Record numbers of people are taking the rewarding (and challenging) leap into running their own business, with over 60% beginning this venture from home.
There are still a few things to consider though when starting your home business adventure. We have summarised 10 things you might want to think about before the home business adventure begins with additional information and web links where appropriate for further reading and research.
The advantages of starting and running your own business are a big draw:
• Savings on rent and other costs associated with running an office;
• Flexibility of working hours;
• Remove the the rush hour commute, replacing it with a 40 second, stress free walk to the home office with a morning beverage in hand.
Starting a business from home can be a very rewarding venture providing the balance between work and family commitments are clearly defined (and adhered to) from the start.
One of the biggest challenges with running a business from home is creating a clear work / home divide and balance, not only in physical work space, but also mentally. No one wants to feel like they’re at work every waking hour, having that clear balance between home life and work life is essential in making your home business work for you, and to keep you sane.
Let's take a look at our 10 things to consider...
1. Is my business venture viable from home?
The most important decision when deciding whether to run a new business from home is whether your chosen business idea will work from your residential dwelling. If a small office is all that's needed then working from home is a great option to reduce startup costs and keep ongoing business expenses to a minimum. Flexible hours will help you to focus and spend the time needed to grow your business whilst working around your other commitments.
If you plan on having regular customers visiting and / or frequent deliveries to your home your local council may impose some restrictions on the type of business you plan to run. Likewise if you need to make significant changes to your property in order for your business to run, that may effect your local area, a dedicated office premises might be a better option to consider.
2. The Legalities
Working from home can create some legal snags depending on the type of business you plan to run. For example, you may find you need permission from your mortgage lender, freeholder or landlord to conduct business from your residential dwelling.
A large proportion of mortgage contracts and tenancy agreements prevent residents from working from home, so it's always best to check these legalities to make sure your home business venture gets off on the right path.
Anyone that works from home (even as part of salaried employment) may be liable to pay business rates on the part of their home that is used. The decision is mostly based on the frequency and extent to which the space used in your home for the business to operate. If any space of your home is solely used for the running of the business or it has had any modified work carried out exclusively for the business to run, the chances are business rates might apply. However, the VOA (Valuation Office Agency) consider each case individually and do not have a rigid set of requirements, so it’s best speaking to them directly.
You can find out further information on Business Rates on the VOA (Valuation Office Agency) website.
According to Business Link more than half of self employed people do not inform their insurer that they will be working from home. This can have a negative impact on their insurance position. It’s advisable to always have this discussion with your insurer and check your equipment is covered and any stock you may keep before you get to the level of being VAT registered and becoming an “official business”.
There are different types of insurance for your home business:
- Professional indemnity – This applies to business offering services and knowledge, this covers any claims against you or your business relating to a negligent act that could be committed or pursued against you or your business.
- Public liability – If you have customers visiting your home office and / or you are selling products to the public. This covers you from any injury claims that may be raised against you, or your business.
- Employer’s liability – Offers protection to your employees during the course of their employment.
- Motor insurance – Make sure you amend any policies to include business use.
- Home Insurance - Your home insurance policy will generally not include business activities or cover business equipment. Speak to your insurer to check the level of cover you need to protect you and your home business.
4. Involving HMRC
You need to let HMRC (HM Revenue & Customs) know within three months of trading that you have started a business. If you start working for yourself you are classed as a sole trader even before you let HMRC know. You must register and follow the rules for self employed tax and National Insurance.
There are other types of business structures other than sole trader such as becoming a partner in a business partnership or setting up your own LTD company, all have different rules on tax and National Insurance. You will also need to inform companies house if you choose a route other than a Sole Trader.
Setting up a LTD company means you’re not classed as self-employed but you are both the business owner and an employee of your company. It’s advisable discussing your options and tax implications with an accountant beforehand to make sure you choose the right type of business structure that suits your needs.
- Check what counts as self-employed if you’re not sure about your status.
- You must register and follow the rules for self-employed tax and National Insurance.
- Choose a legal structure for your business.
5. Working Hours
You may want to consider starting your business whilst in full time employment utilising evenings and weekends. This part time approach gives you time to build your business, your customers or your orders while you still have the security of a regular income. That's not to say this will work for everyone, you may find you simply do not have the time to dedicate to both.
Another option, if your business type allows it, is to become a freelancer. This is an ever popular route into your chosen business market. Clients hiring you are buying your time to complete a project so it’s easier to plan jobs in advance and the time expected to complete them.
One certainty, whatever route you choose, is the long hours needed to make your home business work. You may find working much longer hours than you have previously being used too. Long nights, early mornings, whatever is needed to grow your new business.
At the beginning it can be a lonely endeavour starting your business from home, be prepared for this. Build in some family and friends time and reach out to other business owners through networking to keep motivated.
6. Find an accountant early
It goes without saying that sourcing a good accountant from the start is imperative. It may sound like an unnecessary expense but they will be able to advise with the initial business setup and structure, while ensuring all deadlines and tax and National Insurance liabilities are met.
Many accountants will gladly offer free startup advice if you agree to sign up to their services which can provide invaluable knowledge and experience to a new business startup.
If you'd like to know more about finding an accountant, then check out our article on the best questions to ask when looking for an accountant.
7. Finding and maintaining business contacts
Growing business contacts is imperative for any business. Not only to help gain work from referrals, but also to gain invaluable advice and knowledge from other business owners, who will have undoubtedly faced the same issues and problems you may be facing. Regular contact with other business owners will also help with the lack of human contact you will receive while working from home.
Networking is a great tool to help build your contacts. We have lots of guides on starting networking, which to choose, and how to fight those inevitable worries and fears. You can download our free book on how to get started and improve your networking.
8. Be social
Social media is a great place to find advice, reach out to other business owners, and also help with the isolation working from home can bring. Its also a great tool to build your new business’ profile and gather followers to engage with about your business and its products or services.
We have lots of guides on how to manage your social media profiles, from making sure your branding is consistent across all channels, to effective tools to help queue posts in advance to keep your profiles updated and relevant.
For advice on how to get involved with Twitter networking then we have a great article on the top 12 Twitter hours in Yorkshire you can read.
As your business grows you may find bringing your clients to your home premise for meetings simply will not work.
There are many business centres in many towns across the UK that offer room and meeting room hire to fit most budgets. Hotels and restaurants are also a neutral meeting venue that can suit some business’.
Another option is to meet clients at their premises to save them travelling to you, it also lets you get a good feel for their business which can help you tweak your sales processes in order to personally target your pitch to them for your service or product.
10. Organisation and time management
Organising your time is another key area for new business owners working from home. Segregating time away from the home solely to spend on business activities is a must. Not only will it make you more productive, but mean your home / business life will have a good balance.
As well as the day to day running of your business, driving sales, customer service and much more, you are now responsible for the administration, accounts and finance of your home business. Setting time each day to deal with admin and finance leaves time to focus on your actual services or products and generating the sales needed to keep your new venture sustainable.