Planning for the startup your home-based business operation is just as vital as planning for the startup of a brick-and-mortar business perhaps even more so. Don't let yourself be fooled into believing home-based businesses are any less legitimate than their storefront counterparts. Even companies run from home must be properly licensed, and to succeed, they need to operate from a well-designed business and marketing plan.
Here are the basic needs of home-based business startups.
The business plan: Developing an official business plan is the first step of starting any business. Why? Because during the process, you're forced to examine every part of your business in an in-depth and analytical way. This is where potential flaws in your idea will surface, and it's much better to discover them prior to investing time, money and sweat equity. You will also be required to have a solid business plan in place prior to seeking any type of financing. You can get help writing a business plan through Nevada Microenterprise Initiative (www.4microbiz.org), SCORE (www.score.org), or the Nevada Small Business Development Center (www.nsbdc.org).
The marketing plan: Who are your customers? Who are your competitors? How is your product or service different from others in the market? How will you brand your company in such a way that allows you to find and retain a steady flow of customers? A marketing plan is a vital component of your business plan in that it forces you to consider how you fit into the marketplace, and develop a plan of action for promoting your company.
The budget: The budget is another component of your business and marketing plan that helps you assess what you have and what you need both in the short- and long-term when it comes to cash flow. Establishing a working budget early in the start-up process will also help you with record-keeping, accounting and tax prep as you business progresses. Remember that while numerous home-based business costs are tax-deductible, you must keep detailed, accurate records of everything, from utility costs to home repairs.
Business licensing: Do you really need a business license if you operate from home? Yes! Not only is it the law, it also legitimizes your business. The type of license you'll need depends on where you live and what type of business you're operating. Business licensing recently became consolidated and streamlined through the Nevada Secretary of State's Office. You can learn more by visiting www.sos.state.nv.us.
Permits: Depending again on where you live and what you do, you may be required to seek special permits prior to launching your home-based business. This includes home-use permits and often, permission from your homeowners association to operate a business at home. You will likely be required to outline whether you will have people working with you in your home and how much foot and auto traffic you anticipate coming through your neighborhood. The Secretary of State's Office is again a good resource for learning more about the specifics as they pertain to your particular industry.
Insurance: Insurance costs are one of a small business' largest expenditures, so it's important to consider your insurance needs prior to launching your operation. The first to consider is your homeowners insurance itself, and whether your existing policy provides sufficient coverage for operating a business from home. Talk to your insurance representative for more information. Depending on your business, you may also need workers comp or additional liability coverage specific to your operation. Second is health insurance for you, your family and employees, if you have them. There are numerous factors that influence the cost of purchasing private policy coverage. Consider the benefits of participating in a group plan which allows small businesses to buy into a larger pool and access competitive rates.
Basic business tools: In addition to the formalities of business startup outlined above, there are also practical basic startup tools you'll want to have in place to ensure your business performs professionally. These include:
* Designated work space in your home
* A computer, printer, fax and designate
phone line
* Professional email account and address
* A business bank account
* Professional business cards, letterhead
and, finances permitting, a Web site
I also believe a professional frame of mind is an essential startup "tool." This means projecting a professional image for your business and for yourself right from the start.
Next month, we'll go more in depth with establishing a home office, including the all-important differentiation between "home" and "office."
Dave Archer is chief executive officer of Nevada's Center for Entrepreneurship and Technology. Contact him through www.NCET.org.
