Home-Based Business Begins with Extensive Planning, Use of Local Tools
Starting a home-based business can have benefits, but it can be challenging as well.
"Many people turn to the U.S. Small Business Administration for assistance when they look to start new businesses," said Michael Foutch, economic development specialist with the SBA's Nebraska District office."
"SCORE, a nonprofit resource partner of the SBA, is another helpful tool for entrepreneurs," said Gordon Yager, chairman of the SCORE chapter in Omaha.
"Numerous factors need to be considered when starting a home-based business, including whether a neighborhood's covenants even allow for it," said Heather Nelson, entrepreneurship program manager and instructor at Metro Community College.
"Marketing a home-based business is one of the challenges that business owners have," said Janell Anderson Ehrke, CEO of GROW Nebraska.
"The SBA has found more than half of all U.S. business are based out of an owner's home," Foutch said.
Foutch has seen several successes. One is Sand Creek Post and Beam in Wayne, the SBA's Small Business of the Year for Nebraska in 2011. The business run by a husband and wife built custom barn kits on their driveway.
Foutch recommends people contemplating home-based businesses to go to the SBA's online small business startup assessment tool at www.sba.gov/content/home-based-business. It will help gauge readiness for starting a small business.
Some of the challenges are potential distractions at home from children, personal phone calls, and other home obligations.
"Plus there's a lack of privacy," he said. "You might not want to meet with clients at your home so you may seek a space separate from your home life to do so."
"SCORE (Service Corps of Retired Executives) is a nonprofit all-volunteer resource partner of the SBA," Yager said.
"The mission of the 60 members of SCORE in the Omaha area is quite simple - help small business start up and grow," he said. "Each of our volunteers will state the same thing - there is great satisfaction in helping someone achieve their dream of starting a successful business."
"SCORE provides low-cost or free workshops for pre-business planning, selecting a legal entity, effective websites, social media marketing, and others," Yager said. Practicing attorneys, certified public accountants, insurance professionals, and small business owners all take part in presentations.
"Several factors need to be considered before starting a home-based business," Nelson said. A homeowner must first check neighborhood covenants to make sure they allow business to be conducted in a home. For example, some covenants may allow a business as long as customers are not visiting the house.
Insurance is another issue that must be considered. A business owner must check to see if homeowner's insurance will cover business assets in the home or whether a separate rider is needed. A business liability policy also may be required.
Check with an accountant to see what type of income tax deductions can be take, such as business in a home. A lawyer can help a businessperson decided what form of entity a business should take.
"Marketing is one of the biggest challenges for those doing a home-based business," Anderson Ehrke said.
"It can be a struggle to keep a business going," she said.
Many home-based businesses do not have a large marketing budget that will assist them in getting the word out.
Since word-of-mouth advertising is useful, Anderson Ehrke recommends home-based business owners join their local chamber of commerce to raise awareness of their business.
"It is important that business owners know who their customers are," she said. "Some mistakenly assume that everyone is a potential customer, but business should have a targeted audience."
Story by: The Lincoln Business Journal