3 Tips for Starting a Small Home-Based Business

December 13, 2022

3 Tips for Starting a Small Home-Based Business

It should come as no surprise that small businesses are the backbone of our economy. You’ve heard it often enough as every presidential candidate has proudly mentioned this on the campaign trail as if they were personally responsible for the success of small businesses throughout the entire United States. Actually, you can’t blame them for trying because it is a fact.

Small businesses are the lifeblood of our nation and the reason why our national unemployment rate stands at roughly 3.7%, which isn’t bad considering we’ve just come off a global pandemic in which many jobs were lost. Small businesses are once again prospering and if you are an entrepreneur with the goal of starting a small, home-based business, here are a few tips you may find useful.

Key Takeaways on Starting a Small Home-Based Business:

  • The Importance of Small Businesses: Small businesses serve as the backbone of the nation's economy and are essential to maintaining a low national unemployment rate.
  • Selecting the Right Business Structure: Choosing an appropriate business structure, such as a Limited Liability Company (LLC), can protect personal assets from potential legal action against your business.
  • Importance of Reliable Internet Connectivity: In our digital age, having reliable internet service is critical for business operations. It's essential to weigh different internet service options in your area to avoid costly downtime.
  • The Role of Business Insurance: It's crucial to carry at least a basic business owner's policy to protect yourself and your business against major financial losses. The type and amount of coverage needed will depend on the nature of your business.
  • Preparation Before Launching: Make sure that you have taken care of essential aspects like the business structure, internet connectivity, and business insurance before opening your doors to business. The time invested in understanding these aspects can significantly impact your bottom line and the overall success of your business.
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1. Choose the Right Business Structure

The very first thing you should consider is the business structure under which you’ll operate. While you can file as a corporation or as a sole proprietor, it is best to operate as a Limited Liability Company. This filing status will protect all your personal assets. To further secure your business, you can generate a free LLC operating agreement to outline the terms and conditions of your company's operation. Any other business structure could result in losing literally everything you own. An LLC keeps personal and business assets separate so if you are sued, at least anything of value in your personal assets cannot be awarded if you should lose the suit in a court of law. Transitioning from Sole Proprietorship to LLC offers significant advantages in safeguarding your personal finances and minimising legal risks.

2. Carefully Weigh Your Internet Options

Most metropolitan areas have several options for business internet service providers. You will invariably find satellite networks as well as wired connectivity. While rates are important, reliable connectivity is more so. You can’t run a business if your internet keeps dropping and slow internet is almost as bad. Carefully weigh your options between internet companies in Phoenix AZ if that’s where you’ll be operating so that you will not experience costly downtime. Whether your business is a local land-based business or an e-commerce site, much of what you do will require internet connectivity, so this is one of the most important decisions you will need to make from the very beginning.

3. Business Insurance to Mitigate Risks

The amount and type of coverage you choose to carry will depend on the type of business you operate but in any case, you will need at least a basic business owner’s policy. Liability insurance can safeguard you personally as well as protecting your company against major financial losses. If you are like most new business owners, you have probably sunk literally everything you own into starting your business, so don’t take the chance of sustaining major financial losses that could have been avoided with business insurance coverage.

These are three of the most important things you will need to decide when starting a new business. Since you are the expert in your field, you know what kind of tools and equipment you need but you may not have considered how each of these can impact your bottom line. Take the time to understand exactly how you intend to file the insurance you need to carry and find an internet service provider that is reliable. Don’t open your doors to business until each of these is in place. You’ll be glad you did.

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