Starting a home-based business seemed somewhat foreign for entrepreneurs in the years before the pandemic. As millions were forced into lockdown, entrepreneurs both young and old found that starting a business from their home can be more practical, and financially beneficial.
According to statistics provided by the U.S. Census Bureau, small businesses account for 99.9% of all businesses currently operating in America. The share of these businesses makes up roughly 45% of economic activity, and as of September 2021, more than 1,396,792 new business applications were submitted.
While we are faced with major labor shortages, and Americans leaving their workforce en masse – some are finding it more productive and financially stable to start their own small business.
In the past, entrepreneurs, and freelancers were faced with major challenges that withheld them from getting their business off the ground. High startup costs, insufficient market data, low levels of online support, and a lack of online presence were only a few of the contributing factors.
Today, that portrait is painted a lot differently, and many retirees, and even a few young high school seniors are now starting businesses from home, as technology and the Internet of Things (IoT) are making it easier, and cheaper to be an entrepreneur from home.
Things to consider
Regardless of your business idea, whether you already have one or not, there are a host of things you will need to consider before your small business can become the empire you’ve always dreamt it to be.
Startup Financing
Initial funding for your business is the most challenging part for many small business entrepreneurs. It’s estimated that around 20% of small businesses fail within the first year, and 55% within five years.
Some small business entrepreneurs can get a business going with as little as $30,000 startup funding. While other small or medium-sized enterprises will require anything between $300,000 and $3 million.
The initial capital needed is the most important out of everything, as this will give you a clear picture of what your limitations may be, and how you can work with minimal resources. Starting from home makes it easier, as you have no overheads such as rent, staff, and low operating costs.
Planning & Operating
Any entrepreneur will share that having a concise and well-detailed business plan can be the map to your business success.
Ensuring you have a business plan will not only help you see where there might be certain pitfalls, but some financial institutions require it in order to apply for business loans and financing.
Additionally, the business plan will also need to have a clear outline of the operations, the type of business formation i.e. Limited Liability Company (LLC), Sole Proprietorship, taxation and licenses that may be required, and professional business practices among others. Make sure you’re also setup with the right bank. We’ve found Chime to be a good bank for entrepreneurs like yourself.
Customer Analysis
Market research has become a lot more streamlined and easier with the advent of the internet and a plethora of marketing research tools for small businesses.
Starting any business from home will still require you to have a firm understanding of your market and the customers you’re looking to engage with.
Using certain online tools, some being free, makes it easier to study your target market, understand what the current trends are, what competitors are doing, and how you can do it better.
Marketing
For any business to successfully flourish, proper marketing and public relations will be required. Using various forms of media and online platforms, you’ll be able to reach potential clients and customers within and outside of your community.
Innovative tools such as Google Ads, and sponsored content on social media pages are only a few of the many marketing tactics small business entrepreneurs can use. Additionally, it’s important to remember that marketing your business through the right channels and platforms will grow your network and customer base.
Pros and Cons
Whether you’re considering starting an e-commerce business, or something that may require physical labor, there are some pros and cons to operating your business from home.
Pros
- Startup costs are kept to a minimum, as no premises or staff are required during the first few months.
- You have better flexibility working from home, giving you more freedom to focus on both your business and attending to family matters.
- You can leverage the resources and tools offered by the Small Business Administration.
Cons
- Some neighborhoods, and cities will require you to have additional licenses and permits to operate your business from home, and you will need to comply with any existing regulations.
- If you require inventory, it’s not only a matter of startup costs that will increase, but you will need to make space for it, which will require you to convert areas of your house into storage.
- Operating your business from home might require you to set working parameters for your family, which may intervene with daily operations.
5 Profitable and Great Business Ideas to Do from Home
There are of course plenty of small business ideas any entrepreneur can use to kickstart a career for working for themself. The following list comprises the five most profitable home-based business ideas for 2022.
Online Content & Communications
Freelancers working in any of these fields will share how easy it can be to do what you love, while still making a profit from it. Online content, blogging, and social media consulting is an industry that is only set to grow bigger in the coming year.
Some companies are now considering taking on third-party professionals to deal with any content and social media-related work. It’s made the process of marketing and PR a lot more affordable and streamlined as opposed to having large marketing departments that require large funding.
This line of work, including business, consulting, or even being an online coach requires almost zero startup funding. Additionally, a requirement will be to have some experience and a background in the industry, but it’s great to know that these industries are only set to grow in the coming years as more and more businesses are moving online.
Website Development & Graphic Design
Nearly any business today has a website, whether it be an eCommerce site or a service provider website that helps with brand messaging and marketing.
Business ideas in this category include SEO services, website design, graphic design, telehealth, and telecommunications.
Although a broad spectrum to consider, most of these services can be integrated into one domain, making it easier for clients to find everything they need under one roof and for you to market it.
It’s good to consider that website and design is a broad field, and having a specific interest in a certain niche will give your business the edge it requires. Not only is it important to have a certain niche, but you can also tie it in with online content and communication services as already mentioned.
Handmade Goods & Sustainable Products
Locally produced products are popular among younger and more contemporary generations. Not only do these products cater to a niche market, but they can also have a slight edge above big box and commercial stores.
Handmade goods of any kind can be better in quality, variety and customers can build a one-on-one relationship with you. Additionally, selling any type of handmade goods, or sustainable products falls part of a creative industry, and consumers are growing more fond of these products.
Sustainable goods and products might be difficult to get off the ground, but if you have a sought-after idea that might work, why not try it. Sustainability is looking to be a big movement in 2022, as consumers are considering how their habits can have an impact on the environment.
Dropshipping Store
As online shopping is only set to increase even more in the next few months, dropshipping remains an important link in the retail chain.
Dropshipping gives you all the fun of e-Commerce and online shopping, but without the inventory. As customers order items online, companies that do not fulfill the order themself will usually outsource the work to a third party.
There are minimum startup costs required, and having some experience with customer management and logistics might help speed up the startup process.
Subscription-based Business
Subscription-based programs are a business idea to start from home, although it may require some form of financial funding and inventory, subscription boxes will only keep growing in the next few years.
Start small, think of creative subscription programs or box ideas that will cater to a niche market. If you’re already an eCommerce store you can use excess stock as a subscription box, rent out clothes, uniforms, beauty products, or online services.
There are a variety of subscription ideas one can create, as consumers are looking for services and products that will give them more value for their money.
Final Considerations
Starting a home-based business isn’t easy, and entrepreneurs should consider all the various pitfalls that may occur during the initial start-up process. Working from home on your ventures, or business ideas allows you to grow personal profits and also combine personal and professional life from the comfort of your home.
