01Assess Your Talents
Think of your talents as the things you're really good at. They're like personality traits. For instance, you may be a very creative person, or a person who's really good at attending to details or a person with a gift for communicating. Your talents are the base for any successful business venture, including a home business.
If you have never been self-employed before you need to do some further self-assessment to determine whether you have the right personality to be an entrepreneur. Starting a business is not for everyone. (See 6 Traits You Need to Be Self-Employed.) Common traits for successful business owners are motivation, self-reliance, perseverance, initiative, and the ability to deal with uncertainty.
02Examine Your Skills
Your skills are the things that you can do. The difference between talents and skills is that talents are passive and skills are active. Or, to put it another way, you're born with talents but you develop skills over time as you learn. For instance, a creative person may have excellent skills for drawing or writing or design. A person who has a talent for attending to detail may have strong accounting or organizational skills.
03Put Your Talents and Skills Together and Generate Business Ideas
The procedure outlined here will work for starting any kind of business, but as we're focusing on home-based businesses, the question is, "With these talents and skills, what kind of home business could I start?"
And that's just six ideas from our limited premise here. When you're doing this exercise, you, of course, have more than one or two skills, so you'll find that your list of possible business ideas is much longer.
Don't censor yourself as you list home business ideas. List all your ideas at this stage; crossing off choices comes later.
Need help getting started? 7 Sources of Business Ideas will show you how to get started thinking as an entrepreneur.
You might also want to browse these lists of business ideas:
04Give Your Business Ideas the Home-Based Business Test
When starting a home business, you need to keep in mind that not all businesses are going to work well as home-based businesses, and some won't work at all.
You are not going to be able to start a manufacturing business in a residential neighbourhood, for example, and any business that involves a lot of clients coming and going is sure to upset the neighbours. See What You Need to Know Before You Start a Home Based Business for more about the factors you need to consider before starting a business in your home.
Go back over your list and cross off any business ideas that won't work as home-based businesses.
If you are intent on starting a business where you actually get to work at home, also cross off any business that could be operated as a home-based business but wouldn't allow you to do that. For example, in the short list of sample business ideas above, I would cross off "business manager", as this would involve off-site work.
Many people who want to start home-based businesses stop here. They've come up with an idea for a business that they like and feel they'll be good at, so they plunge into it at this point.
Don't make this mistake! If you do, you run an extremely high risk of investing months of your time, energy and money in a losing venture and seeing the home business you had such hopes for fail.
(Learn more about why small businesses fail.)
The next two steps are critical to your home-based business's success.
Figuring out the profit angle and doing a business plan are two important parts of the process of starting a business - two parts that many people starting a home-based business don't bother with.
But if you want to start a home-based business that will succeed, rather than just being another business failure that drained your time and wallet and left you disappointed, you need to pay particular attention to these two steps of the startup process.
05How to Start a Home Business: Figure out the Profit Angle
This is the litmus test for anyone wanting to start any kind of business. You may have a great talent for something and the skills that enable you to express it, but if people aren't willing to pay you for the product or service, it won't work as a business.
For each home based business idea, you need to know the answer to two questions:
- How much are people willing to pay me for this product or service?
- Can I make a sufficient income from that?
Suppose that you, being a creative person, are able to make beautiful quilts. However, because of the time involved, you're only able to make two quilts per month. You discover that people are willing to pay $200 for each quilt you produce. The math says that you would have, therefore, an income of $400 per month. (Actually less, as there will be expenses related to quilt production, such as cloth and thread, to deduct from this amount.)
Ridiculous, isn't it?
But many people put themselves in a very similar position by starting home-based businesses without considering the profit angle. Business is about profit, and without sufficient profit, you'll never have enough income to even pay the bills, let alone generate wealth. (For more on creating a business that actually produces income, see Change Your Business Model and Watch Your Profits Soar!)
Go back to your list of home business ideas and assess the profit-making potential of each. If the answer to either of the two questions above isn't satisfactory, cross that idea off your list.
Note that you decide how much income is enough. Many people run part-time businesses that supplement their income and are perfectly satisfied with that. (If a part-time business appeals to you, check out 16 Part-Time Businesses You Can Start Today. )
If you want your new business to provide all of your income, however, you have to research the profit-making ability of your business idea very seriously.
06Do a Business Plan to Assess the Viability of Your New Home Business
Many people are under the impression that working through a business plan is only necessary if you're going to be looking for a business loan. But the primary reason to do a business plan is to find out if your business idea has a chance of becoming a successful business.
So once you've chosen a home-based business idea you're passionate about, write a business plan. The research and thinking that you do as you work through the business plan will do more than anything else to ensure that the business you start succeeds.
And if your business plan shows you that your idea isn't viable, shelve it, choose another home business idea and go through the process again. It's not uncommon to work through part of at least three business plans before you find the idea that will blossom into the thriving business you want to run.
07Ignore Those Ads and Roll Up Your Sleeves to Start Your Own Home Business
Want to start a successful home business? Ignore the work-at-home opportunity ads; there are no shortcuts. Instead, follow the six steps outlined above. You'll end up with a home-based business that truly has the potential to succeed, bringing you the money and the satisfaction you've been dreaming of.
These articles are packed with ideas to get your own home business going:
How to Start a Home-Based Business That Will Succeed
So how do you start a successful business in your home? The secret of success is not to stop halfway through the business selection process as so many people do. Follow these six steps to start a home-based business that will succeed rather than just being a drain of your time and money.