In today’s day and age, it’s never been more practical to launch and manage a business from your own home. But just because you can build a home-based business, doesn’t mean you should. Before you take the plunge, there’s a lot that you need to take into account.
Here’s What You Need to Know
Running a business out of your home is a lot different than operating a business in a traditional work setting. There are both pros and cons to this unique setup, but you need to be aware of the following before you get started.
Get the Right Licenses and Permits
In most cases, a home-based business sort of flies under the radar. This is especially true if you’re running an online business that is almost exclusively operated through a computer. But before you get started, it’s smart to do some research on permits and licenses.
Some counties, cities, and neighborhoods actually prohibit home-based businesses or require a licensure process, especially if it involves manufacturing or on-premise selling of products. For example, if you’re going to be mixing chemicals in your garage in order to make a product, chances are pretty good that you’re going to need to go through some sort of approval process. Figure this out before proceeding.
Properly Finance the Business
How do you plan on funding and/or financing the business? While money can be a sensitive topic, it’s better to think this through ahead of time. It’s important that you never use something like a home equity line or second mortgage to fund a business. Instead, it’s smart to get a small business loan.
Qualifying for a small business loan isn’t as hard as you may think. You’ll need to develop a business plan, figure out exactly how you’ll use the money, and make sure personal factors – like your credit score – are attractive to lenders. Once you receive a loan, do your best to pour as much of your revenue back into the company so that you can pay off this loan and start growing your business.
Design a Functional Workplace
There has to be some separation between your business and your personal life. Bringing your business into your house can make things difficult, but it’s still possible to establish some division here.
It’s best if you have a functional workspace that’s dedicated to your business. For example, most home-based business owners like to have an office that’s only used for business purposes. Not only does this allow for a tax deduction, but it gives you a place where you don’t have to worry about anything except for the business.
If you’ve never worked from home, you may assume there are fewer distractions than there are in an office. But in most cases, the opposite is true.
For one, you have to deal with distractions from family members and neighbors. People will assume that, because you’re home, you’re able to hang out and have fun. It’s up to you to quickly correct this notion and let them know that you’re technically “at work.” If they want to chat before or after work, that’s fine. But between the hours of nine and five (or whatever schedule you set), you’re unavailable. Make that clear.
Do Your Due Diligence
It’s feasible to go from having nothing more than an idea to having a full-fledged business in a matter of hours. The level of access everyday people have to powerful business tools is astonishing. But if you’re thinking of launching a home-based business, you need to be sure you’re doing your due diligence. While it’s easy to get started, not everyone is fit for the challenge.