Whether you’re ready to give up the 9 to 5 life, want to pursue your side-hustle full time, or you want more flexibility in your work, starting your own small business from home can be challenging.
Running your business from home will give you more freedom, but it will save you the cost and time of renting a commercial space for your business. In this article, we’ll give you some helpful tips on starting a home-based business, so you can get off to the best start possible.
Steps to starting your Small Business
Making a Plan
You may be thinking; how do I start a small business from home?
The task may seem daunting for a new entrepreneur. Nevertheless, whether you are an expert or a beginner making a plan can help turn your good business idea into reality.
Anyone can think of a business idea, but it’s the execution and strategy of your idea that matters. If you do this, you can turn your hobby into a successful home-based business.
Your new business plan should be your guide when it comes to actually running your business.
Your plan should identify your business idea, goals, opportunities and financial forecasts that you want to achieve over a specified period of time. It’s also important to plan how you’re going to respond to any setbacks.
Planning for a business is not merely day to day, you also need to map out what you want your business to do over the next 6 to 12 months.
Some questions to consider before starting your business include:
- Who will be the target market for your product/service?
Who is it that you want to help. Understanding this can better help you create your business plan with intention ad know who your potential customers are.
- What does your budget allow for?
While it would be nice just to put all your costs on a credit card, it is not the best strategy for financial success. Knowing how much to spend and where to spend it is the key to making your business commercially viable. It may help to set up a separate bank account to keep track of business expenses. It is important for you not to forget the legal side of your business, and understand why your business’ budget should include legal.
- Where do you see your business in 12 months?
Looking to the future and having goals is important for you to stay on task and work towards your goals. This can help your business grow.
- How might you price your products and services relative to your competitors?
Looking at how other businesses price their products is important to understand the implications of your own pricing. You don’t want to price yourself out of the market, or alternatively undervalue yourself. Further, these have implications for your brand presence which can be hard to change once established.
- Do you have a formal marketing plan in mind?
As a provider of a good or service, people need to know about you. Businesses need marketing to grow. This may even include a podcast.
- What structure do you want your business to be?
Understanding what business structure is right for you will shape how your business operates.
Find your structure
One of the first things you need to do, upfront is to decide on your business model. Choosing your business structure and your type of business comes with important tax implications, liability limitations, and reporting obligations. Your business’s structure will therefore have a significant impact on how you run your business and what you’ll have to do to be legally compliant.
The 3 main Australian business structures are:
Certain structures will be more suitable depending on your circumstances and the kind of business you want to start. For example, if you want to work on a solo basis as an electrician, being a sole trader may benefit you.
Sole traders do not however, have limited liability. This means your personal assets may be collateral, and your profits will be taxed as part of your individual income.
Further, if you want to trade under a commercial name, you will have to register a separate business name.
Alternatively, if you do not want to be financially liable, you may be better off registering a company. Your business’s profits will be taxed separate to your income and will enjoy the lower company tax rate.
Registering a company also means that you won’t be liable for your business’s losses (unless you sign a director’s guarantee). At Lawpath we provide a variety of templates to ensure you start your business off on the right foot.
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Find your Space
Running a business from home allows for flexibility and comfort, but you should also dedicate an area in your home to running your venture. This can be simply a desk which will serve as your office, or a dedicated room where you will manage your business’s operations.
Doing this will put in the frame of mind of doing business, and help minimise any distractions that may be present in your home. You should also check local council guidelines to see what rules apply to your local area. Different local governments have different rules for home-based businesses, and some even require approval.
Register for an Australian Business Number (ABN)
Regardless of which business structure you choose, you should register for an Australian Business Number (ABN). An ABN is a unique number that identifies your business for tax purposes. You are required to have an ABN if you intend to register for GST or PAYG Withholding Further, you will need to display your ABN on invoices and receipts you issue to customers.
Note that if you are applying for your ABN as a company, you must first register for an Australian Company Number (ACN). Once you have completed your ACN registration, you may then apply for a new company ABN.
Build a digital a presence
As a part of a comprehensive marketing strategy, building a positive online presence is important for any small business. Digital marketing is even more important if your business is an ecommerce business or online business.
A website, its domain name and its web design for your online store is your first point of contact with consumers and reflects the credibility of your business.
Your website provides information about your services, generates leads, and builds your brand image. It may even turn into referrals from customers with positive experiences with your business.
A website, its domain name and its web design for your online store is your first point of contact with consumers and reflects the credibility of your business. Make sure that you have website terms and conditions taken care of. Similarly, having a privacy policy is important to legally protect both you and your customers.
In today’s digital era, having a digital presence is essential to starting a successful small business from home. Further, most small business owners are surprised to find that the cost of maintaining a website is very affordable. Running a business online can be made easy through using a platform like Amazon, Shopify, Upwork, Fiverr or Etsy.
Social Media
It is also important to consider which social media platform will be of most use for you. Sometimes Instagram might be the best option, while others it may be LinkedIn or WordPress. Regardless, as your business grows keeping track of social media platforms and optimisation of SEO can take time away from your daily tasks, so it may be important to consider hiring a social media manager to help you grow. It also may be a good idea to see if your business could benefit form affiliate marketing.
Consider your legal needs going forward
It important to ensure that you have the right legal documents to ensure that your website is legally compliant and protected under Australian Consumer Law.
As your small business grows, you might need employment agreements when hiring employees or increased asset protection and decide to apply for a company registration.
By taking our free Legal Health Check, you will be able to identify the legal gaps of your small business and keep up-to-date with all your legal obligations.
Legal Health Check for Small Business
Uncover your small business’ legal gaps in minutes with our award-winning tool.
Benefits of running a small business from home
Running a small business from home has many benefits, it provides flexibility for you to do what you want. Here are some of the key benefits of small businesses:
- Starting from means that your cost to start is relatively low
- All you have to do is get started and not worry about the typical start-up costs
- You can choose your own hours as you are your own boss
- You can achieve your goals and have personal growthSome people can work better at home
- Working from home can allow you to claim tax deductions for things like rent and home-loan interest, utilities, telecommunications and business insurance
- It can be a creative outlet
- Create your own business opportunities through your own skill sets
- There is no need to search for real estate to start your own business
Drawbacks of running a small business from home
It is also important to consider some of the drawbacks when considering starting a small business from home.
- Difficult to keep work and life separate
- High risk of being distracted.
- Need to pay close attention to maintaining records of your business and bookkeeping.
- High level of personal responsibility.
- If you have young kids at home, they can be distracting. You may have to consider daycare so you can stay focused.
Key Takeaways
Starting your own business can be tricky and sometime you may think you don’t know how to do it. That is why preparation and going step-by-step is key to starting a successful business from home. Turning your small business idea into reality means you will need to make sure you also understand your local council’s guidelines and comply with any zoning laws.
You should also ensure that you have home and contents insurance to protect your business assets if anything happens.
As exciting as it might be, it is important to analyse your business goals and set up a sound legal foundation to ensure that your business is legally compliant. When running the best business you possibly can, taking into consideration all of these factors will help you become a profitable business.
