6 things to consider before setting up shop at home
Most Interweb dwellers know that some of the biggest companies in the world were started in garages, including Amazon, Google and Apple (just to name a few companies – you may have heard of them). While most of us only dream about our garages being the birthplace of such wildly successful companies, the reality is that you can successfully start a company out of your own home. There are even free online step-by-step guides detailing how to get started. But before you rush off to beg funding from strangers on KickStarter, heed the wise words of home-based serial entrepreneur and guest-poster Jane Water. The founder of Frugal Ferret knows all too well the considerations that need to be taken into account when starting a home-based business and outlines the most important below.
Some clarification before we get started: my definition of a ‘small’ business starting up from home is initially just one person – this means you are wholly responsible for every aspect of your business. The advice below is geared to you brave solopreneurs. (However, it is advisable to have the help of someone trustworthy who could take over if you become, for instance, ill with the flu. This is important – we can not organize flu in your time management schedule!!) Alright, let’s get going!
1. First and foremost personally I do not actually advise initially starting any small business from home on any form of credit. Do not use credit cards or loans – if you borrow, borrow from someone who does not mind when/if you pay it back! It would be great to think that every small venture is a great success, but sometimes even the best of ideas does not work out. At this first stage of your venture money management is of utmost importance.
2. Finance – so do you have enough capital to invest in your product? You will need finance for advertising, raw materials, and an income until you begin to make profit. If the product is not successful will you survive and be able to try again from a different angle or with another product? Continue working and developing your home business part-time if you don’t have the capital to invest in your venture full-time.
3. Consider all your reasons for wanting to work from home and be absolutely certain this is something you’re willing to develop for years to come. These reasons may be e.g. a need for flexible working hours, extra income, or perhaps loss of permanent employment. Then consider your talent; this may be a hobby now, but have you the self discipline and necessary time to work at this and make a good profit? Will your income be regular enough to cover your lifestyle and financial commitments?
4. Do your research. Try marketing your product locally first. Get some first hand comments on the product, maybe try local shopping outlets, markets, speak to people face to face and get honest comments. It is no good spending time and money on anything if it is not a niche and attractive product. When you are sure you will have a market for the product and some evidence to back up that wild claim, then you can make a business plan and confidently approach lenders for further investment capital.
5. Whatever your product is, it must be fully tried and tested before marketing. Test it on willing friends and family first! Depending on your product, it may need health and safety testing; perhaps for a home crafted item this may mean making it, timing and cost of production. A full and true costing is essential.
6. Lastly, please consider insurance! Will you need any extra sort of insurance cover for your product production? This may take the form of extra personal injury or equipment damage – if e.g. you have only one sewing machine and you are starting up a dressmaking business can you afford to replace it if it becomes damaged beyond repair through no fault of your own.
I have started up and successfully run 3 small businesses from home, so the tips I give are tried and tested! I have also raised a family, had a teaching career and been a homemaker so I feel I have some qualification and helpful knowledge. For more simple money saving advice and frugal living tips please visit my site, Frugal Ferret.
