Do you dream of starting a business from home? The idea of being your own boss and working from the comfort of your own home sounds pretty awesome, right? But it can be tough to know where to start.
Over the last couple of years, we’ve all been spending more time at home. With job losses and cutbacks due to the pandemic, starting a home business is a smart way to create a new income or supplement your paychecks.
The good news is that 70% of British businesses start as home businesses, so you’re already on the path to success. If you’re not quite sure how to start your own business, you’re in the right place. This guide will cover the four things you need to do to create a successful home business.
Find a Killer Business Idea
If you’re thinking about starting your own home business, you’ve probably already got a few business ideas up your sleeve. If you haven’t, then you’ll need to come up with some. It’s a good idea to find something that interests and excites you. Choosing a business idea that doesn’t interest you isn’t likely to excite consumers either.
Think about your passions and how you could convert them into commercial success. Maybe you’ve got a creative streak, or you’re an incredible baker. Go ahead, make a list of potential business ideas.
Once you’ve got your list together, you’ll need to do some research into the different markets. Market research is critical for the success of your business. Without it, you’ll put all your effort into creating a company, only to find that nobody wants to buy your products or services. This might seem obvious, but 42% of business closures are due to a lack of consumer interest.
Use your market research to choose one of the ideas from your list. If you find that the market is already saturated with businesses like that, try to find a different angle to make your business stand out. Perhaps you’ll take a sustainable approach to your industry or focus on a single area to target a niche within a larger customer base.
Nail Your Business Name
Once you’ve got your business idea nailed down, it’s time to pick a business name. Choosing a name might seem like one of the most straightforward stages of starting a business, but it can be tricky. Plus, picking the wrong business name can spell doom for your business from the outset.
When you’re coming up with business names, there are several things you need to consider:
- Is it memorable?
- Is it easy to spell?
- Does it tell customers what my business does?
- Does it limit potential future growth?
Once you’re happy with your list of potential business names, you’ll need to check that they’re not already taken by an existing company. You can do this with the government’s company name checker. Check the names on your list so that you know your options. Also, check to see if the web domains are available for your chosen business names.
There are also specific rules for business names from Companies House that state your business name cannot:
- Be offensive
- Be the same as an existing company
- Breach a trademark
If more than one of your business names are available and fit the Companies House criteria, you’ll need to choose the best one. It’s a good idea to ask friends and family for their thoughts before making a decision.
Plan, Plan, Plan (Then Plan Some More)
With your business idea and name in the bag, you can start moving forward with getting your business off the ground. Admittedly, the planning part of the process is not as fun as the previous two steps, but it’s more important.
Any business that wants to be successful will need a detailed business plan. It might seem like an obvious step in starting a business, but it’s one that many entrepreneurs ignore. As the adage goes, “Fail to prepare, prepare to fail.”
Your business plan doesn’t need to be huge, and it’s good to remember that your plan will evolve and change as your business grows. But for it to develop, you need to create the initial plan. To create an effective business plan, you’ll need to complete the following detailed sections:
- Executive summary — This is a concise summary of business objectives. It outlines what your business is and how it will succeed.
- Business scope — This is a detailed description of how your business fulfils a market demand. (You’ve already got this covered from your earlier research).
- Business model — This explains how your company and products or services give value to your customers.
- Market and competition analysis — This allows you to find gaps in the market and to see what your competitors are doing well (or poorly).
- Financial plan — A detailed budget for your business that includes cash flow projections, income and balance sheets.
Register Your Business
With your business idea, name, and plan all in place, the final thing you need to do to start your home business is to register with Companies House. Before you can register, you’ll need to choose a business legal structure; there are two main options:
- Sole trader
- Private limited company
Many people start their home businesses as sole traders and later register a limited company, but nothing stops you from starting as a limited company. If you decide to register as a sole trader, you will only need to register for HM Revenue and Customs for self-assessment tax returns.
If you decide to register a limited company, you’ll need to register with HMRC and Companies House. To register with Companies House, you’ll need to supply the following:
- Company name
- Business address
- Director and shareholder information
- Formation documents
Once your business is registered, you’re ready to start trading and making your business successful. Good luck.