Running a business from home comes with a list of difficulties, yet people make it happen. Some people take a hobby or just something they know they are good at and turn it into a profit. Before starting a home business, a business run out of your home, you should take steps to make sure you are protected. Tasks such as locking down ideas, identifying your competition, and having proper insurance help small business starters to excel.
Before a business becomes a business, you must come up with an idea. As mentioned earlier, locking down an idea gives your home business a foundation on which to build. You likely already have some idea of what you want to do with your home business, but ironing out the idea is key. If you want your home business to act as a main source of income, it should generate income all year.
For example, let’s say you are a tax professional and you want to start doing it as a main source of income. You can cut expenses by working from home and having clients meet you there. However, taxes are filed annually, which makes being a tax expert seasonally in demand. It may seem like a good idea at the time, but going months without a main source of income difficult.
Identify And Destroy
Ok, maybe not destroy, but identifying your competition is vital to keeping any small home business alive. A competitive market is a healthy one, but you can not expect to survive long if you are not sure who your main competitors are. Identifying competition helps you set prices and gives you an idea of what the competition offers. Once you know what market prices look like, you can set a competitive price and/or attempt to offer a better product to consumers.
For example, let’s say you love baking and you have the resources to produce an adequate supply of baked goods. You have a solid idea, now you need to identify the competition. If the competition is a chain business, they may be producing a generic product in taste set at a reasonable price. Instead, you can introduce consumers to your brand of home-made baked goods set at a similar price.
I Got Two Policies, One For The Business, One For The Home
If you plan on running a small business from home, you need to get policies for both. Yes, your home is still a home even when you are running your small business out of it, but technically they need separate policies. A homeowners policy would not cover losses or damages created by your home business and vice-versa. Minimum liability insurance, or workers compensation, applies to businesses with one or more employees. Yet you may want extended coverage if your product has the potential to cause damage or a loss.
For example, let’s say you run a car shop out of the garage attached to your home. If your work damages the garage or home your homeowner’s policy will not cover it. You will be left paying for damages unless you take out a business insurance policy. Similarly, if a pipe burst inside your home and your equipment gets water damaged, replacement costs would be on you.
Running a small business from home requires dedication and preparation. A solid idea, knowledge of the competition, and a good back up plan for disasters and damages does wonders for home business owners. Hopefully, this post inspires people to follow their passion and make a profit doing it.