Work: Starting a Small Home Business, On Less Than $5,000
By Pankaj Tripathi
2010 saw the economy teeter at the edge of a double dip recession. For all those people who have either lost their jobs or are on the verge of doing so, a big question – What now? With unemployment at 8.1 percent, no wonder so many résumés and job applications go unanswered. This silence has revealed an entrepreneurial spirit in a number of people, and triggered the rise of the ‘Homepreneur’.
Can it be done? Does a home business work? Yes, for sure. Does it cost a bomb? Absolutely not.
Anyone with initiative, skills and determination can get started for as little as $5,000. Rickey Pacheco a South African immigrant started Medalion Enterprises, a signage business in 1989 from his home. He founded it with a small capital of $2,500, invested in a website, some flyers and business cards.
Today the company employs five workers, operates out of a leased factory space, and counts major retailers like Walmart and Loblaws as its customers. Rickey says, “Operating as a home business is not a disadvantage, in fact it is a major competitive advantage. Your costs are significantly lower than your competition.” He adds, as a home business owner you have to be focused, organized, professional and, “always behave like the company you want to be.” That means a clearly defined work space at home, strict business hours and never be afraid or hesitant to go out and meet potential customers – however big or small.
10 steps to start a home business with no, or very little, capital.
1. Have a sound business idea. What products or services your business can offer. See if you have the skills and the knowledge to compete in the market. Michael Senoff bought used seminar materials for $50, resold them on eBay for $1700 and laid the foundations for hardtofindseminars.com. The business today shows a daily profit of more than a thousand dollars. Catherine Keane of Hungry Pods makes more than $100,000 a year uploading music for others on their iPods, and gives employment to three other people.
2. Research your market, customers and competition. Find out who is going to buy your product or services, what in your offer is different from your competitors and gives you a clear edge. Define with clarity your value proposition and service offering.
3. Write a detailed Business Plan. The Business Plan should clearly define your product, services, market, customers, financial targets, supply chain, network and other resources. Do a basic SWOT (Strength, Weakness, Opportunity and Threat) assessment. Adrian Rudzikas, CEO of Business Plans Canada, and a recent immigrant himself says, “Home Businesses should have a clear, concise and well written business plan prior to launching operations. It dramatically improves the chances of success by bringing in a deep focus and sense of purpose to the whole business. It is fundamental to your success, especially when your resources are scarce.” Define your start up costs, calculate your breakeven point and identify the various sources of funding available. Seed capital can come from your savings, borrowings from friends and well wishers, banks or government grants. See what services or requirements you can outsource to cut down your start up costs.
4. Finalize your legal form of business organization and register it. Most home business owners start as a Sole Proprietorship or Partnership. As your business grows you can change to an incorporated company. Enterprise Centers all across Ontario help business owners legally incorporate their businesses. It is quick, easy and most registrations can even be done online.
5. Find a good mentor. Mentors have done it, been there, know the pitfalls to avoid and networks to tap into. They help you start the process, guide and motivate you throughout it. Someone from your own line of business is always preferred, but be open to mentors from other fields as well.
6. Assess the level of your family’s support. Members of your immediate family, who are living with you will have to make lifestyle adjustments and sacrifices. Make sure everyone understands the discipline and rigor involved in running a home office. The key is communication, consensus and everybody’s involvement in the decision. Any discord at home will affect your professional performance and be detrimental to your eventual success.
7. Get proper training. Rickey Pacheco says, “Proper training gives you the confidence and a constructive frame of mind. It gives you a systematic start”. Find out the programs where you can get training in various aspects of the business you are about to embark upon. See if you can work as an apprentice or an intern with an individual or a company. Be honest and straightforward and explain to them your plan and objectives. There are peers who are open to sharing their knowledge and expertise.
8. Home Office. Set up the home office in a separate area away from the living space. See whether you need any additional storage space, which might be the case if you are going to maintain an inventory. Furnish the space comfortably, and equip it with the required furniture, phones, faxes, computers, copiers, printers and other equipment.
9. Abide by the local laws and regulation. Check out if your paper work, permissions and registrations are in order and in compliance with local rules and regulations. Consult with a tax consultant on the tax implications, find out if you need any extra insurance or professional accreditation from industry regulators. Any violations may invite a fine and other punitive action, which is not a good way to start your business.
10. Identify the initial customers and start marketing your products and services. Prepare a good information and marketing pack, design and print your logo, business cards, website, flyers and presentations and start calling on your initial set of leads, prospects and customers.
Finally, never give up. Listen to your inner voice and believe in yourself. Sixteen year olds have done it, seventy year olds have done it, people with money have failed at it, and people with no money have succeeded at it. So, trust the power of your dreams, and work to reach out to your destiny. You may have to work harder than you have ever done in your life. Why? Because you deserve success, as do your loved ones. Build the future you want, with what you have, however little, however inconsequential.