How to start a small business at home: A detailed overview
Are you starting your own business? You must be on your toe-tips. But trust me, starting up a small business from home can be as adventurous as it can be uncertain. If you don’t plan clinically, there are high chances you are going haywards.
Most small entrepreneurs find the process overwhelming. That’s why I get many queries like how to start a small business at home. And that’s quite natural. Beginning a small home-based business is the same as starting any other company. The same risks and peculiarities apply here as well.
However, the environment is favorable for small businesses to prosper. In fact, the current trend suggests that every other mall venture could be a home-based business. That’s why 50% of 31.7 million small businesses in the US are home-based ventures.
However, the rates of home-based businesses failing in the US are equally high. Therefore, you need a concrete business plan before entering dirty waters. Hence, I am here to help those who asked- how do I start my own small business from home?
Key takeaways:
To start a small business at home, these ideas can be critical:
- Try selling stuff in small quantities through online marketplaces, viz, Facebook marketplace
- Secondly, try to sell home-based goodies and avoid sourcing your products from anywhere else
- You can sell services like tutorials or on-demand products like printed apparel or confectionery. Read my blog on how to start a tshirt business
- Start with an LLC or sole proprietorship at first and then expand
Framing your business structure
Before setting up your supply chain or inventory, try framing a robust yet suitable business structure first. Remember, the legal structure of your business will decide the course that it will take in the future:
| Parameters | Sole proprietor | LLC | Partnership business | Corporation (not recommended for a start) |
| Number of people | Only the owner | One or more people or business entities | One of more owners | Multiple shareholders |
| Taxation | Taxes payable as per profit earned by the owner | Not taxable (if you meet specific terms) | Not taxable (if you meet particular terms) | You need to pay corporate tax if you are a C-Corp |
| Liabilities | Owners can dilute personal assets and skim business assets into personal assets. | Business debt and liabilities do not impact personal assets | Owners have to shoulder debts and liabilities in business | Business debt and liabilities do not impact personal assets |
What are the popular home-based start-up types?
If you are wondering how to start a small business in your home, you first need clarity on what business you want to do. Here are some options to start a small business from home. These businesses are faring better in recent times:
Most popular ones
| Home-based social media management as a third-party consultant | Offering cybersecurity services | Small construction company with an office in the home |
| Small-scale e-commerce like cloud kitchen and online delivery | Shirt printing or DIY printing | Small-scale catering business from home kitchen |
Other popular businesses you can try:
- Graphic Designing
- Wholesaler
- Records keeping
- Event planning
- Travel planning agent
- Teaching
- Tutorials/online courses
- Home-based pet care salon
- Beauty services
- Website development
Is your business idea ready?
Those who don’t know how to start a small business at home can begin by selecting a business idea first. Maybe you have an idea already. You may carry on with it. But do you know whether it is compatible with your skills and competencies?
If you have not decided on your business idea yet, that’s fine. Let’s get things rolling together. First, you must consider your areas of expertise.
Pro Tip: Avoid indulging in businesses where you can’t handle the production yourself. For example, don’t start a cake baking business if you don’t have the skill.
Are you solving the gap by offering something unique? If yes, there could be nothing better. If not, rethink your business ideas. I won’t say you can’t succeed with a common idea. But the chances of success may be lower.
The next thing is existing competition. If you are exploring a new business idea, competition will be lower. But always scan the market religiously to find details on your prospective competitors.
Let’s take the example of starting a small food business from home. There are many options there as well. We can move with home-based baking.
There are 9000 listed bakers in my place, NY. So, the market is still open for small-scale bakers. Wait, did you also think that?
I know. Many make the same mistake. You would need to consider the upscale market as well. Besides home bakers, people also buy bakery savories from the more prominent brands.
If there are too many popular businesses of the same category in your city, chuck that business idea. That’s how critical market competition is.
Registering your business
What is one purpose of writing a business plan before entering the market? It’s the first concrete step towards making your dream a reality. Registration is what comes first in a business plan. Yesterday, someone asked me- how to start a small shirt business at home. I replied that your first task would be to list a cool name for your business.
You may want a cool name for your business, too. But what if the name is already taken? The legal owner of the name can sue you for violating IP rights. So, what will you do?
You will register your business. During the process, you will know if the name is available or taken. What is better for a small business LLC or corporation? I prefer moving with an LLC, partnership, or sole proprietorship at first. These businesses incur fewer risks, and owners take all. Besides, it is easy to register any of these businesses in the US.
It is now coming to the registration procedure. It may vary from state to state. However, the primary step is to contact the Secretary of State or the bureau for business registration in your state.
What else?
You must do another listing with the Federal government. After that, you will get your Employer Identification Number. Once you get it, you are ready to launch your brand.
Licensing your home-based business and assets
Recently, I got a query related to this from one of my readers. He asked- how to start a small cupcake business from home. I asked, “Have you got your commercial food preparation and selling license?”
He seemed taken aback. But that’s how it is. You need to apply for the specific license relevant to the type of business you are in.
Next, you need a home occupation license. It ensures that you are not violating the privacy of others in the locality. It also ensures that you are not adding to the residential area’s noise, commotion, or pollution.
Sort your finances
Let me talk about another exciting query from one of my friends. He asked me- how to start a small business home with no money. People often say I want to start a business but have no idea. But this was a weird one.
Or maybe not. Finance is one of the biggest concerns for every other home business owner. Oft, people ask how to get a small business grant. So, I would recommend doing these two things as soon as you get your business rolling:
- Open your business bank account first
- After that, apply for a business insurance
**The process to get a business license may be tricky, too. Comment below if you want a separate blog for that.
How to start a small business at home online
I get this query a lot. However, the processes for online business are nothing different. What’s extra is a domain for building your ecommerce listing site. The licenses can be slightly different, too. But I recommend such ventures.
Firstly, you get broad exposure to a wide customer base. Secondly, you can get a prominent advantage through WOM publicity.
Let’s take the example of another query from one of my colleagues. She asked- how to start a small nail business from home. But she wanted to make an online brand.
I recommended listing her services online through various listing sites. Additionally, she only needs a website to introduce customers to her work. And share the contact details, of course.
FAQs
There are many queries on how to start a small business at home. So, I decided to answer some recurring queries separately.
What is the best small business to start from home?
There are plenty of options to choose from. It depends on the state you’re in. For instance, freelance work and IT consultancy services are famous in my city. Let me know in the comments what home business clicks in your town.
How do I start my own business with no money?
You can start affiliate marketing, among other businesses, without a penny in the US. Other services, such as website design, can also be offered. You may also work as a freelance SEO specialist.
The Bottom Line
Many enthusiastic entrepreneurs don’t know how to start a small business at home. That’s why I posted an essential guide here.
But you must remember what’s most important while starting your own business from home. Begin with sorting the best business idea and marking the target audience. Then, register your brand and open your business bank account. That’s all for now.
Best of luck with your new home-based business!
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