes in.
You really have to love what you will be doing. The challenges that are associated with starting and running a home-based business can be daunting – lots of trial and error. If you’re not passionate and really love what you will be doing the desire to overcome and push through those challenges will eventually fizzle.
If you’re considering starting a home-based business, before you start, take a step back and really ask yourself if it is something you will love to do. It will go a long way in providing you with the tenacity and motivation for staying on task and overcoming challenges on your journey.
- How I Made Over $30,000 Flipping Stuff
- How to Publish an eBook in 5 Steps
- How to Create Passive Income Through a Dividend Income Strategy
Back of the Envelop
At some stage as you start evaluating the feasibility of your little venture the topic of how much it will cost will come to mind. The good news is that unless you’re going to be purchasing real estate or creating a product that requires a significant amount of capital, most home-based businesses are relatively inexpensive to start. Something I have learned over the years is that before you put together a ten-page financial document on expenses, or start evaluating whether it should be a sole proprietorship or LLC its prudent to do what I call a “back of the envelop” analysis.
A back of the envelope analysis is just a simple informal way of assessing whether your home-based business even has a chance of making money before you get started. It involves writing down the initial start-up costs you’re going to incur and then understanding what monthly costs your business will have. In addition, it takes into consideration what you can sell your product or service for. It’s a first look at whether your business can make money before you go through a more formal process.
Over the years I have had a lot of ideas and recommendations on what businesses I should or could start. Doing a quick assessment of whether I could make money was always a starting point – before I jumped in. It’s a way of minimizing your time and effort before you even get started.
If you discover your business venture has some real opportunity. I highly recommend using Quickbooks Online, to manage all your accounting functions. Quickbooks allows you to manage expenses, invoice customers and even provides payroll services.
Incidentally, the process of quickly understanding what the financial cost is to start your business is another way of really assessing your own desires for how passionate and motivated you will be about running the business.
Who Else Does That?
At least in our own minds, our ideas and concepts about our new home-based business can often become rather narcissistic. From the perspective that we believe our ideas about our product or service may be the best thing since sliced bread. Sometimes that perspective can cause us to be less objective than we should be.
Understanding who you will be competing with before you start your venture can go a long way toward making sure your home-based business is successful from the start. Assessing how your competition markets their products, where they are located and how their products are priced provides you with additional information about what your project may need to endure.
From a pricing perspective, it also allows you to reaffirm that you can actually make money based on what your competition is selling it for and based on what you think your costs will be.
Think Big, Start Small
One of the greatest advantages of starting your own home-based business is that unlike other business ventures where multiple owners or partners may be involved, your ability to control where and how you start is your own.
Some of the businesses I started had goals of someday growing the business into a larger company with many employees. However, growing a business takes time and a lot of effort and it’s important on the front-end to understand all the aspects of running the business first. Starting small in relation to your financial commitments, time and effort, selling and marketing your business is a great way to test the feasibility of your venture. Versus spending large amounts of money up front to find your business does not have the scale to reach its potential.
Dream big but start small, and understand all the different nuances that your business will require before you commit significant amounts of time and financial resources.
Marketing and Sales
A great idea is a start, but if you’re the only one that knows about it it’s unlikely you’re going to make any money. Understanding where your customers are located and how and why their buying is the first step in marketing your product, knowing how you will reach them is the second step. Most businesses fail because although they understand who their marketing to, they are unsure how to reach those customers. Taking time to understand your marketing and sales channels for the sale of your product or service is an important part to starting a business.
Will you use social media like Facebook, Twitter or Google+. Will you run print advertising or television ads, or like my real estate ventures will networking with other real estate agents be your primary marketing channel. One good way of initially assessing what your sales and marketing needs will be is to look at what your competition is doing.
Understanding how you will reach your customers and the cost associated will go a long way in determining how you will generate sales for your product or service before you get started.
The Final Assessment
From past experience starting a home-based business can be a very rewarding endeavor. I have found that although making money can be the initial motivator, it’s equally important to understand and be realistic about what your business may require from you.
If you can use these five tips to initially evaluate your home-based business ideas and then feel you have a viable venture, then you’re ready to get started.
- Amazon Books about starting a home-based business.
- Filling The Pig – Simple Investing, A Beginners Guide to Investments and How to Get Started.
- Emotional Agility, by Susan David, understanding how to walk your why.
- Quickbooks Online
Have you started a home-based business? Do you have any additional tips you can provide? Comment below.