The allure of starting your own business is hard to deny—being your own boss, setting your own hours, pursuing a passion—who wouldn’t want that? As romantic as the idea might seem, starting a business is hard work, and most people never turn the dream of business ownership into reality.
However, with the rise in technology and a shift in how business is conducted, many barriers have been eliminated, and a successful business can be started right from your kitchen table. In fact, starting a business from home has never been more accessible.
Whether you’re looking to escape the corporate grind, you want to be your own boss, or you want to pursue a passion, there has never been a better time to start a home-based business.
The following guide will walk you through everything you should consider when starting a business from home so you can establish the most successful home-based business possible.
Here's a look at what's to come.
Before going down the rabbit hole of creating a business plan or forming an LLC, it’s important to first determine if starting a home-based business is right for you. You’ll want to consider things like your motivation for starting a home-based business, the financial investment it will require, and even the physical space you have available.
Being your own boss is one of the top reasons people start their own business, and the perks of being your own boss are hard to beat. Who wouldn’t want to answer only to themselves? But is being your own boss enough to make you happy if you have no passion for the actual work you are doing? For some, the answer still might be yes, but before starting a business from home, it’s important to consider why you want to start a business in the first place.
Are you looking to escape a soul-sucking job? Do you want more flexibility? Do you want to find more passion in your work? Do you want to make more money? There is no right or wrong answer, but starting a business is a big deal, and you don’t want to make any snap decisions just because it sounds appealing.
Really consider your motivations and determine what is most important to you. Then decide whether starting a home-based business can truly help you reach your goals.
[Watch] What gave Laura the confidence to start her own home-based business?
Laura used to work in finance and accounting for a large, global company. She started her home-based travel business part time. See why she decided to go all in.
Owning a business is like having a child. It requires constant attention, love, and support. When you own a business, you have a responsibility to your customers and your employees (if you have any). Just like you wouldn’t neglect your child, you can’t neglect your business. That’s not to say you can never take time off, but you have to be fully committed to working, supporting, and growing your business. Just because you are tired, doesn’t mean orders or customer emails are going away.
Before starting a home-based business, it’s important to understand the amount of work it will require to run it and determine if you are ready to make that level of commitment. You may love to knit, but are you prepared to run an e-commerce website, process orders, answer emails, and keep up with demand?
There is a big difference between a business and a hobby. While hobbies can blossom into successful businesses, it is important to draw a distinction between the two. If you still have another job or you’re just not quite ready to fully commit to a full-fledged home-based business, consider starting part-time.
This will allow you to test the waters and get a feel for what running a home-based business is like and how viable your business can be.
To help further evaluate whether a home-based business is right for you, it’s good to create a good old-fashioned pros and cons list so you can weigh out the benefits and potential challenges. Your individual list might be a little different, but here are some things to consider.
This is one of the biggest perks of a home-based business: you get to decide when you work. Need to take a three-hour break to pick up the kids and get them to and from their after-school activities? You can do that. Prefer working at two in the morning? No one is going to stop you. You have complete control over your schedule.
Full-Time or Part-Time
Depending on your goals and life situation, you can choose to work your business full-time or part-time. Perhaps you are just looking to supplement your income and only want to work 20 hours per week. Go for it! Just make sure you set clear expectations with customers about when you will be available.
Commuting is a drag and can add hours to your workday. Plus, the cost of gas or public transportation can add up quickly. When you work from home, you only have to go a few steps to get to your office. That’s more time back in your day and more money back in your pocket.
Lower Overhead Costs
There are costs with any business, but with a home-based business they can be greatly reduced. Not paying rent on office space is probably the biggest savings. Plus, you won’t have to worry about all the other costs associated with leasing an office like utilities, office furniture, or additional internet. Instead, you can invest the savings back into the business.
You’ll want to talk to your accountant, but home business owners can often claim certain deductions on their taxes, including the home office deduction. Again, this is more money back in your pocket or toward your business.
You Are in Charge
The buck stops with you! This is one of the main reasons people start a home-based business. As your own boss, you get to call all the shots and determine how the business is run. No nagging bosses or micromanagement. The decisions are all yours.
You Are in Charge
As liberating as this can be, it also means you have to deal with everything. Angry customer? It’s your responsibility to deal with them. Delays with a supplier? You have to figure out an alternative. There’s no punting to anyone else. The buck stops with you!
Hard to Separate Work from Home
When your home is your work and your work is your home, it can be hard to distinguish the two. You’ll want to make sure you set up expectations with your family about when you are working and make sure you take time to disconnect.
Congratulations! You’ve decided starting a business from home is a good fit for you. Now you just need a business idea. Maybe you’ve had an idea for decades or maybe your wheels are still spinning. Regardless, you’ll want to make some considerations about the viability of any business before jumping in too deep.
There are plenty of examples of companies starting in a garage and making it big time. While there’s no reason to think you can’t become the next Apple, you’re probably not going to be competing with them on day one.
When coming up with your business idea, you want to find an area of the market that has sufficient demand but isn’t’ oversaturated with competitors.
Think about what problem you are solving or what value you are providing. Take a hard look at other companies in the same space. How will you be different?
Think about your potential customer. Who are they? How will you reach them? What value will they find in your business? It’s a good idea to talk to these potential customers and learn about their characteristics and pain points. By fully understanding the needs of your potential customer, you can develop a product or service that best helps fill that need.
Too often, new businesses lack clear direction and don’t really solve for a problem. Don’t fall into this trap.
It’s never too late to learn new skills, and as a business owner, you are going to have to wear many hats. But when you are just getting started, it’s good to draw on your core competencies.
Think about the skills you’ve developed in previous jobs and the relationships you can leverage to get your business off the ground. Then determine what type of business is best suited for those skills.
Randy Hobday started his own home-based travel agency after a long corporate career. Although it seemed like a big jump, Randy’s skills as a former project manager translated seamlessly to helping customers plan amazing trips. He also leveraged his passion for music and his relationships in the industry to carve out a unique niche in which he plans music cruises where travelers enjoy intimate music experiences with artists while they travel.
By tapping into his already established skill set, Randy was able to grow his home-based travel agency to well over one million dollars in annual sales.
[Watch] How a new home-based business owner used his existing skills and relationships
See how Randy applied his skills as a former project manager and his passion for music into a successful home-based travel agency that does over $1 million in sales annually.
When formalizing your business idea, you’ll want to make sure it can realistically be run from your home. There are plenty of home-based businesses that can be run with just a laptop or even a cell phone, but certain businesses may pose challenges.
If you are producing a product or providing a service that requires customers to come to your business, you need to make sure you have adequate space to conduct your business and make sure there aren’t zoning requirements limiting the type of business you can run from your home.
If making a product, do you have the physical space to store the product plus the raw materials? Do you have enough space for assembly? If it’s a food product, do you have the appropriate licenses or certifications to make and sell the product from your home.
If customers will be coming to your house, are you comfortable with that?
You’ll want to answer all these questions now to avoid running into trouble in the future.
While starting a business from home comes with less overhead cost than a traditional business, there are still plenty of costs you will need to account for. It is critical to understand all the costs and have a plan to pay for each. It’s a good idea to make a list of all the costs associated with starting and running the business and create a monthly budget so you know what type of investment to expect.
Here are some costs to consider:
Operational Costs: Office equipment like computers, printers, phones, etc.; business phone line; web hosting services; licenses or permits; insurance
Production and Fulfillment Costs (if selling a product): Cost of goods or materials; production; labor; storage; shipping and postage
Advertising Costs: Printing and design; digital ad spend; trade shows or events; TV, radio, print publications, etc.
Labor Costs (if you plan to have employees): Salaries; payroll taxes; health insurance
Not all these costs are going to apply to your business, and in many cases, you can start a home-based business on a very modest budget.
It is important to understand all the potential costs, though, so you can properly fund your business venture (either with your own money or by acquiring a loan) and avoid financial pitfalls in the future.
Starting a business from home entirely from scratch can be a daunting task. A franchise allows you to own and operate your own business while leveraging the power of an established brand.
Rather than starting from scratch, the franchisor will provide you the systems, training, marketing and infrastructure to start and grow your home-based business. This can be a great option for those with no previous business experience or those simply looking to invest in a proven model.
Franchises will require an initial franchise fee, and you will typically be required to pay the franchisor a royalty on your sales. However, the benefits you get in return are immense.
While starting any business comes with risk, a franchise helps minimize risk because they have already done the legwork for you. You are buying into an existing brand with a proven and refined model of success.
Training and Support
A franchise only succeeds when its franchisees succeed. Because of this, most franchises will offer excellent training and support to help establish and grow your business. Some franchises will even give you a personal business development coach who will help you establish goals, create a go-to-market strategy, and provide advice on marketing.
Established Tools & Technology
Most franchises will provide you with tools and technology to run your business like a website, CRM system, and even mobile apps. The best franchises have in-house technology teams who design proprietary software and tools to help you drive sales.
Marketing can be time consuming and expensive. A franchise will typically provide marketing support, and great franchises will have an in-house marketing team that designs and executes comprehensive marketing campaigns on your behalf.
Building a brand from scratch can take years if not decades. With a franchise, you are tapping into an established brand. This helps bring instant trust and credibility to your business.
With a home-based franchise, you are still the boss and can enjoy the flexibility and freedom that comes with that. At the same time, you will have a support system behind you invested in your success.
There are several low-cost franchises you can start from home for under $10,000. If you are wary about starting a new business from scratch, looking for more support, or simply want to tap into a proven business model, a home-based franchise is an excellent option.
Is a franchise worth it? Find out.
Once you’ve determined the type of business you’ll be starting, you will want to create a business plan. If you are attempting to get a loan or attract an investor for your home-based business, you will likely be required to provide a business plan. Even if you are not trying to get a loan, it’s still a good idea to go through this exercise.
A business plan is a document that serves as a blueprint for your business. It typically provides an overview of your core business and outlines key components such as your sales and marketing strategy, projected sales, costs, and how the business plans to succeed.
A good business plan will clearly define your business and help put you on a path for success. If you are unable to provide a clear vision for your business, you might not be ready to start quite yet.
There are plenty of free business plan templates available online to help you get started.
You’ve got an idea and a business plan—now it’s time to get your business up and running! There are some important nuts and bolts things you need to take care of. They might not be the sexiest tasks, but hey, you’re a business owner—sometimes you’ve got to get down and dirty.
Your business structure will impact how you pay taxes, the amount of liability you carry, and how you operate your business. Although it is possible to change your business structure later, there may be lots of red tape to cut through and potential business consequences. You should consult with an attorney or tax professional before deciding which option is best for you.
There are multiple business structures. Three of the most common for home-based businesses are sole proprietorship, limited liability company (LLC), and corporation.
Sole proprietorships are the simplest and least expensive business structure. As a sole proprietor, you run your business without creating a separate business entity, meaning your personal assets and liabilities are not separate from those of your business. This is great come tax time, because your business will not be taxed separately. However, because there is no separation between you and your business, you can be held personally liable for any debts against your business.
A sole proprietorship is a good option if you have a low-risk business or are starting out part time.
Limited Liability Company (LLC)
With an LLC, your personal assets will remain separate from your business assets. That means if your business faced bankruptcy or a lawsuit, your personal assets like your house and car would likely not be at risk. As a member of an LLC, you will be required to pay self-employment tax contributions towards Medicare and Social Security.
An LLC is a good option for medium to high-risk business or if you are looking to protect your personal assets.
There are several types of corporations (C corps, S corps, B corps, and others). A corporation is its own legal entity, separate from its owners. According to the Small Business Administration, “corporations offer the strongest protection to its owners from personal liability, but the cost to form a corporation is higher than other structures. Corporations also require more extensive record-keeping, operational processes, and reporting.”
A corporation is a good option if you have a medium to high-risk business or plan on selling your business.
Depending on the business structure you choose and your location, you may be required to register your business. Check local regulations and consult with a qualified professional to see if you are required to register your business.
Once you’ve established your business structure, you can apply for your Employer Identification Number (EIN). An EIN is like a social security number for your business and is used for federal tax filing and other business purposes like opening a bank account. If you are a sole proprietor, you are not required to get an EIN but have the option to if you’d like.
Depending on the location of your business, you may also be required to get a state tax ID number.
Depending on the business structure you choose, it is a good idea to open a business bank account. This will allow you to keep personal and business expenses separate and better account for cash flow. It should also make things easier when filing your federal taxes.
Again, you should always consult with the pros. Talk to a financial advisor or other business professional to determine which type of bank account is best for you.
Your idea has officially turned into a business—now it’s time to get to work! Although it might seem somewhat trivial, you’ll want to spend time setting up your home office. Ultimately, a good home office space can greatly impact your productivity.
For starters, you’ll want to find a dedicated space in your home where you can work. Whether it’s an actual office, a guest bedroom, or a desk in the basement, it’s a good idea to have a dedicated space so you can create as much of a distinction as possible between work and home.
If you have kids or other family in the home, you should have a conversation with them about providing you privacy in your workspace and set clear expectations about when you will be working. Distractions will inevitably come up but setting clear boundaries in the beginning will help you be more productive.
In addition to the physical space, you also need to consider what goes inside that space.
Computer: A reliable computer is a must. No home business can function without it. Consider investing in a new computer that can meet the demands of your business. Depending on your type of home business, it might also be a good idea to invest in a second monitor to help increase productivity.
Reliable High-Speed Internet: This is another must for any home business. Evaluate your current internet plan and make sure it can handle the needs of your business.
Separate Phone Line: This is not essential but is a good idea if you want to create a separation between business calls and personal calls. At minimum, you should set up a unique business phone number (like a Google Voice number) that forwards calls to your personal phone. This way, you will not have to advertise your personal phone number.
Good Chair: Most work-from-home jobs require a lot of sitting. To ensure your comfort and health, it’s definitely worth it to invest in a good desk chair.
You’ve got a business and an office—now you need customers! Marketing strategies will vary widely depending on your type of business, your industry, and your location, but there are some marketing basics that almost all home businesses should follow.
Set Up Your Website
If a business doesn’t have a website, does it even exist? In today’s digital age, a website is the lifeblood of nearly every business. There are plenty of great resources available to help you design a website, or you can hire a web development company. There are a few key things to consider when setting up your website:
Set Up a Business Email
Your business email should include your business domain name (i.e. email@example.com or firstname.lastname@example.org). This is a simple step and can usually be done through your web host. Not only will this help you separate personal and work emails, but it will also make you seem more professional and legitimate. No one wants to open an email from email@example.com.
Create a Google My Business Account
Google is king when it comes to internet searches. With a Google My Business account, you can create a free business listing that includes pictures, information about your business, links to your website and a link to call you directly. Your business profile will be visible in Google searches that match certain terms. This is an easy and free way to drive more traffic to your business.
Set Up Social Media Profiles
Your customers probably don’t want to know about your cat’s new sweater (unless you happen to run a cat sweater business called Looking Good, Feline Fine—dibs on that idea BTW), but they might want to know about an upcoming sale you’re having.
When starting a home-based business, it’s a good idea to create social media profiles for your business that are separate from your personal profiles. Most platforms, like Facebook, allow you to create a business profile so you can include information about your business and links to your website.
Social media continues to be one of the leading ways to connect with customers, but it can be overwhelming. Rather than spreading yourself thin posting to five or six different platforms, start by focusing on just one or two sites. It’s a good idea to pick the social platforms your customers are most likely to use.
Make a Yelp Business Listing
Reviews play a huge role in the consumer decision making process, and Yelp continues to be a leading site for reviews. By creating a business profile with Yelp, you will make your business more visible to potential customers. Like with a Google business profile, a Yelp business page allows you to include photos, links to your website, and other important information about your business. Yelp business listings are free to create with the ability to pay for enhanced advertising options.
Invest in a Great CRM
A Customer Relationship Management (CRM) system allows you to track relationships and interactions with your customers and potential customers in an organized and streamlined way. Excellent CRMs will have built-in reporting functions, customer segmentation, automated email sending platforms, and sales tracking capabilities. All of this allows you to better target and better communicate with customers.
There are basic CRM systems available for free, but it is worth making an investment in a great CRM to really hone your marketing and sales.
Tell Your Family and Friends
Word of mouth advertising is the best form of marketing, and your existing network of family and friends is a great way to get the word out. Create a post on your personal Facebook or LinkedIn page or send an email to your personal contacts explaining your new business. You can even create incentives for providing referrals.
Starting a business from home can be a fun, fulfilling and profitable journey, and with the number of resources available today, starting a home-based business has never been more accessible. That said, with any new business, there is a substantial amount of work needed to get it off the ground.
Cruise Planners is the largest home-based travel agency franchise company in the nation, and we have been helping people from all backgrounds start and grow successful businesses from home for over 25 years. We provide proven systems and processes which require less start-up capital and reduce the risk of failure compared to a traditional new business.
With Cruise Planners, you’ll receive comprehensive training and ongoing business development coaching to help you grow your home-based business. Our award-winning marketing will help you get your name in front of potential customers, and our industry-leading technology lets you work seamlessly from anywhere in the world.
Cruise Planners is a recognized name in the travel industry, and with our American Express Travel affiliation, you will gain instant credibility and trust.
Take the first step to becoming your own boss. Download the Starting a Business from Home Checklist and get helpful tips about all the steps needed to start your own home-based business.