How to Open a Home-Based Small Business | 5 Initial Steps

How to Open a Home-Based Small Business | 5 Initial Steps

We’ve been doing practically everything from home for the past year, so why not start a home-based business? If you have a great idea, now could be the perfect time to move forward.

The concept of a home-based small business is not a new one. Take Etsy.com, for example. Etsy is a very popular online marketplace where people from around the world come together to make, sell, and buy unique items. You can find everything from jewelry, clothing, and shoes to art, wedding supplies, toys, and more on this unique site.

According to Statista.com, “as of 2020, more than 4.3 million sellers sold goods through the Etsy platform, up from approximately 2.7 million active sellers in the previous year. By comparison, there were over 39.4 million active Etsy buyers worldwide.”

Wow! Those are some big numbers. And equally as impressive is the fact that most of those 4.3 million sellers operate their business out of their home.

So, are you convinced? Would you like to start a home-based small business? Allow us to help you get started. Keep reading for five initial steps to get your home-based small business up and running!

 

5 Steps to Open a Small Business at Home

Aspiring entrepreneurs like you have seen the pandemic as an opportunity to capitalize on their ideas and launch their own small businesses from home. Starting a business from home certainly has its advantages, but just like any other business, there is quite a bit of prep work involved. Here are five initial steps you will need to take to make your business official!

 

STEP ONE: Form Your Idea

Before you can do anything, you need to fully flesh out your business idea. Get it down on paper, and then share it with a few people you trust. Ask for their honest feedback on the idea. What do they like or not like about it? Does it seem like a realistic undertaking? And, most importantly: does is sound like something they would want to buy?

Another very important question to ask yourself is, can this business idea actually be run from home? If it’s going to take up too much space or you don’t want to sell your products online, you may want to check out our other series on how to build a business from the ground up. Click below to head over to those posts!

How to Write a Business Plan

Tips to Help You Choose the Right Business Location

Marketing & Merchandising Guidelines for New Stores

How to Promote Customer Loyalty & Grow Your Business

 

STEP TWO: Build a Business Plan

This is a big initial step for any business, whether its being run from a home or storefront. A well-written business plan will help you:

  1. Educate Investors - If you don’t plan on funding your shop completely on your own, a well-crafted business plan will help you convince investors and/or the bank that they should fund your shop. 

  2. Seek Employees and Partnerships - You’ll certainly need employees to help you around the store, and partnerships with other local businesses can drive traffic to your shop. Your well-organized business plan can get these people excited about working with you.

  3. Set Realistic, Attainable Goals - Laying out your entire plan on paper can help you set clear goals for your new business. It also gives you something to go back to when it’s time to revisit those goals.

  4. Create a Timeline - Your business plan can help you create a timeline for getting your shop up and running. Define a target opening date and work backwards from there.

  5. Stay Organized - Your business plan will be an important point of reference for you during the process of starting your business. With everything documented, you won’t have to worry about forgetting a step.

There are seven key pieces for all good business plans. These include: Executive Summary, Company, Overview, Market Analysis, Products & Services, Marketing Plan, Logistics & Operations Plan, and a Financial Plan. For in-depth information to help you write each of these sections, click here.

 

STEP THREE: Choose Your Business Name and Entity

Now we’re getting to the fun part! Once you have your idea solidified and business plan written, it’s time to decide on an official name for your business. The possibilities are truly endless when it comes to naming your business, but we suggest choosing something that explains what you offer and is memorable. Here are a few examples of Cleveland-area small businesses with creative names that are both practical and easy to remember:

  1. Antiquation – This shop sells knickknacks, signs, and other unique pieces. It’s a modern twist on the classic antique store, much like the name suggests.
  2. CLE Clothing Co. – This store sells classic tees and more, with an all-Cleveland theme!
  3. Our Favorite Things Boutique – The owner of this shop fills it with her favorite things. She personally tests out all the clothes, accessories, skin care items, and more herself.
  4. Urban Planting Cleveland – This shop offers plants designed to suit any space, from a small apartment, to townhouse, and beyond.

If you need help choosing a name, you can try using a business name generator. Enter a few key words into a generator and the results may inspire you!

Once your name is chosen, you will need to choose an entity for your business. We recommend consulting with an attorney or other legal counsel at this point to make sure you choose the right one for your operation. Visit irs.gov to review the different options for small business entities.

 

STEP FOUR: Register Your Business & Obtain a Business License

Depending on which business entity you have chosen, you may need to register with your state. Again, seek legal counsel or business bureau assistance for this step to make sure everything is completed properly.

You’ll also need to register your business with the federal government and obtain the proper business license. By registering with the federal government, you will receive an Employer Identification Number (EIN), which will help you hire employees, open a business bank account, file taxes for your business, and more. Your business license requirements will vary depending on your business type and location. Some general licenses you may want to research include:

  • A home occupation permit
  • Property use permit
  • Zoning permit
  • Business operating license
  • Professional or trade license
  • Sales tax permit

 

STEP FIVE: Separate Your Finances & Secure Funding

Now that your business is official and legal, it’s time to think about your finances. Even though you may be the sole owner and operator of your business, it’s important to separate your personal and business finances. Keeping your money separate is crucial for bookkeeping and filing taxes, but it can also help protect your personal assets.

Start by opening a business bank account and applying for a business credit card. You’ll need that EIN we mentioned earlier to accomplish this. If you plan on accepting credit card payments for your business, you’ll also need to secure a merchant account through a payment processor. We’ll talk more about that later.

You may also need to secure funding to help cover some of your business startup costs. Be sure to have your written business plan handy when searching for investors. You can also check out our BizFunds™ program, which provides startup funding for qualifying businesses.

 

With these five initial steps completed, you’re just about ready to launch your small business! But first, you’ll need to take a second to think about how you want to get paid.

 

Process Payments for Your New Small Business

Cash-only may seem like the best option at first. However, most consumers today do not carry cash, which makes cash-only a less profitable option. The same can be said for checks – most consumers don’t carry their checkbooks with them, for security reasons or otherwise.

That leaves credit and debit cards!

We know when most business owners hear “accept credit cards” they see dollar signs, but if you choose the right payment processor, your credit card fees won’t break the bank.

Electronic Merchant Systems is a leading provider of payment processing and merchant services. Since 1988, we have been helping business owners like you realize their full potential and grow their financial well-being. We’re headquartered in beautiful Cleveland, Ohio, with offices and agents coast to coast serving tens of thousands of retail, internet, and start-up businesses.

Our goal is to empower small business owners like you to grow and thrive in the digital payments landscape. Therefore, we provide a full suite of innovative payment products and solutions designed with simplicity and security in mind. No matter what type of small business you run, EMS can help you get paid!

We can also tell you everything you need to know about payment processing. Click here to get started by reading our payment processing guide.

To learn more about how we can help you grow your business, check our product pages, or contact us at the button below.

 

Sources: JustBusiness