5 Steps to Starting a Home-Based Business

by Alexa Mason · 5 comments

Home-based businesses are becoming more and more popular. Many people who have been laid off, or are unhappy with their current careers, have been looking to branch out on their own.

Working from home doesn’t have to be just a dream. With these five steps, it can become your reality.

1. Find an idea

Deciding what business you’re going to create is the most important part of the process. You want to do something you’re interested in — but that also has enough promise to pay the bills.

When you’re first weighing your home-based business options, start with your current hobbies. Here are a few questions you should ask yourself when choosing your idea:

  • What do you enjoy doing?
  • What are your skills?
  • Who would your customers be?
  • Will people pay for what you have to offer?

Home-based businesses are popping up in a variety of fields. Freelance writing, dog grooming, resume creating, video editing, and tutoring are just a few businesses that seem to be doing very well.

2. Start on the side

I’d never suggest that anyone just up and quit their job to pursue a home-based business. Before you can quit your day job, you need to know your business will pay your bills.

Start by pursuing your business on the side. Dedicate weekends and evenings to your new business. Though this takes a lot of work up front, it’s worth it in the end.

Once you know your business idea will be profitable, you can start planning that future quit date.

3. Grow your customer base

The larger your pool of customers, the more stability your home-based business will have. Growing a customer base isn’t something that just happens overnight; it takes a lot of hard work and persistence.

Start by spreading the word to your friends and family. If your business has a local target market, consider putting ads out in the local newspaper or hanging fliers up at local businesses and colleges.

Figure out where your customers hang out and advertise there. Encourage current customers to give you referrals. If they feel that you’ve provided them with a quality product or service, they’ll be more than happy to do so.

4. Build a savings buffer

Before quitting your day job, you need to prepare yourself financially. This means saving up enough money to tide you over through those scarce months.

When you work for yourself, fluctuating pay is simply inevitable. The amount you need to save will vary on a number of factors. Some of these factors include how diversified your customer base is and how much money you need to live on.

I’d recommend saving a minimum of six months worth of normal expenses.

5. Give your business time to flourish

It takes time for a business to find success, and it also takes a ton of hard work on your part. Put in the hard work — and be consistent.

It could take months, or even years, for your business to develop into what you want it to. Starting a home-based business isn’t a get rich quick tactic by any means. But if you’re willing to put in the hard work, deliver an awesome product or service, and actively find your customers, all you need is time.

Have you thought about starting a home-based business?

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{ 5 comments… read them below or add one }

John S @ Frugal Rules December 18, 2013 at 7:22 am

These are all great tips Alexa! I think we did all of them as we started our business and they were incredibly helpful. I think all are important, though we found #3 & #4 to be vital. Of course the amount each person needs saved will differ, but it’s important to have something set aside.

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Trace @ Independence Investor December 18, 2013 at 7:46 pm

It’s really important to follow your passion. You are more likely to stay with it for the long term. It’s definitely prudent to keep your day job and incrementally build up the side business.

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Levi @ Wealthnote December 19, 2013 at 2:05 pm

Great tips. This is something I am striving for and slowly building up 10 months of expenses so I can quit my job and work on my business full time. I still have a ways to go but I wouldn’t be able to survive without having something I can passionately work on.

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Devtome December 23, 2013 at 8:53 pm

Nice advice, I have often talked about starting a home based business but can never think of an idea.

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Cedrick December 23, 2013 at 11:13 pm

I have recently started my own backyard Garage and currently employ my wife on the financial side.Thanks for the advice, I’m going to use especially 3 and 4.

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