How to Start a Business From Home
Disclaimer: Nothing in this article should be construed as legal, financial or tax advice. Please always consult a knowledgeable professional advisor.
Sometimes the best ideas are born from challenging situations. During the COVID-19 pandemic, it’s been inspiring to see new entrepreneurs seize opportunities and take the initiative to start a new business. If this sounds like you, you’re in the right place!
This comprehensive guide will take you through the different steps, from harnessing your initial business ideas to finding the tools you need to make your vision happen. It’s time to make your dreams a reality and start your business from home.
Develop your home-based business idea
Ensure market demand meets your contribution
There are multiple steps to starting a home business, but the first and most important one is to come up with an idea. Have you identified a gap in the market you can fill? Or is there something you’re extremely passionate about and want to share with the world? Either is a great reason to open a business – so long as there is a demand.
As you develop your ideas, you’ll need to consider what unique strengths and skills you and your business can offer. Think about why this might appeal to the market and what the market will pay you to do. Channel your inner ‘Ikigai’ to help you define your business’s ‘reason for being’.
Product or service – or both?
Next, you want to decide what type of home-based business you want to run. You might be interested in selling a product to a consumer, so elements like manufacturing, warehousing and shipping will need to be considered. Services on the other hand, like consulting, require relationship building and frameworks for knowledge sharing.
There’s also combination businesses, like at-home salons and online food businesses that need to manage both tangible and intangible components, for example, food and customer loyalty
Business models differ significantly depending on whether you want to offer a product or service, or a combination of both. When considering what small business to start from home, it’s important to identify which direction you want to go in.
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Popular home-based business ideas
To get your creative juices flowing, we’ve compiled a list of five types of home business ideas that you could explore:
When it comes to eCommerce, the options are endless. You can sell handmade clothes and jewellery, curated gift boxes or even personalised baked goods. This is a great way to turn an existing hobby or skill into a profitable business, from the comfort of your own home.
You can even set up your homemade eCommerce business as a side hustle, to give yourself some extra financial stability with a regular income boost.
Another popular business idea is to purchase products in bulk and sell them individually online. They could be niche products that would appeal to a certain audience or products that fill a gap within a niche market.
This type of business is ideal for starting at home, so long as the products are small enough to store and ship - you don’t want them taking over your entire home. Once you reach a certain point, you can also grow the business further, by hiring employees and expanding into additional storage.
Drop shipping is an alternative to bulk-buying that works especially well for those who have less storage space available in their homes. Rather than purchasing products in advance, you’ll take a more on-demand approach.
In short, when a customer purchases a product from your online store, you’ll buy the item directly from the wholesaler or manufacturer, who will then send it straight to the customer.
You can find out more about starting a drop shipping business from home with our complete guide to drop shipping.
From virtual tutoring and personal training to freelance writing and consulting, a service-based business is one of the simplest types of business to set up at home. You’ll usually just need three things to get started: time, expertise and a suitable home workspace.
A service-based business relies on client trust and loyalty, so it’s often better to take the quality over quantity approach and offer a high-end service to fewer clients. This way, you’ll be able to sustain a healthy work-life balance, while ensuring your customers keep coming back.
Much like its virtual counterpart, offline service-based businesses also follow a similar model, whereby you charge for your time and expertise. However, while virtual services can all be done from home, offline services tend to market themselves from home but operate in-person.
Offline services can include house cleaning, dog walking, decorating and child-minding, among many others.
Identify your customer
Once you’ve landed on a business idea, you can start to define your target customers. Knowing your customers and tailoring your offering to them is the key to your success when starting a business from home.
Here’s a series of questions you should answer to find clarity about exactly who will purchase your product or service:
- Define your product: How would your customer explain your product or service in their own words?
- Define the opportunity for your business: What problem does your business help your customer solve?
Define the demographic of your customer. For example:
Where is your customer located?
How old are they?
What’s their gender identity?
What is their profession?
How much is their annual income?
- Understand your customer’s behaviour. For example:
How does your customer make purchase decisions?
Who is influential in their lives
What existing products do they use?
What worries them?
What excites them?
Run a competitive analysis
Before you start running a business from home, it’s important to understand who else is doing what you’re doing, by developing a competitive analysis.
Look at other brands online and read their product reviews. Better yet, put yourself in your customer’s shoes and purchase that product or service. For instance, if you want to make and sell candles or soaps, buy some from another brand. Or if you want to offer your gardening expertise, hire a gardener.
Here’s what to look for when assessing your competition:
- What’s the price of the product or service?
- What’s the quality of the product or service?
- What are the key benefits that are communicated?
- What was your the experience of interacting with the product or service? How did the business meet your expectations?
- What customer is the business appealing to and where is their focus location?
Answers to these questions will help you create a business plan and marketing plan for your own start-up business.
Articulate your unique selling proposition
Once you know what other businesses are out there, you can see how your home-based business differs – and what you want to highlight that you do differently. This is called your unique selling proposition (USP) – and it’s all about what you can do better than anyone else. You should be able to sum up this proposition in a simple, short sentence.
Take FedEx’s original USP as an example – ‘When it absolutely, positively has to get there overnight’. This highlights a problem that can be solved with their product.
Another example from Innocent Drinks is their campaign “Taste good. Does good.“ that helps communicate the company’s use ethos of using sustainably-sourced natural ingredients and donating 10 percent of their profits to charitable organisations.
Don’t be fooled. This deceivingly simple exercise requires time and attention. Chances are, your first attempt won’t be your last. Your USP is why people will want to buy from you, work for you and invest in you, and is the basis for your elevator pitch.
Build your at-home business model
Your business model is all about the ‘How’ – how you’re going to set up a business from home and plan for making money. It identifies the key sources of revenue by selling your product or service to your intended customer. Your business model also identifies your funding streams and your suppliers, and other stakeholders, in your business. The Business Model Canvas from the University of Oxford is a popular tool for mapping out these elements.
Pricing your goods and services is an important consideration when building your home-based business model. There are three ways businesses typically price their product:
- Competition-led: Where do you want to sit alongside your competitors?
- Cost-led: How much does it cost to produce your product or service?
- Value-led: What is the price your customer is willing to pay for your product?
Your pricing model is a determining factor of your expenses and revenue for operating your business over time.
Register your business
Once you’re confident starting a business from home will be profitable, it’s time to make it official! There are three steps to registering a business in the United Kingdom:
- Claim your business name: Make sure it’s memorable and desirable for your customer, and that no one else already has it!
- Choose your legal business structure: From ‘sole trader’ to ‘limited company’, different business structures come with varying benefits and obligations.
- Get the necessary permits: Different businesses require different permits. For example, you need a specific licence if you want to sell food or trade in the street. There are also specific rules you must adhere to when selling goods online.
To find out more on these steps, check out our guide on how to register your business as a name and entity in the United Kingdom.
Set up your software stack
Once your home-based business is official, it’s time to launch your website or online store, as well as any supporting infrastructure.
Firstly, you’ll need a domain provider. It’s common practice to purchase domains that are the same and similar to your business name so that other people and companies don’t use your name too (knowingly or unknowingly).
You’ll also need to find a hosting platform for your website. If you’re accepting online payments, you can find eCommerce platforms, such as Square Online, that include payment processing or integrate with payment platforms. You can customise your virtual storefront and start accepting payments in no time.
When choosing the right online store platform, consider:
- How easy it is to build using their templates to reduce design and development costs and
- its ability to integrate with other applications, like accounting software, so all of your systems play nicely with each other.
Prepare your payment system
Beyond accepting cash, you also need to accept card payments, which offers convenience for your customers and means you’re more likely to get paid the right amount straight away.
There are several ways that you can accept payments when starting a business from home:
- Set up your online store with Square Online to accept payments on your website
- Use your computer to take credit card payments over the phone with Square Virtual Terminal
- Easily create and send estimates and invoices from the free Square Invoices app
- Set up easy checkout links to help you start accepting payments online with Square Online Checkout.
If you’re also planning to trade in person, Square’s contactless card reader allows you to accept payments from contactless cards, contactless devices and chip cards.
Marketing your home business
With everything up and running, it’s time to promote your business and attract some customers. This can be done in several ways, so we’ve listed a few ideas below:
Create an online blog or website: Make a digital space for your home business so that customer’s have a point of reference to return to. This could be a website integrated with your online store, or a separate blog which showcases your brand and business ethos.
Use those SEO tactics: Search Engine Optimisation (SEO) helps ensure your website appears in relevant search results. To enhance your website or blog, you can include keywords that your customers might be searching for, create informative pages that link to your business offering and make sure your site is easy-to-follow.
Set up your business’ social media: From Facebook and Twitter, to TikTok and Instagram, the world of social media is a free and accessible way for you to engage with potential customers. Set up your own accounts and create a regular posting schedule to attract likeminded brands, clients and consumers.
Go local: When starting a business from home, your local area can be the perfect place to generate some interest. Whether you leave a few business cards at your nearest coffeeshop or offer exclusive discounts to local stores, it’s a great way to get your name out there. And don’t forget to list your business online so you appear on local searches.
So, now you know how to start a business from home, it’s time to get going! Your business will require time, effort and lots of flexibility, but the rewards will make it worthwhile.
Follow along on Town Square for more about how to successfully run a business over time, or find out more about Square payment processing options and how they can help your home-based business grow.