What Do I Need to Consider Before Starting a Business in My Home?

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    What Do I Need to Consider Before Starting a Business in My Home?

    Starting a business in your home is a good way to test a business idea. If you are currently employed in another job, you can begin the business while still being employed. This will provide income while starting your business, and if you have health insurance through your current employer, you will be able to maintain it during this time.
     
    Owning and operating a business can be very time consuming. It is important that your family is supportive of operating a business from the home. Determine if family members will be involved in the business operation and what their roles will be. Research has found that women who operate a business from home may need to arrange for child care, depending on the age of the child and the type of business being operated.
     
    Consider these tips when starting a business from home.
     
    • Ask yourself why you want to operate a home-based business. Determine what your personal goals are for starting the business. Research has found that personal/peer recognition as the “best in the field” was the goal of women who owned soft-goods businesses. Other goals may include supplementing or replacing income, realizing a dream or being able to provide care for a family member while working from home.
     
    • Define your business idea or concept. This will be the mission statement for your business. This statement should include what you are providing (service/product), who your customers are and the benefit your business provides them. This statement should be brief and to the point.
     
    • Check local zoning regulations for home occupations. These may be available online or through your local city office. Some businesses cannot be operated from the home. Businesses that represent a danger to the neighborhood are typically not allowed.  Regulations vary from town to town. Signage and amount and type of traffic are two items typically addressed in most zoning regulations. Some types of food businesses are required to be operated from an approved commercial kitchen. New regulations regarding food production in a home kitchen are currently being developed.
     
    • Determine where the business will be located in your home. It is best if the business can be situated in an area separate from family living space. If your business requires inventory, determine if you have room in your house or if inventory will need to be stored elsewhere.
     
    • Read your homeowners insurance policy and talk with your insurance agent to determine if your homeowners insurance covers a business in the home. If your business involves customers coming to your home, determine if you have adequate liability insurance coverage.
     
    • If customers are coming into your home, walk around the house and yard. Is it inviting to customers? Is it safe? Do you need a separate entrance for the business?
     
    • Keep your business finances separate from the family’s finances. Develop a system for keeping records of expenses and income. Most start-up, home-based businesses are organized as a sole proprietorship, but check with an attorney to determine the legal structure that is best for your business.
                
    Working from home requires that you have a mindset that you are working. When at home, it is easy to let “family chores” interrupt your work day. As you think about starting a business in your home, make a list of the pros and cons and determine if this is the work environment that will best suit your needs.
     

    By: Karen Biers - Jun. 7, 2007