Four Mistakes To Avoid When Starting a Home Business

By Guest Blogger Erica Bell

2013 is looking like a great year to get off the fence and become an entrepreneur. Starting a business from home sounds like a dream and indeed, running a home-based business has its perks! You can be close to family, work on your own schedule and build your passion into a business. However, common mistakes are often made by those starting a new home-based business. Mistakes from forgetting about government regulations, to not sticking to an effective schedule and business plan, to not marketing your new business properly. Home business owners have a lot to keep track of.

As you get ready to launch your home business, here are some entrepreneurial mistakes to avoid:

Ignoring Planning

A proper business plan can help you find funding, stay on track when times get rough and make your business more successful with each passing year. A basic business plan should include: a summary of your company’s profile and goals, a description that includes what the business does and what markets it serves, as well as a market analysis and more, according to the SBA. Failure to create a roadmap for your home-based business can lead to financial loss, and even failure of your startup.

  • Check local, state and federal regulations about home businesses in your area and industry. Make sure you have all the right paperwork, business insurance and protections in place.
  • Conduct competitive research. Look into who your competitors are and what each is doing well and what each is doing poorly. Take the best methods and apply them to your business. Build on it, adding your own unique spin.
  • You’ll need a business plan if you are going to apply for a business loan. Make sure it’s well thought out, accurate and realistic, and includes the necessary information such as competitor research, forecasted expenses and profits, etc.

Borrowing Too Much or Too Little

Sometimes, entrepreneurs starting home businesses lack the financing experience. If you don’t have personal or family backing to support your new business, you will need to apply for loans, grants, explore investors, or use a business credit card. Make sure you keep your personal risks in mind as any debt the business incurs will become personal.

  • If you’re taking out a loan or running up credit cards to get your business off the ground, make sure you’re only using what you need. Borrowing too much money when your business is first starting out can put your business in jeopardy. Then again, starting a business underfunded is not good either.
  • Buy only what you need. While equipment, printed business cards and materials are all necessary for a new business, make sure you aren’t overspending. Keep your overhead low so you can start building profits as soon as possible.

Not Having a Dedicated Work Space

When starting a home business, it’s important to have a space where you can work without interruption. If you have a family or roommates, be sure to let them know what the ground rules are. A successful home business requires hard work, and little distraction. Have a designated work space and optimize it so you are most productive. Starting a business at home also requires you to be very self-motivated.

  • Space – Whether it’s a single desk or a whole office, designate a space that’s for work. Let your family know that when you’re in there, it’s time for business.
  • Privacy – Even if you’re not dealing with sensitive or confidential information, you need to have some privacy for clients when on calls or processing payments.
  • Security – Small businesses should accept credit cards. If you’re selling on Etsy, Ebay or from your home, you’re going to receive confidential financial information from customers. Make sure your internet connection, mailbox and home are set up securely.

Mismanaging Marketing

In order to spread the word about your business, product or service, you need to make sure you’re marketing. Marketing a business can be done on a low budget. Consider free or inexpensive resources where you can reach your target audience such as social media, local newspapers or radio stations, and a blog.

  • Use friends and family. Ask friends and family to use social media, email and in-person conversations to spread the word about your new business. Word of mouth recommendations are an easy way to get your business out there when you’re first starting out.
  • Make the most of social media. Chances are you don’t have the budget for ads. Use free networks such as Facebook, Twitter, Pinterest and Tumblr to spread the word about your business and products. Engage with others and start building business relationships.
  • Join networking groups. Getting out there and meeting as many potential clients and suppliers as possible is crucial, especially at the beginning when you have no built-in referrals yet.

If you’re considering starting a home business, be sure you’re prepared and ready to launch your business. From creating the business idea, to marketing your launch, to ensuring you have the proper systems in place, to making sure you’re on top of the regulations in your area, there’s a lot to consider. In order for your home based business to be successful: get the word out and keep costs low. Stay motivated and work hard. It’s possible!

About Erica Bell

Erica Bell is a Small Business Expert and writer for Business.com, focusing on topics such as starting a small business and business insurance.

Tell us, what are some of the mistakes YOU made when starting your home business? What would you tell the business newbie or mompreneur taking the plunge? Share your wisdom and advice with our community. I would add: not to undervalue your offer – we often undervalue our offer and give our product and service away for less than it is worth, because we are not confident yet in our offer. When you plan properly, you can stand confidently by your offer.

31 Comments
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  1. I really appreciate you drawing attention to the importance of having your own work space. I work from home and I take on-line classes, and I find myself in these awkward places within my home. I’m renting now and I don’t have any room but we are planning to buy soon and we are definitely factoring this into our list of requirements for our new home. Thanks for the tips!

  2. Make sure you have the time, to go with the passion. Starting a home business when you don’t actually have the ample time to contribute to it, is like a person wanting a realationship but does not have the time to devout to it. The relationship suffers just like your business will suffer if you are not prepared to allogate the time it takes to develope it.

  3. Great post! Very helpful. Planning and targeting your clients are the keys! I have recently decided to go on my own as a corporate lawyer. My goal is to help entrepreneurs to reach their goals. It has been a great experience so far and something I have been thinking for a while. Cathy

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