Ohio State University Fact Sheet

Community Development

700 Ackerman Road, Suite 235, Columbus, OH 43202-1578

Starting a Business in Your Home-Is It For You?

CDFS-1126-94

Small Business Series

Starting a business in your home may be rewarding, both personally and financially. The home business can provide an opportunity to expand a hobby or pursue an "idea" that you have been considering.

Before you commit time and resources to your new business, ask yourself:

"What are the pros and cons of taking such a step?"

" What do I need to know and consider before establishing my business?"

"Is a small home business for me?"

First, take a good look at your hobby or idea - remember, not everyone needs your product or service. Developing your business and selling your product or service is hard work and includes disappointments. Would filling orders, working under time constraints and dealing with a variety of customers turn that once exciting business venture into a chore?

Second, take a hard look at yourself. Do you have the qualities that make a good business person?

These qualities include the following:

• self-starter
• good organizational ability
• willingness to give the business your time
• willingness to keep good records
• self-discipline
• like people
• good decision maker
• ability to stick with it, have follow-through

Next, discuss your business idea with your family. It is a rare home business that does not involve all or most members of the family. Business calls come into the home and accurate phone messages must be taken. Deliveries must be made. Many times the work schedule intrudes on the family's schedule. This is especially true on weekends and evenings. How does your family feel?

Pros and Cons

Pros

• Being my own boss
• Working at something I love
• Don't have to pay for child care
• Sense of accomplishment
• Flexible work schedule
• People want my service

Cons

• May upset my family's schedule
• Money at beginning will be inadequate
• May have to buy equipment to make it profitable
• Have interruptions of small children

After making your list, determine if the pros outnumber the cons. One important quality in an entrepreneur is nerve. You need the personal and psychological resources to overcome your "con" list.

Business Considerations

• Is there a market for my product or service-a market that extends beyond my family and close friends?
• Do I have space in my home to conduct the business?
• Have I outlined my financial objectives?
• How important is a profit or loss to me?
• Do I have another source of income while getting started?
• Do I have adequate capital to get started?
• Do I need to invest additional money in my business to make it profitable, i.e., equipment, materials, supplies?
• Have I checked the zoning laws to see if a business such as mine is permitted in my neighborhood?
• Have I contacted an accountant or set up a good record keeping system?
• Have I talked with my insurance agent about coverage for my business?
• Have I talked with my attorney about legal ramifications?
• Have I determined what permits and licenses are required?
• Have I investigated sources of materials and supplies?
• Have I set a realistic and profitable price for my product?

Your Business Plan

• business objectives and goals
• description of your business and its chances for success
• an analysis of the market
• financial data such as capital, income, expenses and profits
• a summary of the management and operation of the business

By making sound decisions, you can enhance the potential of making a successful business from your hobby or idea.