6 Home Business Ideas That Can Pay Off (+ Tips for Getting Started)
Home businesses are a booming! In fact, 52 percent of all small businesses are home-based, according to the latest data from the SBA Office of Advocacy.
It’s no surprise; home businesses afford the luxury of being your own boss and can be started with relatively little investment.
But what types of businesses thrive in the home environment? Here are six ideas to explore (plus some tips on getting started).
According to a 2014 survey by Elance.com, 34 percent of the U.S. workforce – that’s 53 million Americans – is now freelancing. In fact, freelancers are the new normal, contributing $700 billion to the U.S. economy.
Freelancers take many forms – tax advisors, bloggers, accountants, graphic designers and more – and with advances in mobile technology, the remote office has made it easier than ever to become one. Those who hire freelancers understand the benefits too – freelancers have a lot of experience with different businesses, don’t require training or benefits. Plus, they get things done fast.
Freelancing as a career is finally gaining the respect it deserves and the potential for earning is increasing. Elance reports that three times as many freelancers expect their hours to increase in the next year.
If freelancing might be for you, here are a few resources that can help:
- Becoming a Freelancer: Assessing your Readiness to Be your Own Boss and Tips for Getting Started
- Starting a Freelance Business – How to Take Care of Legal, Tax and Contractual Paperwork
- How to Calculate and Negotiate Your Hourly and Project-Based Pricing
- 8 Steps to Becoming a Consultant at 50+
- Should You Incorporate Your Freelance or Consulting Business?
- 5 Ways to Become an Indispensable Freelancer and Earn More Money From Your Clients
Monetize your creative skills and hobbies
Doing what you love is a great incentive to get out of bed in the morning. What better way to do this than finding a way to make money out of your hobby?
If you’re crafty, you could start small with an online store on Etsy. If cookery is your thing, home-based food production businesses are a great option, but remember to consider the laws that govern any food-handling business. Read Starting a Home-Based Food Production Business: Making Your Culinary Hobby Your Job.
Be a professional organizer
From bridal consultants to travel agents, if you have passion and experience in a certain field, consider becoming a home-based professional organizer or consultant. Other ideas include business coaching, virtual assistants (companies hire you to help manage their email, appointments, etc.), life coaches and event planners.
Whether you are washing, walking or sitting pets, the pet industry is huge and people are always looking for a trusted sitter. Like so many other home-based businesses, this is one you can do on your own or work freelance for an established company. You can also offer your services through online portals like DogVacay.com or Rover.com
Personal trainers affiliated with gyms don’t always get paid well as employees and the work is often infrequent, so the incentive to going it alone can be strong. Convenience, flexibility, and the knowledge that you earn what the client pays (less any overheads, of course) are some of the benefits of starting a group or one-on-one home-based fitness business. Your customers benefit too – no gym fees, privacy, one-on-one attention, results-focus, etc.
Before you do, weigh the cost-benefit ratio carefully. What equipment will you need to buy? Do you need to make any renovations?
It’s a good idea to have a strong body of clients established elsewhere before starting out. That way your reputation will take care of that much-needed start-up marketing. Be sure to invest in liability insurance. You’ll also need to insure your premises and any equipment as well.
If you don’t have the business savvy to do it on your own, you could go the franchise route. You provide the classes, but the franchisor takes care of the backend business like marketing, a centralized website, booking system, accounting, and even coaching.
Home childcare businesses offer a potentially lucrative and long-lasting business opportunity. A home environment is often appealing to parents and once their kids are settled (and assuming you are doing a great job), then it’s likely you’ll have that business until they are old enough not to need care.
For information on starting a child care business including financing options, licensing requirements and other regulatory matters read: Starting a Child Care Business? Government Tools and Resources that Can Help.
Special consideration for starting a home business
Starting a home business is much like any other business venture. You’ll need to ensure you comply with certain legal and regulatory requirements (yes, even home businesses need various permits and licenses), most of which are listed in this guide: 10 Steps to Starting a Business.
If you’re not sure what applies to your business idea, give your local Small Business Development Center a call. You might even benefit from the advice of a mentor, which you can get this for free via email or in-person from SCORE.
In addition, look into buying insurance (even if you operate as a freelancer). Check with your homeowner’s or renter’s insurance if you intend to work with customers in your home. Liability insurance, as mentioned above, is also a wise investment. Read What Kind of Business Insurance Do You Need? for more information.
Finally, contact your local planning and zoning office to see if there are any restrictions on home-business activities and what permits you’ll need. If a homeowner’s association (HOA) administers your community, read over the HOA documents to see whether there are any restrictions on certain types of home business (especially if you intend to have people visit your home and park in the street).
About the Author:
Get a Fresh Start for the New Year with SBA Resource Partners
Each year the SBA helps more than one million aspiring entrepreneurs and small business owners with their business start-up and growth. If you have thought about starting your small business in the New Year, the SBA can help you with a fresh business start.
SBA directs a national entrepreneurial network that provides mentoring, training, resources and business assistance for entrepreneurs just like you, and to more than one million entrepreneurs and businesses each year. During fiscal year 2014, these efforts helped small businesses get more than $4.7 billion in capital infusion, start over 13,500 new companies, and create and retain more than 70,000 jobs.
Under the direction of the SBA’s Office of Entrepreneurial Development, one million of you who were interested in starting or expanding a business received business counseling and assistance through one or more of the SBA’s counseling and training programs:
- Small Business Development Centers (SBDCs) counseled and trained over 570,000 clients;
- SCORE, For the Life of Your Business, counseled and trained over 442,000 clients, and
- Women's Business Centers (WBCs) provided assistance to more than 140,000 clients.
These dynamic SBA resource partners provide quality one-on-one consulting, training, counseling and entrepreneurial education that can help you start, grow and compete in the marketplace. They have helped countless small businesses across the country to raise start-up and growth capital, start new companies and sell billions of dollars in products and services world-wide.
SBA also helps target market segments like as women, those over age 50, veterans, young entrepreneurs and growth-oriented businesses ready for development or expansion. You may be the next budding entrepreneur looking for resources to start, grow or manage your small business. Reach out today to connect with SBA’s resource partner network or one of our online or in person services for all of your small business needs.
One small business that got the help it needed is accounting firm Professional Services LLC in Brooklyn, N.Y. The business owner, a public accountant, got help from her local area Women’s Business Center with technical assistance. The counseling, training and encouragement she received helped with the success of her business in providing a range of accounting, tax preparation and credit services.
We’re here to help you connect with your nearest SBA District Office, SBDCs, SCORE Chapter or WBCs. Go to SBA’s Local Assistance map to get started. Here you can find useful counseling, training and mentoring from any of these partners for starting, growing and managing your small business.
Once there, simply enter your zip code to access the descriptive information about each SBA resource and narrow your search based on where you would like to go for assistance. It’s that easy!
About the Author:
How to Guesstimate Your Starting Costs
How much will it take to start that new business you’re thinking of? Use these simple steps to develop a good estimate. You don’t get to know for sure, but if you have the discipline to break things into meaningful pieces, and then research each of the pieces, you’ll have a good idea.
Starting costs for any new business are a matter of two simple lists. The first is expenses.
Step 1: List Expected Expenses
Some common startup expenses are always associated with starting up. For example, legal expenses related to setting up the company, or expenses for fixing up a location, designing a logo, signage and so forth.
Other expenses are normal running expenses, like rent and payroll, which take place before launch. Lots of startups need to rent the location and pay some employees before they launch. While these are the same as running expenses later, they belong on the startup expenses because of timing.
All these expenses create a formal accounting loss at startup. In the example here, the loss at startup is $16,000. That loss won’t matter to taxes until there’s a profit, and at that point it can be deducted against taxable income.
The value of the list is that you can estimate items one by one. What will the attorney cost? How much do you need to send on computers? Each of these estimates is the result of calling and asking and finding out.
Step 2: Assets You Need to Buy
Your next list is what you need to buy to own, such as starting inventory to stock the store, or office furniture, vehicles, land or equipment. These are assets, not expenses. You won’t be able to deduct them from income later, but you will be able to depreciate them as an expense at some point.
As with those starting expenses in the first list, make this one a list of educated guesses. Call people and ask and get good estimates of what things will cost.
The starting cash you need in the bank is also one of those assets, but leave that one for the next step.
Step 3: How Much Startup Cash
People will say you need six months or even 12 months worth of expenses before you start, but those who say that probably never had to raise money for a startup. Unless you have your own funds to use, having some arbitrary cash stockpile is not realistic. What you want to estimate is how much cash you need, not how much you want.
For that, make two lists. Both have months on top, one after the other, as columns. The first has your sales forecast, month by month. The second has your spending budget, month by month, for the same months. Make as many months as you can reasonably expect it to take before your startup sales cover its spending. The vast majority of startups have a period of deficit spending before they start to break even with sales and expenses.
After you’ve made those lists, calculate the total cumulative deficit you have to manage before the business breaks even. Round that number up to the nearest thousand, or ten thousand, and that’s what you need to put into your starting assets as starting cash.
So that, in a nutshell, is your estimated starting costs. It’s not a definitive list, of course. And it’s not certain. But at the very least, you should have a fairly good idea of how much money that business you want will require to get going. And a good idea is better than a wild guess.
(Image: courtesy of leanplan.com)
About the Author:
Small Businesses Create 2 Million Jobs
Last week’s jobs report offered more evidence that our economy is gathering a head of steam as we ring in the New Year. Last month, American businesses added back 252,000 jobs and our unemployment rate fell to its lowest level since June 2008. We’re in the midst of 58 month of consecutive job growth – the longest streak on record since the mid-1990s.
Once again, it was not large corporations driving this train, but entrepreneurs and small businesses powering us out of the greatest economic crisis since the Great Depression. Small businesses created nearly 2 million of the roughly 3 million private-sector jobs generated in 2014. More than 7 million of the 11 million jobs created during our recovery have been generated by startups and small enterprises.
December’s jobs picture is a microcosm of the upswing: 73 percent of last month’s job growth came from small businesses, according to ADP. Meanwhile, twice as many small businesses added jobs as cut them last month, according to a separate report by the National Federation of Independent Business (NFIB), which also found that small-firm revenues are on the rise.
American manufacturing is undergoing its best stretch of job growth since the 1990s. The U.S. auto industry is back, creating a half-million new jobs in the last five years. The United States is now the world’s number No. 1 producer of oil and gas; President Obama’s policies have helped cut our national deficits by about two-thirds; and 10 million Americans gained health insurance in the last year alone.
In short, we’ve come a long way.
Entrepreneurs have been our life preserver in this economic storm, because of their resilience in budgeting wisely and effectively deploying their capital. While commercial small business lending is still only at 91 percent of the pre-recession level, SBA-backed lending has now eclipsed its pre-recession output. In fact, small business borrowers have received more SBA-supported capital under President Obama than any president before him – $163 billion total since 2009.
In other words, SBA continues to play a pivotal role in America’s economic comeback story. Upward pointing arrows on graphs and ascending numbers on spreadsheets don’t always capture the real-life impact our agency has on this nation’s improving economy. But I’ve heard story after story from entrepreneurs who tell me they would’ve gone belly up during the recession if not for timely SBA assistance.
One industry that’s surging is computer systems design, which now employs 1.8 million Americans – 25 percent more than before the recession began. EarthWalk Communications is a pioneer in education technology, bringing mobile wireless computer labs and patented battery technology to schools across the globe. Five years ago, the Manassas, Virginia-based company was forced to cut more than half of its workforce due to recessionary pressures. But in 2010, Earthwalk received a $1.5 million SBA loan to secure additional working capital and refinance its debt. Since then, the company has added back 20 workers and last year celebrated a record year of $3 million in revenue growth.
There’s ample reason to believe 2015 will be a ripe environment for small business growth. Consumer confidence is at a 7-year high. Our economy has added at least 200,000 jobs for the last 11 months in a row, and hiring is at levels we haven’t seen since the Great Recession. The wind is finally at our back, and SBA is ready to help make this a breakthrough year for entrepreneurs on Main Street and beyond.
About the Author: