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How to Start a Home Business: The Ultimate Guide, Step-by-Step

Don’t be ashamed to start a home business because two out of every three companies began as a home business either in the spare room or garage/basement.

Great brands like Apple, Baskin-Robbins ice cream, Electronic Data Systems, Hallmark cards, the Lillian Vernon catalog, and Purex began as a home business.

We even have an advantage now because the internet makes operating a virtual company from home more feasible and popular than ever before.

Just have a feasible idea, conduct your market research and you are set to start your home business.

As a result, this article will explain the steps to begin a home business, the advantages, disadvantages and some home business ideas you can start. Stay with us!

What is a Home Business?

A home business is any business that is run primarily from the home. It basically has the office location in the owner’s house.

However, you do not need to be running the business from the premises where you reside for it to be considered a home business.

It is important you know that the subject of home business far stretches beyond just people who work at home. Software trainers, trainers, interior decorators also run a home-based business just that they have to travel to provide their services.

Therefore, we can generalize by saying that home businesses are those businesses whose owners are the office.

Most home businesses do not have many employees. Employees in such organizations typically either work from home or for agencies that operate as subcontractors.

Advantages and Disadvantages of Starting a Home Bussiness

There are obvious reasons to start a home business. The first is that there is no commuting to work. This saves a tremendous amount of time and car expenses. The typical commute is just up and down a stair unless the job requires a lot of traveling.

Reduced overhead cost is another advantage. Starting a home business saves you expenses for renting and furnishing business premises.

In some cases, running a home business reduces tax. If you registered as a sole proprietor, your business income is taxed as a personal income.

However, to qualify for a reduced tax, the workspace has to pass the exclusivity test, showing there is a defined portion of your house used exclusively for business purposes.

Lastly, if you have children, runing a home business offers you more time with the kids.

The disadvantages of starting a home business are outlined below.

It is restricted in some areas according to zoning laws.

Next, home businesses require a lot, like home insurance, signage, parking spaces, etc. Constant visits of customers may create a conflict with other people in the neighborhood. This may even interfere with family life. You may consider an exclusively online home business to eliminate this factor.

Lastly, for individuals who have worked all their lives in profesional settings, starting a home business may seem like a joke at first. The fear of isolation may breed depression.

Steps on How To Start A Home Business

First things first! Before starting a business, you need to make adequate preparations by planning thoroughly. Also, be flexible to adapt to changing solutions.

Now to the ‘how’ properly.

#1 Conduct a Market Research

You want to be sure to conduct in-depth market research. This is an essential step before you decide on a business idea. Since the aim of every business is to make revenue, it is important that your business idea is a profitable venture.

Conducting market research comes in two parts. The second being after identifying the business idea.

Here, you’ll basically identify your potential clients, competitors, run surveys and research SEO. From this research, you’ll build followership and get contactsof people who will jump in once the business is aboard.

We may also include naming your business, creating a logo, and building an online presence since it is a home business. Rather than spinning the wheels, make a checklist of all that’ll be vital to the success of the new venture and thoroughly research about them.

So, how do i start a home business? Start wih a market research.

#2 Identify and Refine your Home Business Idea

The truth is that many home business ideas and solutions you’ll come up with are already been practiced. Therefore, you need to remodel, redefine and repackage the idea to become a unique solution.

In this regard, conduct a search on the companies offering the same services you intend to, learn about their services and figure out how to distinguish yourself.

You may use the strategy of faster and cheaper service delivery or even consider franchising.

Since we assume that this home business is a small one, writing a business plan may not be necessary. But, consider an idea that works well from home.

Lastly, it’s important to have the experience, training, or skills necessary to be successful. This is the beginning of the startup journey for your home business.

#3 Think About Finances

No matter how small the business is, it requires some finance. Do you have the means to fund the business or will you borrow? Bear in mind that it may take some time before your business starts making a profit. Having adequate finance will ensure that you don’t run out of money before making a profit.

Deteremine how muc you need to break even by conducting a break even analysis.

It is a simple calculation: Fixed Costs / (Average Price – Variable Costs)= Break-Even Point.

This simple formula above teaches the entrepreneur about the minimum performance the business must achieve to avoid losing money. Furthermore, it helps you understand exactly where your profits come from, so you can set the price of a product or service and production costs.

In addition, watch your expenses. Don’t spend on unnecessary things like hiring an office space or virtual assistants at the beginning of the business if you can handle all orders for the first few weeks. Remember that it takes a while to start making profits, the employees’ salaries will be additional expenses on the business.

#4 Decide on your software.

At the starting period, decide on the software you can employ to help. Remember that the software has to be crucial t the success of the home business.

A central database like CRM will be helpful to keep all your data in a safe place. It will help organize the business and the team it grows. Start off with the free ones.

Regardless, this will only be necessary if it is crucial at the start point of the home business. Some of the software predominantly used by companies are for analytics, project management, accounting, bookkeeping, email marketing, and other basic day-to-day tasks.

#5 Create a Business Plan

A business plan serves as a blueprint for your home business. Once you know your idea has the potential to succeed, it’s time to build a business plan. Since you are starting a home business, the business plan can be concise and not elaborate.

Your business plan should include the following essential elements:

  • Executive summary– This provides an overview of the company and its market.
  • Business model– Outline what your business does, who your business serves, and how your business is structured. Include a description of what products and services you offer, and how they meet the needs of your customers.
  • Market condition– This section specifies your closest competitors, their strengths, weaknesses, and your competitive advantage.
  • Operations and management– Outline your business’ organization structure, key roles, and responsibilities.
  • Marketing and sales strategy– This section should describe how you will market and sell your product. Include information on your ideal customer, how you plan to position your offering, and your sales strategy.
  • Financial plan– You require a detailed outline of your business financials. You’ll include your startup costs, how you generate funding, pricing of products and services, and your prospective income plan.
  • Appendix- End the document with an appendix summarizing your business plan.

Furthermore, business plans should identify what makes your offering different from competitors. They should also be short and actionable. And your business plan should evolve with your business.

Do you wish the business to be a sole proprietorship or a partnership? If you wish to own it solely, you’ll bear all the costs, debts, obligations, and profit.

Similarly, you may partner with someone who believes in the vision. Let the partner be someone with complementary skills that can help the business grow.

#7 Register Your Home Business

To start a home business, you have to keep the registration rule.

A home-based business must be registered with the city where you intend to run the business. The city may also require you to obtain an occupational license to run the business and this can be obtained from the license office.

Registering your home business isn’t as difficult as it sounds, the paperwork is pretty straightforward. Most importantly, it ensures that you run the business legally.

Before completing this step, the business requires a name and structure.

You may also need a federal employer identification number (EIN), which the IRS uses to identify your company when you pay taxes.

#8 Create a Business Bank Account

Once you have legally registered your home business, open a bank account specifically for your business. It is essential to separate your personal and business finance.

This can give you a clear picture of the business’ cash flow. Also, it makes bookkeeping and tax preparation easier and some banks require an EIN to open a business bank account.

Many banks offer both business checking and savings accounts. Choose the best for the home business.

Here is a glimpse of how they both operate. A business checking account typically does not have a limit on the number of transactions, you also get a debit card, but no interest accrues.

However, a business savings account earns interest over time but has a limited number of transactions you can perform each month.

Here’s an advice, when starting out a home business, look for a business bank account that does not have a minimum balance so you are not penalized for having low funds.

#9 Choose your Vendors

Depending on the kind of services you wish to render as a home business, you may require the services of vendors.

Choose carefully because they’ll have access to vital information about your home business.

#10 Brand Yourself

Most of the big names you see online are home businesses. Yes, you’ll never know because they have a strong brand identity.

Branding can come in the form of a company website, strong social media presence, email marketing, logos, and lots more.

How do I start a home business? Start by branding yourself!

#11 Set up The Office

Even as a business that is run from home, have a designated workspace. Set up a corner specifically for work. It helps maintain focus while working.

In addition, if you have to make video calls, you don’t want your clients seeing rumpled sheets and an untidy environment in the background.

#12 It is Time to Work!

You’ve put in lots of hard work already, get to work like a boss on your terms, and make some dollars.

Do I need to Register My Home Business With My Local Agency?

Yes, it is important to register your home business. This is one of the first steps on how to start a home business after ideation.

For a fact, many home business owners skip this step. Failure to check with local authorities about home business regulations in your area can lead to penalties and business closure.

Most residential areas have zoning laws and your home business will be situated in one. This restriction is put by the authorities to maintain quiet and aesthetics in the neighborhood.

If your home business will not impact the neighbourhood, you may get a waiver.

However, a zoning law seeks to address the follwing:

  • Physical Changes: Will your business require your home to be modified? Are there going to be signs in your window?
  • Traffic: Will there be customers and employees coming and going out often?
  • External factors: Will the business constitute a nuisance in the environment? Like collecting scraps in your lawn?
  • Business Activities: Are you running a farm in a suburb?

If your business will not impact the neighbors, you’ll be allowed to run your home business. However, do not assume that your business will not affect the neighbors. Check with the appropriate authorities.

What are some examples of Home Buisness Ideas?

Some home based business ideas you can start today are:


We know that passion for the idea is one salient factor that will ensure the home business sees the air of continuity. However, you are bound to start making a profit quicker if the business idea is an in-demand thing in your vicinity. This way, you’ll have both a local and foreign customer base.

Also, consider gettiing an insurance policy to safeguard against any business loss.

In conclusion, all that we have listed above have shown the major steps on how to start a home business. Start one as a hobby or a side hustle, with time, you may quit your 9 to 5 and make it a full-time venture.

Everyone desires some level of freedom, and you’ll get this by being an entrepreneur.




Peace Akujuobi is a Web Content Developer and Digital Product Tester at Silicon Africa Technologies. She holds a degree in Mass Communication from a reputable institution.

Peace is an expert SEO writer with years of experience offering tips on wealth creation, jobs, and education. Also, she is passionate about helping people get access to online money-making opportunities.

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