Skip to Content

How to Start a Home Based Business in 21 Days or Less (21 Easy Steps)

What does it takes to build a successful business right from your closet? Do you want to start your own home based business but you don’t know how to go about it? What are the exact easy steps to starting a home based business successfully?

How do I go about starting my own business? What are the pros and cons of starting a home based business? How do I reduce my chances of failure when I start my own home based business? How did Rachael Ray, Jenny Craig and Julie Aigner Clark grow their home based businesses to international level? Well, if you desire an answer to any of the questions above; I will advice you read on.

Many individuals are skeptic when it comes to starting a home based business. In fact, I understand their skepticism and that skepticism is fueled by the fact that 90 percent of all businesses started will fail in their first five years. Now what makes me hopeful that anyone can quit his or her job and build a business right from home? Well, just read on as you will find the answers you seek in this article.

The number of home businesses started yearly is rapidly on the rise. According to Link Resource’s National Work at Home Survey, over 100 million home based businesses are in operation as at 2010; up from about 50 million in 1997. This is an indication that people who want more control over their lives are starting their own home businesses despite the risk involved. This trend is not only in the U.S but in Nigeria, Canada, India and all over the world.

Are there individuals that have built successful home based businesses?

Are there individuals who have found success starting their own home based business and growing it from scratch? My answer is a resounding yes. In New Orleans, Rick Hart’s home based Cajun Cargo ships seafood nationwide. In Palatine, Illinois; Stephanie Heavey works from home designing and selling original patterns for fabric dolls.

And in Dallas, Lisa McElya published the Dallas Party & Event Planners Guidebook from the entire first floor of her two-story home. Also, entrepreneurs are turning over millions of dollars by running their own home business with e-Bay and Etsy. These three people are living the new American dream of owning a business, while avoiding the high overhead and start-up costs of a commercial location.

Well, you may say those names are not popular but how about these. Steve Jobs started Apple right from his garage; so also did Jeff Bezos and Henry Ford. Robert Kiyosaki started the “Rich Dad’s Company” as a home based business and grew it to international level. J. K. Rowling became a home based billionaire author with her book “Harry Potter series.” Julie Aigner Clark was a nursing mother when she created Baby Einstein and grew it right from home.

Ashley Qualls founder of WhatEverLife.com started her website building business right from her bedroom and she became a millionaire at the age of 17. Rosalind Gardner; the affiliate marketing queen quit her job as an air traffic warden to start her own online home based business and she made $437K in her first year selling other people’s product. Coco Chanel, Rachael Ray, Mary Kay Ash all started their own home based businesses and became international successes.

If these successful entrepreneurs and drop out billionaires started out as home based business owners and grew to international level, I see no reason why you can’t achieve the same feat of building a successful business. Now does the idea of working from home or starting a home based business sounds appealing to you but you don’t know where to begin? Then here is an easy step-by-step guide to starting a home based business successfully.

21 Easy Steps to Starting a Home Based Business in 21 Days or Less

1. Decide what part of the house you will use for your home based business

The first step to successfully starting your own home based business is to select an area away from family activity. The perfect space is a separate room, the garage or perhaps the basement. But any area will do as long as it can hold all the business supplies and equipment; and also provide enough work space for desks, tables, or counters. Jeff Bezos, Steve Jobs and Henry Ford used the garage of their various homes while Robert Kiyosaki used the basement to kick start his business.

2. Determine how much time you can spend on your home based business

Many people start a home business on a part-time basis while raising children or working outside the home. Others start full-time when family and finances allow. Julie Aigner Clark created Baby Einstein while nursing her baby. Rosalind Gardner started her home based business part time as an affiliate marketer and went full time when her business income exceeded her salary. Steve Jobs, Henry Ford and Jeff Bezos on the other hand started full time.

Well, the best way to find success as a home business owner is to figure out how may hours per week you can devote to the business. Make a weekly chart of your activities, examine it, and determine where the business fits. Don’t assume you have time, only find out later by the time you’ve kick started the business that you don’t.

3. Decide on the type of home based business to engage in

Make a list of things you like to do, your work, passion, hobby, skill and volunteer experience; and items you own that can be used in a business. Look over this line-up, and using ideas from it; list possible businesses to start. You can also start a home business based on your passion as Rachael Ray did with cooking and J. K. Rowling did with writing. But be sure to eliminate any business that isn’t appealing or doesn’t fill a need.

Is your business going to be online or offline? Are you going to market your own products or someone else product? These are the questions you must answer before ever starting a home based business.

4. Choose a legal form or business entity for your home based business

The three basic legal forms or business entity are sole proprietorship, partnership and corporation. The most common is the sole proprietorship. As its name implies, a sole proprietorship is owned by one individual. It is the oldest form of business, the easiest to start, and the least complicated to dissolve. Here are some of the advantages of the sole proprietorship business form:

  • You own all the profits.
  • Your business is easy and cheap to organize. You don’t need any government approval, although you may be required to carry a city, state or county license. Your only obligation is to notify the Internal revenue Service (IRS) for the purposes of sales tax.
  • You’re the boss.
  • You enjoy certain tax savings. You must pay regular individual taxes on your income, property and payroll, but these are not levied as special taxes; as with a corporation. You will also have to pay sales tax which you have received from your customers.
  • Greater personal incentive and satisfaction. Since you have your investment to lose if your business is not successful, you should be more willing to put time, thought, and energy into the business. And when your business is successful, you enjoy maximum sense of accomplishment since you know its success was dependent upon your decisions and your management ability alone.

For more information about this and other forms of business, send for the U.S. Small Business Administration (SBA) Publication MP25; “Selecting the Legal Structure for Your Business.” It outlines the advantages and disadvantages of each legal type of structure. If after reading it you are still uncertain what form of the business should take, consult an attorney.

5. Determine how you will raise startup capital for your home based business

There are three ways to finance small business startup costs: one, use your own money. Two, obtain a small business bank loan and three; find equity investors. If possible; it is better and advisable to start small using your savings; so that you won’t have to worry about repaying a debt. Also bear in mind that you are a home based business owner and the chances of qualifying for a bank loan or finding investors for your home based business are slim until the success of your idea is proven.

6. Conduct feasibility study on your proposed home based business idea

Before ever starting a home based business, it’s advisable you conduct a feasibility study on your business idea to determine its viability and profit potential. Spend a few weeks researching home-based businesses. A library or bookstore can provide numerous books on business basics and on the specific type of business that interest you.

As a recommended reading, I will advice you read the book “Homemade Money” by Barbara Brabee and Rich Dad’s Before You Quit Your Job: 10 Real-Life Lessons Every Entrepreneur Should Know About Building a Multimillion-Dollar Business by Robert Kiyosaki; these are excellent books to start with.

7. Check for zoning restrictions

Find out how your property is zoned; call City Hall and ask what regulations apply to home businesses in that zone. Also, if you rent or live in a condominium, check the lease or homeowner’s association rules to be certain a home business is allowed. Generally, I believe you do not want to annoy your neighbors with excess noise, odors and traffic because these occurrences could prevent you from smoothly running a business at home.

However, you can organize your home based business in such a way that your neighbors will not even be aware of the business; but it is necessary to know exactly what you can and can’t do before you start. This is important should any problems or questions arise later.

8. Pick a good Business Name and register it

If the business you choose is different from your name, file an assumed (or fictitious) name certificate with the county or Corporate Affairs Commission (CAC); depending on your country. You will be notified if another business already has that name; so you can select a new one. Please do this before investing in expensive stationery and brochures. It costs only a few dollars to file but it protects the business name from being used by someone else in the county.

9. write a business plan for your home based business

“A business idea is just another idea. But an idea backed by a strong feasibility, a thorough business plan and a smart business team is no longer an idea. It’s now a solid business opportunity worth pursuing.” – Ajaero Tony Martins

A good business plan clarifies your ideas and establishes a strategic plan of action. A good business plan should include a description of what you are selling, your background and qualifications, who the prospective customers are and where they can be found, what is needed to build the business, how you plan to promote, and how much money is need for start-up costs.

10. Get an Identifying number

If you are the sole proprietor of the business and have no employees, you may either use your Social Security number (SSN) or an Employee Identification Number (EIN) as the business number on official forms. But a sole proprietor in a country like Nigeria doesn’t need this.

If you have employees, or the home based business is set up as a partnership or corporation, you must obtain an EIN. To do this, complete IRS Form SS-4 (Application for Employer Identification Number) and file it with the nearest IRS Center.

11. Obtain a sales tax permit for your home business

If the product or service you sell is taxable, you need a state sales tax permit. Call the local tax agency, explain the type of home business you are engaged in and what you sell; and ask if you need to collect sales tax. If you do, they will send you the necessary information and forms to complete. You can also use this tax number when you purchase items for resale.

12. Obtain licenses and permits for your home based business

It’s very important not to overlook any necessary license or permit. For example, some cities and countries require a general business license, and most have special laws regarding the preparation and sale of food. Call City Hall or your local government council and find out what is needed to kick start your proposed home business. In addition, check the Chamber of Commerce for information on city, county, state and federal licenses and permits.

13. Design a unique business card, stationery and brochures for your home based business

If you are going to design a business card or brochures on your own, then spend time on the color, design and paper for these items. They make a definite good or bad impression on the people who receive them. If you are not certain about what is most suitable and effective for your home business, then outsource your business card and brochure design or consult a graphics designer or a creative printer whose work you like.

14. Open a business checking account for your home based business

Call several banks to find out what services they offer and what minimum balance, if any; must be maintained to avoid paying a service charge. Also ask about credit cards and merchant account services if you plan to offer this convenience to your customers. Bank fees can be significant in the long run, so shop around for the best deal.

If your personal checking account is with a credit union, see if it can also provide a separate business account and when you open your account, you may need to show the assumed name certificate and business license. Finally, investigate obtaining a credit card in the business’s name. If this is not possible, then set aside a personal credit card to use for business expenses.

15. Step up a record keeping system for your home business

Put together a simple and effective bookkeeping system with an 8 1/2 x 11″ three-ring binder, columnar pad sheets and twelve pocket dividers from the office supply store. For each month; set up columnar sheets for income and expenses.

Use a pocket divider for each month’s receipts, bank statement, deposit tickets, and canceled checks. In addition, an automobile log for business mileage and filing system for correspondence, invoices, supplier catalogs, client records, etc are two other useful must have tools for your home business.

16. Check IRS requirements

If you comply with basic IRS guidelines, you can deduct a percentage of normal household expenses (mortgage, interest, taxes, insurance, utilities, repairs, etc.) as a business expense. It is also advisable you become familiar with these IRS forms: Schedule SE (compensation of Social Security Self-Employment Tax) and Schedule 1040 ES (estimated Tax for Individuals). Depending on circumstances, you may have to file them.

17. Outfit or bootstrap the business

Make a list of everything needed to start the business but before you buy anything, look around the house for things you already own that are usable. When you are ready to start making purchases, check the classified ads and garage sales. Both are good, inexpensive sources for office furniture, typewriters, computers, answering machines, etc. But make sure you buy only what is absolutely necessary for start-up, and wait until the business is off the ground to get the extras.

18. Decide on telephone requirements

Call the telephone company to find out the cost of a business phone in your area. If you cannot afford a separate business line, investigate the telephone company’s regulations on using your personal phone in a business. It may be possible to do this if you follow certain guidelines. Keep a record of long distance business calls as they are a deductible expense. Finally, consider the benefits of an answering machine to catch calls when you are out.

19. Check out the post office and UPS

Using a post office box as the business address down plays the fact you are a home-based business owner. It also prevents customers from dropping in at all hours. While looking into box rental, ask for information on the various postal rates, particularly bulk rate; if you plan to do large or specialized mailings. If you mail many packages, check out United Parcel Service (UPS), as it is less expensive than the Post Office.

20. Purchase the necessary insurance

Check with your homeowner’s insurance agent about a rider for your existing policy or the need for a separate business policy. Also make sure you have adequate personal and Product liability coverage. Take time to shop around, as each insurance company has different rules regarding home businesses. To save money on medical insurance, you can join an association and participate in their group plan. One such body is “The National association for the Self-Employed.”

21. Organize the house and yourself

To have more time for business, you must organize and simplify household routines. You can start by holding a garage sale to get rid of unnecessary possessions. Next, have a family conference and divide or delegate household duties, making sure each person does his or her part.

Then set up a planning notebook to keep track of appointments, things to do, calls to make, errands to run, shopping, etc. Finally, set up a work schedule so you won’t get sidetracked by TV, neighbor’s visits, snacking, and telephone calls.

As a final note, these are my 21 easy steps to starting a home based business in 21 days or less. You know, creating and operating a home based business is a wonderful and rewarding challenge. The satisfaction is not only in the money earned, but in doing what makes you happy.