How keen are you to start a business from the comfort of your home office? Maybe the pandemic is to blame.
Workers have gotten used to working from home and want to continue with it for much of the week. But many businesses may take a leaf out of Google’s playbook and want their employees back in the office for most if not all of the week.
Not willing to let go of remote working has many people keen to keep it any way they can. Maybe they’ll turn to the gig economy or take the opportunity to go one step further and open their own home-based company. For example, there are home-based child care entrepreneurs who are building successful businesses from their homes. The opportunities are endless.
In fact, according to the Office for National Statistics, the second half of 2020 saw the number of new company registrations soar. All sorts of home-based businesses started while everyone was stuck at home, from boutique face mask companies to home-based chocolate factories.
So if you’re thinking about taking the next step and turning your passion or side hustle into a profession, there’s never been a better time. But it won’t all be plain-sailing, and if you’re planning on bursting onto the business scene, it’s good to make sure you’ve done the legwork first. That’s why we’ve put together this guide to help you through the steps and set you up for success.
Step 1: Define Your Business
Taking a passion or hobby and turning it into a business is a big jump. And if you fail to define your business, you’ll be starting on the wrong foot. Jotting down “I want to sell my cakes online” isn’t enough, but it’s a good start.
You have the essence of what you’re going to do. From there, you need to dig down the specifics. What types of cakes will you sell? Are you going to sell novelty portrait cakes? Maybe you’ve created a cake that’s going to change the world.
Whatever you’re going to do, you need to know the product or service you’re selling inside out. But even then, it might not be enough. Regardless of the brilliance of your idea, there might not be a demand for it.
To find out if you’ve got a solid business idea, have a look at your competitors and see what they’re doing.
On the one hand, you can look for gaps in the market at what they’re not doing and, on the other, see what they’re doing well and find ways to emulate it. It’s also good to speak to your friends and family and see what they think.
Try to pick people that won’t pull any punches; you don’t need molly-coddling. You need honest opinions.
Step 2: Develop a Business Plan
Now that you know that your business idea will set the world on fire, you can move on to the nitty-gritty details of how your company will run. You’ll need to decide on the legal structure of your business, there are several options, but the most common are:
- Sole trader
- Private limited company
- Public limited company
Most people starting a home business will do so as a sole trader and form a limited company once the business proves itself. But you may decide to begin as a limited company.
Regardless of the company structure you choose, you’re going to need a business plan.
Your company will grow and evolve over time but getting a plan on paper is a must. It’ll keep you focused on what you want to achieve and comes in handy if you ever need to secure financial backing.
A business plan doesn’t need to be a massive document, but it does need as much detail as possible. You should include details of the following in your plan:
- Executive summary – a concise summary of your company objectives
- Table of contents list of the topics, and where to find them in the business plan
- Scope of your business – a detailed description of how your company fulfils demand in the market
- Business model – an explanation of how your business and products deliver value to your customers
- Market and competitor analysis – proof that your company has future growth potential
- Management and implementation – details of how your company will run and who will take on specific responsibilities
- Financial plan -a detailed summary of cash flow projections, income and balance
Once you’ve put your business plan together, you’ll have a complete idea of how you will run your company and have mapped out your road to success. Later on, it’s worth revising the plan to reflect any changes in your business and update your goals.
Step 3: Get Your Office Set Up
Over the last year, we’ve all become far too familiar with the pitfalls of working from home. The doorbell ringing on a call, kids and/or pets interrupting Zoom calls and the inevitable lure of the TV.
But if you’re planning on running your business from home, you’ll need to set up a space where you can focus on making it a success. Of course, distractions will always occur, but doing everything you can to reduce them will be a massive help. There are a few things you can do to make sure you stay focused, such as:
- Have a room dedicated to your business that is only used for work
- Get the right equipment for your company
- Choose a comfortable chair and desk for any administrative work
Beyond setting up your physical workspace, you’ll also need to determine whether you want your home address to be your company address.
There several reasons why you may want to consider a virtual business address instead of using your own address, such as:
- Separating personal and business life
- Reducing any privacy issues
- Looking more professional
- Limiting any risk of landlord/neighbour objections
Virtual business addresses are rented addresses in an office building, usually in a major city.
You’ll never visit the address, but you can use it for any company correspondence and any business registrations you need to complete. The virtual office administrator will forward any post you receive to your home address.
Your customers will only ever see a professional business address, and your personal address will be private.
Step 4: Protect Your Business
If you’re planning on running your business from home, getting insurance is a must. Regardless of the company you’re running, you need to ensure that it’s protected should anything go wrong. Depending on your business, there are different types of insurance to consider:
- Product liability insurance — protects your company from any claims of personal injury or property damage by your products
- Public liability insurance — protects you and your business from claims of injury or property damage caused by your company.
- Professional indemnity insurance — Usually used by service providers like designers to protect a business from any claims of error or negligence
- Employers’ liability insurance — Often a legal requirement if you have employees, this covers any injury claims during employment
Whatever company you’ve decided to start, it’s worth doing some in-depth research into the insurance you may need for your industry. If you know anyone that runs a similar business, ask them about their insurance.
Step 5: Register Your Business
The final step is to get your company registered before you can take the world by storm with your business.
Every new business needs to register with HM Revenue and Customs (HMRC). If you’re planning on starting a limited company, you’ll also need to register with Companies House (sole traders don’t need to).
Registering as a sole trader is easy and only takes about half an hour, you can apply online or by post, and you need to provide:
- National Insurance Number
- Date of Birth
- Phone Number
- Email Address
- Business Name
- Company Type
- Start Date
If you decided to set up as a limited company, you’d need to apply through Companies House and provide:
- Business name
- Company address
- Information on the director and shareholders
- Documents of formation
Both of these registrations are relatively straightforward, but advice and resources are readily available, and company formation agencies can help you complete your registration if you’re struggling.
Once you’ve got your company registered, you’re good to go. Get out there, start making some money and get your entrepreneurial dreams off the ground.