What to Know Before Starting a Home-Based Business

Four Steps to Help Launch Your Kansas City Start-Up Like a Professional

furniture for home office

There are few monumental moments in a person’s life. Getting married, starting a family, buying a house – and, yes – starting a business. Most people never dare tackle the giant that is going into business for themselves. It’s a huge personal risk in which you’re essentially gambling on yourself. In fact, some people start their own companies while they’re still employed by another company just to play it safe. Launching a start-up can be tough if you don’t know what challenges to expect, so here’s what to know before starting a home-based business. These four steps should help provide some guidance through your upcoming business venture.

Step #1 – Define Your Products and/or Services

In order for your home-based business to be successful, you either have to sell a product or service. You probably already have this product or service in mind, but it’s only an idea right now…and ideas need to be refined and scrutinized before they can be the gasoline that fuels your thriving business for years to come. Here are some questions you should ask yourself about your product or services:

  • What am I selling?
  • What makes me the best person to sell this?
  • Is there another product or service that’s similar to the one I’m selling? If so, how is mine different or better?
  • This is a good idea now, but will it be a good idea long-term?
  • What is the total market for this idea? And how much of that market can I realistically take for myself?
  • If my idea hits the market and is successful, is there anything protecting me from copycats?
  • Is my product or service a hobby or a business I can grow into a company?

These are tough questions that you need to ask yourself that may remove the rose-colored glasses most entrepreneurs refuse to take off until it’s too late. Be optimistic about your business, but be realistic.

Step #2 – Research the Competition, Refine Your Idea

You have the idea for your product or service, now it’s time to research what the competition is doing and gain a full comprehension of the market – and by extension – your target market. Regarding your products or services, you should ask the following questions to determine how you fit into the marketplace:

  • Who is my direct competition? Who are the companies that offer a similar product or service that I plan on offering?
  • How do I one-up those companies? What can my product do that’s going to make it stand out against my competition that’s already established themselves in the market?
  • How can I take some of my competitor’s customers? Can I offer a higher quality product? Will it be less expensive? Will it solve a problem that’s previously unsolved?

By answering these questions, you can further refine your idea for your product or service so that it is unique, distinct, and hopefully, fulfills a need with customers that your competitors aren’t. Keep refining your idea until you find that X factor that makes your product or service special. The secret ingredient to success is being able to say your company offers something that has previously never been offered before.

Step #3 – Doing the Math, Applying the Break-Even Formula

Hopefully, you like math, because you’re going to be doing quite a bit of it when running an at-home business. There are a couple key things to be cognizant of when launching your business. The first is in regards to expenses. As the saying goes, it costs money to make money, so you’ll want to make a comprehensive breakdown of what you’ll need and how much your operating costs are. Ask yourself the following questions:

  • What are my one-time equipment costs? Do I need a new computer? Desk? Office furniture? Business phone? Printer/scanner? Special software for bookkeeping?
  • What are my ongoing costs? Examples would be the internet/phone bill, website domain, paid search (Google, Bing, etc.), cost of manufacturing the product (materials, labor, etc.), and any other monthly expenditure that is going to be continuous.
  • Do I have any access to start-up capital? Are their assets you can liquify or savings you can borrow from in order to get the business off the ground? What about investors or a GoFundMe page? The problem that most businesses have is they run out of money before they get off the ground. Do the math to make sure this doesn’t happen to you and you have enough to keep your business going.

Once you have an itemized list of your one-time and ongoing costs, you can break down the cost of your product/services, which will then give you an idea of how much you need to sell in order to break even. The break-even formula is something that virtually all businesses use so they have an exact calculation of how much business they need to do in order to survive. Use the data you have and apply it to the following formula:

Fixed Costs ÷ (Average Price – Variable Costs) = Break-Even Point

You may need to tinker with the average price of your product/service in order for the break-even point to work in your favor. The tricky part is that your average price must remain competitive with other companies in order for it to be attractive to your customers.

Step #4 – Build Out Your Home Office

By this point, you should have a list of everything your home-based business needs in order to launch. For most people, the base of home operations requires a computer, desk, comfortable office chair, filing system (hardcopy and/or digital), and other items to improve the overall aesthetic such as framed photos, plants, and artwork that make the space comfortable to be in.

The majority of these items should be on your one-time cost list and can be written off later for tax purposes. A good rule of thumb is to invest in the best office furniture you can so that your home office is as close to its full potential that it can be. That means choosing an ergonomic chair that you can comfortably sit in for eight hours or more and a desk that is of the appropriate height that will accommodate your supplies.

Contact Sante Fe Office Interiors to Build Your Home-Based Office

Sante Fe Office Interiors has years of experience helping entrepreneurs such as yourself outfit their home-based office with the best new and used office furniture at affordable prices. We are highly regarded in the Kansas City area for having a wide selection that works for all budget levels. The best way to see what we have for you is by visiting our store in person at 8106 Sante Fe Drive in Overland Park, KS.

Our friendly staff can help you pick out the perfect chair or desk with any custom options you may require. Feel free to call us 913-901-8800 for any questions or to schedule a personal appointment.