How to Start a Small Business at Home

Curious how to start a small business at home? You’ll need a winning idea, the right equipment, proper insurance, a license, and more. Here are seven vital considerations to help you get started.

By David Bixler | September 10, 2019

Operating a business out of your own home can be a smart move: You’ll save money on renting or leasing an office space, save time on a commute, and have total control over your working environment. But working where you live (and living where you work) comes with its fair share of challenges. In this guide, we’re sharing seven tips on how to start a small business at home. You’ll learn how to ensure your working environment promotes productivity and focus. Get ready to set up your at-home business for success.

1. Prepare your mindset to work from home

Running a business from home requires self-discipline in spades. You’ll be working in a familiar environment teeming with distractions (ahem, the pile of unfolded laundry on your bed, or the next episode in your binge queue). And if you’re the sole employee at your home office, you’ll be the only person holding yourself accountable for the work you do (and don’t do). Beyond that, you’ll need to feel confident making decisions and problem-solving without the input of colleagues or managers. None of this is to scare you away from starting a home business—far from it! This is to remind you that it requires a different skill set than working in an office. So prepare to shift into a new mindset.

2. Create a schedule that works for you

One major way to encourage self-discipline? Create a schedule and stick to it each and every day. The great thing about being your own boss is that you’re not beholden to a 9-to-5 schedule (assuming your line of business allows for flexibility). Feel free to design a schedule that caters to your most productive times of the day, whether that means getting started at 6 AM or 3 PM. Also, make sure to program plenty of breaks and be diligent about taking them. Breaking several times throughout the day will improve your productivity, focus, and energy in the long run. It will also help you avoid burnout. There are many tools that can help you stay focused, like time-tracking apps such as Harvest, or management software. (Trello, Asana, and Monday.com are all popular options.) These tools can help you stay organized and make sure none of your tasks fall through the cracks.

3. Set up a dedicated workspace

As we mentioned, your home is full of potential distractions. Reserving one area of the house for your business offers you and your housemates a physical and mental separation between “work” and “life.” If possible, set up your home office in a room with a door so you can shut out all those distractions. When the workday ends, you can truly leave your work in the office. If you don’t have a separate room available, carve out a dedicated space for your office that can accommodate all the tools and furniture you need to do your job. Ideally, this space has plenty of light and air circulation to keep you energized. Decorate your room to feel inviting, comfortable, and like a place you look forward to spending time in.

4. Write a business plan

Just as setting up a functional home office promotes productivity, writing a business plan keeps your operations running smoothly. Your preliminary business plan should include at least the following components:

A definition of your target audience. Who is your target customer? What problem do they have that your product or service can solve?
Market research. How much demand is there for what you intend to offer? Who are your competitors, and how can you differentiate yourself from them? What can you provide that your competitors have overlooked?
Marketing plan. How will you attract customers? Where will you advertise and promote your business? What are your core values, and how will you convey them in your marketing material?
Financial analysis. What will it cost to launch and run your business for the first 1-3 years? How long will it take to break even, and how long will it take to make a profit? Do you need outside funding? If so, how much do you need, and how will you use it?

5. Register your business

Make your business official by setting up your business entity, such as a sole proprietorship, LLC, or corporation. Also, register your business with your Secretary of State. To operate legally, you may also need a business license and a professional or trade license, depending upon the nature of your business and where you live. If you’re selling a product, you might also need a health and safety permit or a sales tax permit. It’s a good idea to consult a business attorney or accountant to help you navigate this step.

6. Set up an accounting system

When you’re responsible for running your own business, you’re also responsible for managing its finances. That means tracking your expenses and sales and keeping your books organized in advance of tax season, among other tasks. Fortunately, there are many accounting software options out there to help you streamline and automate your finances. QuickBooks, FreshBooks, and Xero are all approachable, affordable options for small business owners. Your software may also be able to identify and track any deductible expenses you can take advantage of, like a home office deduction.

7. Protect your business

Operating a small business without insurance puts everything you’ve worked so hard to build at risk. So purchasing a general liability policy is non-negotiable. It’ll cover many of the basic threats you may encounter throughout your operations, like unintentional third-party bodily injury, property damage, and personal and advertising injury to a third party. Depending on your line of work, you may want to purchase professional liability insurance, which protects your business from third-party claims of professional errors and negligence. And as part of your home is now technically your office, you can also consider getting a separate commercial property policy. Your existing home insurance policy may not cover business property or risks. Thimble caters to small business owners like you, so our policies are flexible and affordable—but the peace of mind you’ll get is priceless. The whole process takes less than a minute: Just click “Get a Quote” or download the Thimble app, answer three questions, and we’ll generate a quote instantly. You’ll be able to purchase your insurance on the spot and receive as many Certificates of Insurance (COI) as you need in your inbox.