Start a small business at home with these 9 steps. Learn how to choose an idea, validate your idea and identify your target customers.
Shockingly, 69% of US entrepreneurs start their business at home each year.
Though half of these startups don’t make it through their fourth year. A failed business comes with numerous lessons.
In order to set up a minimal video studio, start by having a good camera (either your smartphone or a DSLR), ONE good lighting source like natural light coming from a window, or a dimmable led light and one good source of audio like a lavalier microphone or a close-up mic.
You can be much more prepared than other people who just think about starting a business – but take no action.
It will never be the right time.
And there will be no green neon sign lighting up anywhere.
While economic growth can always help, starting a business in a tough economy can also be a smart choice.
At some level, everyone has their roadblocks.
Most often the roadblocks are intrinsic.
Leaving behind your cushy job, to plunge into the unknown can be scary.
The fear of failure is also a deeply rooted deterrent.
At its core, entrepreneurship does not always have to be a game-changing idea.
Most people are just looking for a faster process.
And improvements that make their lives easier anyway.
This is a great perspective to have!
Find your niche.
Find some untapped opportunities that are already existing marketplace!
Here is a 9-step guide to help you start a small home business the right way and validate its profitability before implementing it.
Table of Contents:
Start A Small Business At Home With These 9 Steps
- Step #1: List Out What You’re Good At
- Step #2: List Out Your Skills
- Step #3: Generate Business Ideas
- Step #4: Choose An Idea And Validate It
- Step #5: Identify Who Your Customers Are
- Step #6: Do Competitors Research
- Step #7: Define What Sets You Apart
- Step #8: Set The Right Pricing
- Step #9: Test And Iterate Your Product Or Service
Step #1 List Out What You’re Good At
Your skills and abilities will always be the backbone of your business.
So, begin by taking stock of what you are good at.
Are you naturally detail-oriented? Maybe more creative or a good communicator?
These will come in handy when you want to start a small business at home.
To discover your talents, you can analyze your personality.
Your talents are related to your personality traits.
And these will determine whether you can make it in self-employment.
Top entrepreneurs share a common trait of being open to risks.
They are also self-reliant and go-getters!
Once you know your talents and personality traits.
You can easily start a small business at home.
That’s suitable for you.
Step #2 List Out Your Skills
Skills are a set of abilities that you develop over time.
For example, a creative person may enjoy pursuits such as writing or designing.
A detail-oriented person may enjoy the field of finance and accounting.
And a person who loves interacting with people can be a good salesman.
However, to excel in these fields, you should gain the skills.
You can gain the skills by taking relevant courses online or in traditional institutions.
You could also develop the skills through apprenticeship and practice.
You may also have gained some skills from previous employment or volunteer work.
Consider all these.
Starting a business often dislodges you from your comfort zone.
And forces you to learn and unlearn a few essential skillsets along the way.
Outlining your skillsets can guide you in selecting a suitable business to start at home.
Step #3 Generate Business Ideas
Business ideas are beautiful!
A glorious steak of inspiration.
That’s also a sweet spot of your talents, skills & passion.
Combining these three can open up an array of business ideas that you will enjoy doing.
For instance, a creative person who is artistic.
And possess the skill to code can craft beautiful websites for other businesses.
Or a person with an eye for detail.
And possesses extraordinary organizational skills.
They can turn out to be excellent financial consultants.
Or a business operations manager.
Before you start exploring & brainstorming for ideas.
Create a matrix of your talent, skills, interest areas and goals.
This helps to understand what business aligns with your true self.
You also determine if your skills can be turned into a money-making idea.
Step #4 Choose An Idea And Validate It
Not all business ideas can be homebound.
Whether you start a small business at home will largely depend on various factors.
You should consider the nature of your business and your customers.
If you need customers coming in and out.
You have to think about the comfort of your family.
Similarly, you won’t start a manufacturing business in a residential setup.
So ask yourself these important questions:
- Is it practical to run my idea from the comfort of my home?
- Will I still be okay to run from home if the idea is well received? Or will it require that I move into a traditional workspace to match the increased demand?
Step #5 Identify Who Your Customers Are
It doesn’t matter the kind of business.
A customer-centric strategy is a winning strategy.
Amazon’s obsession with being customer-centric has made them dominant in their game.
The size of a business is irrelevant.
But focusing on customer-first holds.
Find & reach out to your customers.
It’s not difficult or as expensive as people perceive it to be.
It starts with identifying your target market.
A target market is a section or group of people.
Who are likely to purchase your product or service.
Research and gain a deep understanding of your target customers.
And their perception of your business offerings.
Build customer personas
A buyer’s persona is a perceived representation of your customers.
It’s based on their demography & interests.
Your business may have a single customer persona.
Or many types depending on the product you are offering.
Or the geography of your business.
This is important in order to derive effective sales and marketing strategy.
Some essential information you’ll need to research on your customer persona is: demography, location, personality, product objectives, pain points, purchasing capability and more.
This helps you position your product better.
Gather target market resources
Once you gain a thorough understanding of your customer’s persona.
You’ll now need to determine if there are enough customers.
To make your home business a successful and sustainable venture.
Also, understanding where your customers hang out can help your outreach efforts.
For example, if you are catering to local customers.
You may have to ensure there are enough customers available in the vicinity.
If your business is online, you might want to evaluate which online platform your customers use often.
Many interim market research organizations also offer free market reports.
These can help you in your market research.
For instance, Reference USA is a goldmine.
It houses thousands of libraries.
And valuable data points on 147 Million US residents.
Similarly, if your business is online.
You can get free trend patterns available online.
Use Google Trends and others to help validate your target market.
Step #6 Do Competitors Research
Competition is good.
This means that you have a viable business idea with room for improvement.
Gaining insights about your business and its landscape involves understanding your competitors too.
This helps you differentiate your business and establish an edge over others.
Your differentiator can be a great arsenal in your marketing strategy.
Where do you find information about your competitors?
- The internet: In the US alone, you have 320 million people using the internet. This makes it a favorite playground for most businesses. Conduct an online search of all your competitors and hit their website to understand their offerings.
- Online directories: Most businesses list themselves in viable online directories such as Google My Business. This helps them in being discoverable by their audience when they search for their services online.
- Social Media: Presently, only 64% of small businesses have websites. But, most businesses leverage social media such as Facebook, Instagram, Twitter, Pinterest Or LinkedIn. Find their pages and see whether they are successful in creating engagement with the customers. Point out what they are doing well and their shortcomings too.
- Physical flyers, brochures, and posters: You can walk into your competitor’s local business outlet and get access to their flyers or marketing materials to understand their service or products.
Once you have this information, build a comparison table. It should help you to chart out all the similarities, differences, and gaps.
Then, start a small business at home that fills the gap.
Step #7 Define What Sets You Apart
Businesses exist to meet a need or fill a gap.
Unless you want to be another fish in the game.
You should consider having a unique selling point for your business.
Figure out what and how you can get an edge over your competitors.
The basic premise here is to establish what can separate you from others.
Why should customers choose you?
Small innovations, ease of doing business, offering convenience or better pricing?
Any of these can be a good attraction.
Customers love convenience, improved customer experience or slashed prices too.
Start thinking along these lines.
Having a USP will give you an entry into the market.
Step #8: Set The Right Pricing
Cracking the pricing of your product or service can be tricky.
But all your research above can help you establish a pricing strategy.
The most important thing is to make sure your idea is profitable.
Ask yourself this:
- Are customers willing to pay the price you quote?
- Can I meet my monthly income target?
This is important.
For example, if you start a small business at home that’s specializing in vegan cakes.
You may not have regular orders.
Until you establish yourself and gain a reputation in the market.
If you can make 25 cakes in a month.
And if people are willing to pay $70 each.
You make $1,750 per month in revenue.
To determine if this is a profitable idea.
Consider the time, effort, expenses required to bake a vegan cake.
You should also calculate the cost of marketing or advertising.
Subtract this from your total cake sales.
This should be your projected income.
Can you live off this?
Step #9: Test And Iterate Your Product Or Service
The real-world is different.
An idea that looks good on paper may not always unfold in the real world.
A ‘lean rollout’ enables you to get a fair idea if your customers are willing to pay.
If they don’t, it doesn’t necessarily discredit your business idea.
You might have to just change the way you approach.
Build more credibility or reevaluate the pricing strategy.
That’s how you re-iterate and course correct.
Course correction & re-iterations can take time.
Here are a few tips that help you stay afloat before you jump in full time:
- Make your home business a side hustle: consider the possibility of doing your business on the side during your free time. This could help you evaluate your business before you give up your daily job and make the business your main.
- Beta test your product or service: this involves offering your product or service at a discount in exchange for feedback. Offer it to a set group of target customers that can give helpful feedback. The feedback should help you in evaluating and course-correcting your home business. This approach can be beneficial if your service or product is fairly new in the market. Reach out and find potential customers at trade shows, the local marketplace, networking groups, and related events.
- Offer your solutions at no-cost: with the on-going battle for customer’s attention, it may be easier to offer your product or services for free in exchange for a testimonial, reference or genuine feedback. This creates less resistance among your early adopters. But make sure you blow their mind with your product or service, process or delivery. People gauge businesses in terms of how they operate and the ease with which they deliver.
- Crowdfund your home business idea: crowdfunding campaigns can be a great way to raise funds for scaling your business. You could also use it to test if there are legitimate customers for your business. There are many crowdfunding platforms that you can opt for. Find out how much a crowdfunding platform charges before opting to raise funds through it.
When you start a small business at home.
You give yourself an opportunity to pursue your passion.
You also get something that you can call your own.
Validate your business idea and align it with your potential customers.
Streamline your sales & marketing activities.
This way, you build a solid foundation.
And this helps you to launch a successful home business.
It may not be an easy venture.
But starting and growing your own business can be extremely rewarding.
If you still can’t figure out which business to start.
See this list of 17 profitable businesses with the potential to make you 100% richer.