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Starting a Home Based Business – Things to Consider Before You Go All In

For many people, going into business for themselves is the ultimate dream. Having the freedom to make a living off of a professional opportunity that is of your design and operated each and every day with your vision in mind is considered a luxury for most. If this is something that you see yourself working towards, be sure that you have put in a significant amount of thought.

While there are plenty of pros to look forward to, going into business for yourself means additional responsibility as well, and more of a gray area between your personal and professional lives. With many businesses opting for a remote operational plan, that is something that up-and-coming entrepreneurs need to think about as well. Running a business from your home will change the layout of your business plan and will also impact its functionality.

Employee Interaction

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If you decide to launch a home-based business from scratch that will mean some extra creativity on your part when it comes time to recruit, hire, train, and build your team of employees. While many people are used to the Zoom style of workmanship these days, there will still be some growing pains with a brand-new team of people. Depending on the industry that your business is based in, you might want to consider certain software and technology to bridge that gap.

Logistics companies have this down pat. Since most of their operations have to do with their trucks, and so many moving pieces, they understand that they have to provide their employees with certain tools to do their jobs, otherwise they would be impossible. You can review a guide on how to choose the best fleet management software on sites like Samsara.com to get an idea of what type of solutions these existing companies have already put in place.

In this example, managers and drivers alike are able to interact in real time and receive data that is necessary to the flow of operations. Regarding running a business from home, these programs also mean that you can effectively do that, without having to all be under one roof, since with moving vehicles, that would be impossible anyways. Even if you are not considering the logistics field, the example is still transferrable.

A Company Structure

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You must think about what type of business you are going to start. Not in terms of industry, but in terms of how you will identify yourself legally. Think about what will work best for you. The most common options are sole trader, LLC, or business partnership. Take an inside look at some of the risks of being an entrepreneur from home, including deciding how to identify. This choice will have an impact on responsibilities such as what paperwork you will need to fill out, and when, the taxes you will pay, how you pull profit out from your company, and what will happen if you take a loss.

Customers and Market Research

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Nothing else matters if you have not done your market research. Before you can even think about anything else you need to consider if your business is marketable and identify the type of customer that you will target. Additionally with a home-based operation you need to understand that you are eliminating foot traffic, so concessions will need to be made to make up for that in terms of marketing and advertising.

The Space Inside Your Home

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You might have many reasons to gear towards working from home, but do you have the space for it? You must think about the type of business you are starting, and what you need from your current home to be able to be successful. For example, do you need a private office, large enough to house all your important documents and necessary equipment? Do you need a large space to hold inventory and also package products to be shipped out? Look closely at what adding a business to your living space will mean for the function of your home, and also consider the impact it will have on those you share it with.

Passion and Patience

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Every small business owner needs a healthy dose of both passion and patience. These two qualities will work in tandem as you navigate what it means to run a business out of your house. Your passion is what is going to push you through the late nights and inevitable clutter of the early days. While your patience is what you will need to muster through the ebbs and flows of a brand-new company initiative.

Insurance Needs

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Just as your business would if it was outside your home would need insurance, you will need it to run something from inside your home as well. Some insurance based needs to consider are, health insurance for yourself and any employees, additional home coverage, liability insurance, and auto insurance if applicable. Of all the tasks to complete before you make your final decision, ones like insurance are not to be forgotten.

Startup Costs and Funding Sources

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Even if you have already identified that you are going to fund your business all on your own, you still need to identify where that money is going to come from. Are you going to pull from your savings? Take out a loan? Cash in your previous 401k? Each option is going to come with pros and cons, and with things like retirement funds, or home equity loans, there will also be certain criteria that need to be met to even be able to consider that as an option.

When you create your business plan a large chunk of it should be dedicated to your startup costs. It is important to go over this portion with a fine-toothed comb because inaccurately determining your financial needs can stunt the start of your business before it even has a chance. If you are able to fund your business without bootstrapping yourself, or going into personal debt, that is ideal. Having the opportunity to keep your financial worlds separate offers you some protection against bleeding yourself dry, to the point that you might not ever recover.

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