All You Need To Know About Starting A Home-Based Business

  By Amy Collett

By Amy Collett

Working from home is a dream for thousands of people, but making that dream a concrete reality is one of the most daunting things you will ever do. After all, it takes a lot of guts to let go of the safety net of a steady paycheck to work for yourself, but the rewards are well worth the risks. Running your own home-based business gives you flexibility, control, and incredible job satisfaction, but getting started can be the hardest part. That is why we’ve compiled everything you need to know to finally take that step and answered some of your most burning questions. 

Where Do I Start? 

There’s not one correct place to start when setting up your home-based business, but your website and social media presence is a good place to start. If you don’t have any experience with building a website, don’t worry: it’s not nearly as intimidating or expensive as you would imagine.

Essentially, you will need a domain (the name of your website) and a web hosting provider. Both are usually available through web building services, and doing everything in one place is better if you are a beginner who is making a simple website. Modern web builders feature intuitive, easy-to-use, drag-and-drop interfaces, allowing anyone to put together a good-looking website with little to no design experience. Check out this detailed guide to web builders to help you choose the best one for you.

Think about what your website needs, and try to keep it simple to start with - an “about me” section, portfolio, and contact page are usually enough. Then, consider which social media platforms you want to be on. Doing something visual? Instagram is a must. Showing off your way with words? Keep a witty and engaging Twitter feed.

Make sure you regularly set aside time to maintain your online presence. Don’t worry if you don’t have anything to show off on your website or social media yet. Just setting the processes in place and having these ready for when you do will save you loads of work down the line. Online tools like Later (which allows you to schedule Instagram posts on a calendar) and IFTTT (which can help you update multiple platforms at the same time) can be a huge help.

How Do I Start Getting Clients?

This is probably the biggest question for most budding freelancers and entrepreneurs, and the answer is that it depends. If you already have an established network in your area due to past jobs, then this part can be easier for you. Reach out to any contacts that could be interested in your services, and let them know what you can do. Even if you don’t have an extensive list of professional contacts, you can start by reaching out to friends and family members to get the ball rolling.

 If you are freelancing, you may find online platforms like People Per Hour or Upwork extremely useful for getting your first clients. However, bear in mind that the jobs listed on these portals are not likely to be high-paying ones and that you will be competing with people from all over the world who can afford to request lower rates. If you do choose to use these services, make sure you take your time setting up an attractive profile and writing careful, tailored bids for work. 

Finally, you have the option of cold pitching. While this can lead to great opportunities, it does come with its challenges - think about how many unrequested marketing emails you receive at work or in your personal inbox that you actually read and pay attention to. Make sure any emails you send are personalized and engaging, and always try to find a specific email address on LinkedIn rather than a generic “Contact Us” one. This guide to cold emailing by the Harvard Business Review is a good place to start.

 What Should I Charge?

Again, it depends. It depends on the work you do, your level of experience, and your ongoing expenses. Take some time to look up the average rates for your area as well as the different ways you can charge for your work. For example, writing work can be paid per word, per piece, per hour, or per day. Consultancy rates can be hourly, daily, or weekly.

It is a good idea to set your ideal rate for each of these methods, as this gives you a starting point for negotiations. Be realistic - you won’t be able to charge high rates if you are a beginner with a small portfolio. However, you should also be able to take pride in your work, so know how low you are willing to go. One option is to offer different rates based on the complexity of different clients’ work and their budgets, and then establish a set rate based on what seems to work for the majority of them. Using an invoice app (Square Point of Sale is a popular option, and it’s free) will help you keep track of what you’re charging everyone and which rate(s) are the most widely accepted among your clientele.

Finally, many business owners just starting out wonder if they should accept “experience” as compensation in the beginning of their new venture. The question of whether to offer free or extremely cheap work during the start of your career is a difficult one, and it comes down to personal choice. Some people believe it cheapens their work and can lead to being trapped with low-quality clients, while others swear by it as a way to build experience. It’s best to take this on a case-by-case basis - for example, this list by Forbes outlines four times in which it’s a good idea to take on work for free.

How Do I Stay Productive?

One of the hardest parts of running a home-based business is staying productive. After all, home is where you relax, and there are endless potential distractions lurking around every corner. Being your own boss is all fun and games until you realize that you have to monitor and motivate yourself.

First of all, focus on properly setting up your home office. Working from your bed or the dining room table is an attractive option (and you can always do that occasionally), but you need a desk with a proper work area to get your head in the right space for productivity. If you don’t have a separate room to turn into an office, then a partitioned corner of any room can work. The important thing is that it has everything you need to be productive and that it feels separate from your home life. 

Technology is a great ally to the home worker, so use it to be as productive as possible. There are apps that can streamline your invoicing, web extensions that can block certain websites (we’re looking at you, Facebook), and thousands of online playlists filled with music to promote focus and concentration.

Now that you know the basics, it’s time to start putting your plan into action. Don’t worry - anyone who has ever started a business has been slightly terrified, but the truth is that millions of people have fulfilling, prosperous careers working from home. With some planning, organization, initiative, and motivation, you can join them and have the business you always wanted.

7 Easy Business Concepts Every Founder Needs To Know

By Kayleigh Alexander

Over 500,000 new businesses are set up every month, but only half manage to get to the five year mark, a statistic that can be a little alarming if you’re thinking of founding one of your own. 

The infancy period of any start-up is volatile, and it can be especially difficult for entrepreneurs who don’t have any previous business experience.

Having a grip on some basic business concepts will give you some of the tools you need to successfully establish your brand and then keep it growing. Don’t blindly fight against established business norms — learn them, boss them, and then choose to subvert them if you want.

Here are seven easy business concepts that you need to know to help you realize your wildest creative business dreams.

Competitive advantage 

One of the main challenges for young businesses is finding a way to achieve and maintain a competitive advantage over other brands in a given market.

Put simply, a competitive advantage is an advantage you have over your competitors.  This is achieved by giving your customers greater value — either by offering lower prices or justifying higher prices by providing a better product or service.  

In his 1985 book ‘Competitive Advantage’, Harvard Business School professor Michael Porter outlined three core ways that businesses can achieve a sustainable competitive advantage:

●      Cost leadership means providing reasonable value at a lower price, which can be done by improving operational efficiency. Basically doing more with less — gig economy businesses are great for this

●      Differentiation means delivering greater benefits to the customer than your competitors can. This can typically be achieved through having an innovative product, a very high quality product, or delivering a similar product as your competitors, but offering exceptional customer service. Differentiation is often how creative businesses like yours stand out

●      Focus means that the company’s founders understand and serve their target market better than their competitors. The key to focusing is to choose one specific target market, often a niche that bigger companies don’t serve, and then concentrating hard on nailing it.

Supply and Demand 

The concept of supply and demand is directly relevant to any company competing in the marketplace, regardless of its size. Supply and demand means that a market will respond to changes in demand and supply to overcome surplus and shortages and therefore maintain an ‘equilibrium price’. For example, a shortage of gold leads to a higher price, because, as demand for gold increases, the upward pressure on prices would naturally prevent a shortage.

Supply and Demand Chart

Source: The Dasinger Daily

Understanding the specific supply and demand issues affecting both the sales and the purchases that your business makes will enable you to make more informed decisions.

Return on Investment

Return on Investment (ROI) is the financial benefit that is received from an investment, or, put more simply, a measure of what you get back compared to what you put in. For example, say you spent $1000 per month on Google Adwords, and your business made $2000 as a direct result of the ads, your ROI would be the difference. ROI is usually measured as a ratio, which in this case would be 2:1, because for every $1 you spend, you get $2 back.

Calculating ROI will help you to track what’s working and what isn’t working for your business. If your ads aren’t generating a profit, you will know that you need to make changes to them, or drop them altogether in favor of another form of marketing. 

Fixed and Variable Costs

When you start a business, your costs come in two forms: fixed and variable. Fixed costs don’t change when your sales volume changes, but variable costs do. Examples of fixed costs include the rent you pay for the space that your company uses, such as an office or storage facility, insurance, marketing and management salaries. Examples of variable costs are material and labor, the costs of which go up and down depending on sales. 

Economics

Source: PrepLounge

Understanding which costs are fixed and which are variable will enable you to budget and plan accordingly, and help you to identify what is a profitable price level for your products or services. If you suddenly lost your biggest customer account and therefore 25% of your sales, you’d still need to cover your fixed costs to keep your company running; figuring out these costs could be crucial to keeping your company alive.

Customer Lifetime Value

Customer Lifetime Value (CLV) is the total worth of a customer to a business over the entirety of their relationship. It’s important to your business because it costs less to keep existing customers than it does to acquire new ones. According to the book Marketing Metrics, “businesses have a 60-70% chance of selling to an existing customer, whilst the probability of selling to a new customer is only 5% to 20%”. Increasing the value of your existing customers will really help to drive growth. 

However, measuring CLV isn’t easy, with only 42% of companies feeling able to do it, and citing poor systems, lack of coherent marketing and lack of integration as the reasons why.

If big, established businesses struggle to measure CLV, then new and small businesses are likely to find it hard to make accurate measurements, but you can make a start with this simple formula: customer revenue minus the cost to acquire and serve the customer. If you are prepared to really drill down into the concept, there are more complex calculations that will help you get a more accurate result.

Customer Acquisition Cost 

Customer Acquisition Cost (CAC) means the price that your business pays to acquire a new customer. It can be worked out by dividing the total costs associated with acquisition by total new customers, within a specific time period. For example, if you spend $500 on marketing in one month and acquire 500 customers, then your CAC is $1. Web-based companies can roll out highly targeted campaigns and track customers from leads to conversions, making their CAC highly accurate. 

If you’ve just started a business, acquiring customers is crucial to making sure it is a success, but if you spend too much money on acquiring customers, then you won’t be able to pay your other costs and keep your business afloat. CAC is directly relevant to CLV, and combining the two will allow you to calculate what is the true value of a customer to your business.

Minimum Viable Product 

Minimum Viable Product (MVP) is a development technique where a new product is introduced to the market with basic features, which will capture the attention of early adopters. Companies such as Uber, Dropbox and AirBnB all started as MVPs and achieved very rapid growth. An MVP is a bare-bones version of a product that includes a minimum of features and directly addresses the core problem it is trying to solve. Once the initial product is successful, more features can be added.

Pyramid marketing

Source: Cheesecake Labs

An MVP allows you to release your product to market in the shortest possible time, reduce start-up costs and test demand before spending money adding all the bells and whistles.

An easy creative product-based MVP would be a print-on-demand business with low overheads. Simply set up shop, hook up with an app like Printful, and go out looking for ways to make your first sale. Using print-on-demand methods means you can keep costs of production down while you test your designs and brand out with your target market. 

On the service side, you might be looking to start a consultancy coaching business for creative entrepreneurs. Before going all-out, test the waters with a series of blogs, a webinar, or a training course (Thinkific is good for this) to gauge whether you have a viable market and compelling message. You may find that you need to adapt your messaging.

You can work directly with users to analyze behaviors and get feedback, allowing you to develop your product in ways that you know customers will like. Developing your business in this way can also avoid large capital losses, therefore attracting potential investors because it is a low-risk venture.

There’s a lot to learn when setting up a new business and there is no guarantee of success, but educating yourself about some of the basic principles will stack the odds in your favor. A firm grounding in everything from basic economic theory such as supply and demand to sophisticated development techniques like MVP will help you found a business that is both profitable and sustainable.


Kayleigh Alexandra is a content writer for Micro Startups — a site dedicated to giving through growth hacking and shining a light on innovative startups. Visit the blog for your latest dose of startup, entrepreneur, and charity insights from top experts around the world. Follow us on Twitter @getmicrostarted.