Saturday, September 30, 2006

10 Things You Need for a Home Business

You've got an idea for a winner of a home-based business, and you're about ready to announce it to the world. Good for you.

I certainly don't want to delay you from joining the millions of people now running viable businesses from the comfort of their own homes. But take a moment to read this checklist. It's the 10 things you need — besides customers — to start your home business off on the right foot.

1. First and foremost, a market for your product or services. If you haven't done any homework on this, go no further. "This is a critical first step, and it is amazing how many people set up a business without having a market for it," says Jane Applegate, nationally known small-business author and advice columnist. Even "verbal" market research can clear up a lot of questions, she says. "If you want to do cake decorating at home, talk to 50 people you know and see if they would buy from you. Talk to people at your church. Make sure there are people who want to buy what you have to sell."

2. A separate space for your office. Yes, a separate room in your house would be nice. No, it is not mandatory. But you do need an area that is distinctly your workspace, and can be closed off from the rest of the house by partitions, dividers, drapes, even a shower curtain, if that is all you have. "You really need some sort of boundary," Applegate says, "so that on one side you can say, 'This is my business,' and on the other, 'This is my life.' " Don't use your dining room table as a desk, advises Jeff Berner, an author and consultant who has worked out of his home for more than 35 years. "You'll never get it back to eat on." Ah, but if you rarely use your dining room table for dining, go for it, counters Lisa Kanarek, a home-office expert and organizational guru. "I converted our dining room, took out the chandelier and put French doors around it for my office," she says.

3. An ergonomically sound workstation to go with your PC or laptop. If you are Azriela Jaffe, a noted author and writer on home-business psychology, you might spend nearly as much money on a comfortable chair as you would on your computer. "Years of sitting on the wrong chair can leave you with disabilities and poor posture," she says. "I think it is worth the investment to spend $750 on a chair." Jaffe feels similarly about her mouse. "You need a mouse that doesn't stress out your wrist. Your basic cheap-o mouse won't work." PC or laptop? Suit yourself. Today's laptops offer many of the same features as a PC, and greater mobility. You are subjected to a smaller keyboard and, in many cases, a touch pad instead of a mouse. But if you travel or are outside of your office a lot, a laptop may be the way to go. If you can afford it, it may be worth having both a laptop and desktop PC.

4. A separate phone line — or two — and a decent modem. Your customers will appreciate their calls being answered by you, your assistant or a professional-sounding voice-mail message — not your young child, with the dog barking in the background. A separate phone line for your business is a must, and another line for online access is highly recommended. Get a voice-mail system too, rather than an answering machine, says Applegate, because the recordings are better quality and the system is more reliable. Do you need a high-speed DSL or cable modem? Absolutely, most home-biz pros will tell you. "It depends on what your time is worth," says Kanarek. "If you spend all day on the Internet, it may be worth it to you to invest in DSL."

5. A separate bank account. While not legally required for tax purposes, this is important, because you never want to mix your business money with your personal money. Having a bank account in your business's name is the way to go, Applegate says. She also recommends a finance software program such as Microsoft Money to keep track of your business finances.

6. A business license and federal tax ID number. Your city or county may or may not require you to have a business license; it varies per jurisdiction. Contact your local governments to find out. Many large companies will want to see a business license before they do business with you, Applegate says. Getting a tax identification number is a must. Get one from the IRS.

7. A Web site and e-mail account in your business's name. Yes, you need a Web site, for business and marketing purposes. And you want a Web domain name that matches the name of your business's name — not some complicated slash-tilde gibberish that no one can remember. Same thing with your e-mail address — an account with an Internet service provider ( won't do here. Not only do you want to sound professional; you also must promote your brand. "My Web site definitely helps my business," says Kanarek, who runs out of her Dallas home. "I get e-mail from around the world from it. It is probably the best marketing tool I have."

8. Business cards, stationery and, yes, a fax machine. Are fax machines obsolete? "Becoming so," says Applegate, "but you still need some sort of faxing capability." She prefers faxing software, so that you can send faxes through your computer. Jeff Berner would rather have a regular fax machine, so he doesn't have to scan documents into his PC to fax. Both like the idea of a pricier fax copier-scanner machine in addition to your PC.

9. Health and liability insurance. If you quit your other job to do this full-time, you're on your own now. You won't have paid sick days. You don't have paid vacations. And you're responsible for acquiring your own health coverage. Health insurance is probably the biggest thorn in the sides of small-business owners; it's expensive and sometimes hard to get. One of the best ways to get health insurance is through business or trade organizations — even your local chamber of commerce may offer a health insurance option. You also need to consider business insurance.

10. Regular business hours, and a life outside your office. For many people, starting a home-based business means blurring the lines between your work life and family life. Veteran home-based business operators say they set regular business hours and stick to them. When they are off work, they shut the doors to their office or close the partition around their workstation, and leave. Likewise, they don't allow children to hang around their workspace when they are trying to get work done. You're kidding yourself if you expect to get a lot accomplished with a baby on your lap. "You have to be disciplined," says Applegate. "You need to tell others in your family, 'Interrupt me only if the house is burning down.'" At the same time, home-based business owners can go too far and isolate themselves from the rest of the world. "Don't cocoon yourself," Berner says. Maintain your network of friends, and find ways to make new ones, he says. "Seek out other independent professionals doing similar work as you are, and form a 'skill guild.' Meet people for lunch as much as possible." Secluding yourself in your office not only ruins your social life, but it's bad for business.

By Monte Enbysk

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