Starting a business from home, whether it’s a side gig or something full time, requires a level of commitment.
If you’ve dreamt of running your own business, taking it slowly by starting out at home could lower your startup requirements. You’ll reduce the risk associated with investing a larger amount of startup capital, which might be necessary if you signed a business lease and set up dedicated premises.
Further, a home-based side hustle is an excellent way to test an area of interest and see if it has the potential to be a full-time, profitable business. So what do you need to consider and review before you get started?
1. Business model.
As with any type of business, developing a clear vision of what you’ll be selling and how you’ll be generating profit is essential. Refine your business model, and write out a detailed business plan if necessary. Things to clarify with your plan, in most cases, include refining your business idea. What are you planning to do, what products and services are you selling, and what’s your point of difference over competitors? Beyond your business idea is your revenue model. What will you be charging, and how will you make a profit? When should you expect to generate revenue, and what will the cash flow look like? Who are your customers, and how are you going to deliver value for them? Set all of this out in a plan, so you have a basis for benchmarking your progress and adapting your strategy as necessary.
2. Testing your idea.
Trying out your idea and testing it for validity in advance is essential, so you’re not wasting time, money, and other resources on too much trial and error. You might be experimenting to see what works to some extent, but research and test what you can beforehand. Find out whether your customers will be willing to pay for your offerings. In certain circumstances, researching how other similar businesses are doing could be sufficient. In others, you might have to do some market research, survey potential customers, and test the market.
3. Structure and legalities.
Next, you need to consider legalities like your business name and the structure you’ll be operating under. Planning for these in advance will keep you compliant and ensure you’re set up to report for and pay tax. To start, check if your preferred company name isn’t already in use, and register it. You’ll also need an Australian Business Number or equivalent in your country, if not Australia. In terms of structure, will you be operating as a sole trader, company, partnership, or trust? Each structure has its own implications for tax and other reporting obligations. You’ll also need to set up a business bank account so as to keep your personal and business finances separate. This will also make tax reporting easier. You might also need to purchase insurance depending on your business.
4. Working at home.
Since you’ll be operating your business from home, you’ll likely want to find a dedicated workspace, even if it’s a side hustle. This workspace ideally should be somewhere quiet and free of distractions. The kitchen table or living room lounge probably won’t be suitable spaces, unless you live alone. Renting a coworking space a few days a week could be a good idea if you want to build your network and want to get out of the house for a change. Additionally, set up your equipment by making a list of everything your operation will need. A computer, a printer, and other items should be in good working order, so you’re ready to launch.
Keeping in mind, you can claim tax deductions for these even if they’re partly for personal use.
5. Your support team.
You’ll likely need to work with an accountant at some stage, especially if your business grows quickly and your finances become more complicated. An accountant could save you a lot of time and money. He/she can help you avoid frustrating errors on your tax returns and ensure you’re claiming for everything you’re eligible for. Other professionals you might want to include in your support team could be a financial advisor, a business consultant, and an IT expert. Web design, marketing, and legal could be other areas you’ll need expert help with from time to time.
6. Marketing your business.
As you get ready to launch, define your marketing strategy. If you’re bootlegging your home-based business, you might be doing some of the marketing yourself rather than outsourcing it. Outline who your target customers are, so you can reach them with a dedicated campaign.
For most markets, an online presence is vital. Start with a customer persona encompassing things like their age, income level, interests, and pain point you’ll be solving for them. These details can then be used to drive your marketing efforts. You might be reaching customers online, through local mail drops, or through other channels depending on your products and services as well as your target customer base.
Building a thriving business tends to be a long-term prospect, requiring significant commitment and effort. However, experimenting with a home-based business, especially as a part-time side gig, can be a low-risk way to test the waters and eventually turn a hobby into a profitable venture. Avoid underestimating how much of a challenge it could be. Whether you’d just like to generate a second stream of income to supplement your salary or have a plan to build a large business, a plan is essential. A clear vision of what you’d like to achieve, along with research, testing, and the input and advice of professionals like accountants, could boost your chances of success.