According to a startup survey conducted and documented in 2019, 69% of American entrepreneurs start their businesses from their homes. Although some of these businesses become big ventures with thousands of employees in the future, not many Americans begin their entrepreneurial journey with physical offices away from their homes.
With these numbers in place, you may be wondering how you can start your home-based business in America in 2021. This article will equip you with all the knowledge you need to be a successful home business owner.
First things first;
Advantages of running a home business in America in 2021
There are several benefits associated with setting up a home business. For the sake of clearing the air, here are some of them.
- With a home business, you eliminate many running costs.
Imagine you want to set up a business, and the first thing you’re looking for is decent office space for operations. You would need to spend a lot of money on that.
A quick online search reveals that the cost of renting a comfortable office space begins at $600 per month. These aren’t standard prices and may vary based on your needs. Under specific conditions, you may have to pay more to get yourself the desired office space.
With this in mind, setting up a business at home can be a lifesaver, as you get to keep this money and channel it into solving more pressing business needs.
- You wouldn’t be spending money and time on transport
It’s also another good advantage of setting up a home business. You can access your office immediately after getting out of bed. You can even turn it into your office any day you aren’t willing to crawl out of your bed.
- You will not have to pay a lot of tax
If you set up a home office, you may end up paying less tax. First, you wouldn’t have to pay tax on different buildings, and some of your home expenses can be covered by your business’ revenue. However, the Internal Revenue Service has laid out rules that guide home office deductions.
- You can control your schedule
In addition to being your boss, running a home business gives you more leverage to control your schedule. It is easier to put the work aside and enjoy some family time at home than to commute back home from a different office space.
How to set up a home business in America in 2021
Now that we have explored some of the advantages of setting up a home business in America, follow these steps to set up yours. Note that you may have to do some extra digging on some points because some of them are subject to state laws.
On a general note, however, here’s all you need to do if you want to set up a successful business at home.
- Perform a comprehensive market survey
Except if you plan to run a charity organization, one of the big reasons to set up a home business is to make money. The defining factors for your profit would be the demand for the products or services you want to offer in the market.
It’s time to be brutally honest with yourself. Take some time to examine the locality you want to serve. Ask neighbors, launch surveys, and find out how well other businesses in that same niche are performing. One hack you can apply is to take a look at yourself currently. Is there something around you that constantly annoys and frustrates you? Is there any need that you can address?
The results from your survey and the answers to those questions should guide you on whether or not you should start that business.
- Develop an exciting and profitable business idea
It should be an offshoot of the first step you conducted (a comprehensive market survey). Your business idea should excite you, and it should be profitable; so that you can make it work.
After conducting your market survey, come up with an idea that should be both exciting and capable of bringing money.
- Figure out your product/service for sale.
You may either come up with a brilliant business idea or find the perfect product/service to meet the needs of the market you have identified. Whatever product/service you want to sell must meet your target market at the point where they are and offer them the solutions they want.
Here are some questions you need to critically evaluate at this stage of setting up your business.
- What is the market’s primary challenge (for the product you want to offer them)?
- How will my product/service help them solve the problem I have identified?
- If I were a buyer, would I be delighted to purchase this product/service I am about to offer to the market?
- How would I deliver my product/service so that my customers get a unique experience? (It is necessary to ask this question because regardless of what you want to sell, you will most likely have competitors, and standing out from the crowd is not easy).
- Determine a fair price point for your products/services.
You are carefully getting to the monetary aspect of things. Since you started this business to make profits, you must select a fair price point for your products and services. If you don’t, you may struggle to keep the business running.
As you work on this, here are a few questions you may want to ask yourself.
- What is the earning capacity of the market I want to serve? (You need to know how much money the people you want to sell to make every month to be reasonable with your prices).
- What is the spending power of my prospective customers? (How much extra money do they have to spend every month after taking care of their basic living expenses like food, housing)?
- What is the average market price of the product/service I want to sell? (You need to know what your competitors are charging to price your products/services fairly).
- What would be the profit margin for every unit of my product? Will there be enough profit to justify the efforts I am channeling into this business?
- Write a comprehensive business plan
It’s where you put together all the information you have gathered so far. Wikipedia defines a business plan as a document that contains relevant details, including the primary goals of the business, the methods to achieve set goals, and the time frame to achieve these goals.
One of the standard benefits of having a business plan is that it’s an invaluable tool for attracting funding opportunities to your business.
If you intend to seek external financial support to grow your home business, don’t sweep the step under the carpet. If you aren’t sure about how to get a comprehensive business plan, you can hire a professional business plan writer.
- Figure out the perfect legal structure for your business.
While doing this, you shouldn’t get blindsided by where your business is at the moment. A knee-jerk reaction for many solopreneurs is enough to set themselves up as a sole-proprietorship.
While this comes with the benefits of being quicker to set up and independence (of decision-making and monopoly of business profits), it also has its drawbacks. One of the most prominent of these is that there’s no difference between yourself and the business. Legally speaking, you are responsible for anything that happens, even if your business runs into unforeseen debts.
There are many other legal structures your business can take up. To make the best decision, consult with a legal practitioner. Also, remember to look over independent state laws governing the operations of these legal business structures.
- Sort out your documents
It still has a lot to do with the legal and financial aspects of your business. Once you select the legal structure of your business, the next step you should take is to assemble the documents you need to run your business.
As the owner of a home-based business, one of the important business documents is your Employer Identification Number (EIN). It is a Federal Identification that identifies your business as an independent entity. You can run your business using your Social Security Number (SSN) if you plan to run a tiny sole-proprietorship. However, if you intend to hire employees and operate a Limited Liability Company (LLC), you need to be an EIN. Thankfully, the process of getting your EIN is easy and seamless. You can easily apply for an Employer Identification Number here and obtain yours within minutes.
In any case, figuring this step out in your journey to setting up a home-based business is non-negotiable.
- You need a dedicated business bank account
One reason why many home-based businesses fall within the first few months or years is the mismanagement of funds by stakeholders. One of the easiest and most reliable ways to avoid this is setting up a dedicated business bank account.
The aim of doing this is to separate business funds from your money. Look for banks with stellar customer service. Most preferably, set up your business account with a bank that is close to you. This way, if anything happens, accessing it wouldn’t be a challenge.
- Prepare your home office
The advantage of running a home-based business is that you get to work from the comfort of your home, but it can take a toll on your productivity. A productivity hack you can employ (especially if you have a service-based business like a consulting business) is to set up a designated home office.
Having a dedicated office space in your home helps you focus on making things work. You’d notice the sense of determination and concentration that comes with working out of your home office.
- Keep professionals on standby
Despite trying to cut costs, you must have professionals on standby to run a sustainable and expandable business.
Some of the professionals you should have close to you include accountants and legal practitioners. The accountant can provide expert services when you need a comprehensive business audit (even if this is not quite regular). The lawyer, on the other hand, can offer you expert legal insight on diverse matters. They would help you stay away from trouble with the government and potential customers/clients.
A simple hack you can apply to make this work is building profitable relationships with these people. That would give you access to them, and you can get them on board when you need them. You won’t have to keep them on the payroll as full-time staff, but you can access them as independent contractors when the needs arise.
- Put the word of your new business out there
As an owner of a new business, don’t expect paying customers to materialize out of thin air. If you do nothing to get new customers, they won’t come like that.
Marketing is at the core of every successful business. If you don’t have a lot of money to spend on hiring deep-pocket marketing executives, you will have to use the power of content creation, digital marketing strategies, and word-of-mouth marketing to attract your first customers.
Take some time to draft out a workable marketing plan for your new home-based business. What are the things you must do to ensure that your potential customers know your business exists? Figure those activities out and throw yourself into carrying them out with precision.
- Make provision for change
You need to know that you will hit roadblocks once you begin operations in your new small business. If you are going to be successful with it, you must be flexible and ready to adapt to change.
While you have business plans and clearly defined goals, keep an open eye for market trends and emerging situations.
The biggest industries are those that can respond to the changing times.
Successfully setting up a home business in America in 2021 isn’t a walk in the park. As you must have deduced by now, it involves a lot of brainwork, planning, strategizing, and back-breaking work. The benefits, though, heavily outweigh the temporary hurdles you would experience.
An integral part of successfully running a home-based business in America is to be able to accept payments from different parts of the world, and from customers who would rather pay with their cards and not cash.
Hence, it is important that you also get a reliable merchant account for your business. At the top of our recommended list is Payment Cloud; a merchant account provider that specializes in credit card processing solutions for high risk businesses.
For a more detailed breakdown of what Payment Cloud is and the advantages you would access if you use this merchant account for your business, check out this comprehensive Payment Cloud Review | CPO.
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