Welcome to Business Week at I Love Making Money. Every 90 days, we dive into helping you start a business from the name to the structure and setup to the tools and resources to help you start making money fast. We're now heading into 2023 with uncertainty in jobs and the stock market so it's important that we start something that will eventually replace our “job”.
Some of the legendary companies today all started in garages. Steve Jobs and Steve Wozniak started Apple in the garage of Steve Jobs' childhood home. Google founders Larry Page and Sergey Brin rented a garage in Menlo Park in 1998. The now head of YouTube actually rented out her garage for $1700 per month to the heads of Google. Bill Hewlett and David Packard founded HP in Packard's garage which is now designated a historic site. Even Bill Gates and Paul Allen worked out of their garage in Albuquerque, NM.
Every day more people are looking to become financially independent, whether it be from quitting an existing career or building a side hustle to help meet financial goals faster. This article is part of my “How to Start a Business” series, focusing today on how to get a small business up and running from the comfort of your own garage.
Let's get started…
How to Come Up with the Home Business Idea
Coming up with the business idea can lead to paralysis. There are so many options that sound good on paper, but how do we come up with a successful idea and run with it. The easiest place to come up with the idea is through your own experiences.
4 Steps to Create New Business Idea
You can come up with a new idea with these four simple steps.
- Analyze Your Own Problems
- List Your Current Stengths
- Match Your Current Skills to a Specific Niche
- Match Your Skills with Your Strengths to a Specific Business
When I first started, I had a hard time finding people who could build a professional website. That problem kept coming up every day, every week. So I started tinkering with WordPress and installing blogs. I became so good at installing blogs and solving WordPress issues that it became a tool that I could use to make money.
List Your Current Skills
Then, you want to list your current skills.
- Can you write blog posts?
- Can you create email campaigns?
- Maybe you like renovating houses?
- Perhaps you're great at landscaping?
- Are you great at fixing bicycles?
- Maybe you're into cars and street racing?
I want you to list all your skills without judgement, without critiquing ANY skill. For me, I circled the skills that matched my ideal lifestyle. Personally, I wanted to work from home using the four hour workday vision.
Match Your Skills with Your Lifestyle
So what skills match your ideal lifestyle? I can write blog posts like this one. I can create email campaigns. I can install WordPress. I can help people advertise their websites. I can help people create advertising campaigns on Facebook. I can help people create lead magnets. I can help people with their landing pages and sales funnels. The list goes on and on.
Now, the key to all of this is to match what you're good at with the skills above because when you're good at something, then growing the business and working in the business will become easy.
Now that you have your ideal skillset matched with a business idea, let's start mixing it up to create an ideal business. For example, if you are a videographer with a passion for real-estate, you could start a drone real estate business. You create an offer for real estate professionals to enhance listings with drone videos of each property, and this idea is evergreen. It will be around as long as houses need to be sold.
Meet Your Ideal Customer for Your New Business Idea
Once you know what you want to offer, I want you to list out every characteristic of your target market. If you're selling multiple products and services, you will create TWO different lists. These will become your customer personas.
Creating a Customer Persona
Now, take the lists of your customer persona, and let's create a very specific customer profile. List out every detail about your customer:
- Describe Your Customer
- Demographics
- Personality
- Problems
- Pain Points
- Objectives
One of the best practices you can do for this activity is to design your perfect customer, because you'll use this customer persona in your business plan.
Related: How to Create a Business Plan
How to Define Your Ideal Customer
Knowing YOUR customer will allow you to talk directly to them, solve their problems, use their lingo, and understand WHY they are buying from you.
Making your perfect customer as three-dimensional as possible makes it easy to then to target YOUR market. Give them a name, hobbies, other brands they would also likely shop with.
Here are some questions to get you thinking:
Questions to Ask About Your Ideal Customer
- Where do they live?
- Are they married?
- Do they have children? How many and what are their ages?
- What are their professional titles and what company would they work for?
- How often do they like to vacation, and where?
- What’s their socio-economic status? Do they struggle financially?
- How many hours per week do they work? Do they have multiple jobs?
- What are their top 3 hobbies or activities when they aren’t working?
- What problems do they have now?
- Where do they vacation (or want to vacation to)?
Once you can answer enough questions about your perfect customer, to the point you could design an entire life for them: you can finally finish. The purpose of this exercise is to understand your audience so you can talk to them, talk about their problems, talk about solving their problems while getting YOUR content in front of them.
Research Your Competitors
I don't like using the word “competitors” anymore. Every partner, every brand and every person within your niche is a chance to partner up and generate business for both of you.
Here are ten ways to conduct research on your competitiors:
- Google Search
- Google Ads / Facebook Ads
- Watch Social Media Posts
- Attend Events, Seminars and Conferences
- Ask Suppliers for Volume Orders
- Watch for New Hires
- Search Patent and Trademark Filings
- Become a Partner
And I mean that. Call them up, form relationships with your competitors and see what's the best way to work together.
How Are You Different from Your Competition
Now that you have a strong outline of your business as well as the market you aim to operate within, you now have to create a Unique Value Preposition.
This is the promise. What is the primary reason people should buy from you? This is how you set yourself apart from your competition, and it comes with a nice equation to help you.
What your customer needs and care about…
PLUS
What you do really well…
MINUS
What your competition does well…
EQUALS
Your unique value proposition…
This statement is the first statement on your website. If you go to every website, the home page should tell you in one sentence how you solve your customer's needs.
Unique Value Proposition Formula
This is a simple copywriting formula that I learned about 15 years ago. It looks like this:
Headline – You start with the end result you're offering and put that in one short sentence. This is the attention grabbing, problem solving, outcome-focused short sentence.
Then, beneath the headline is a 2-3 sentence paragraph. This explains what you do and why it's useful. Very easy.
Next, create a bullet point with features / benefits.
Then, tie is all together with a visual of the product or the hero shot.
Unique Value Proposition Examples
Here are a few UVP's where people land on your home page and know exactly if it's right for them based on the copy formula above.
- IncFile – The Easiest Ways to Start Your Business
If you're starting your business and you land on this page, it'll be an exact match.
- Business Formation
- For as Little as $0.
- The fastest and easiest way to start a business.
- No Contracts
- No Hidden Fees
Click Here to View IncFile's Landing Page
2. Legal Zoom's Business Plan NonDisclosure Agreement
If you're pitching investors and worried about disclosure agreements, then Legal Zoom has the perfect landing page.
- Make a Business Plan
- NonDisclosure Agreement
- in Minutes
- View Sample
- Create Now
3. M1 Finance – Invest, Borrrow and Spend All in One Place
This is a great example of how new technology can solve problems fast. And each word is perfectly crafted to reach their target audience.
- Invest
- Borrow
- Spend
- All in one place
- You set the strategy
- Automate It
- Free
MVP Your New Business Idea
@thebusinesskid Let’s talk how I can buy your product or service right now! ##biz ##edutok ##mvp ##minimalviableproducts
♬ original sound – ILoveMakingMoney
MVP stands for minimal viable product. What is the minimum you can do to get your product and service out the door, up and running and collecting money. DO THIS FIRST!
For most people I talk to, they come out of that gate with:
I have this amazing, wonderful idea for a business. I found the rent space. I got the desks. I bought the supplies. I got my business cards. I bought the cute kitchen set for breaks. I have the furniture.
I simply ask: How much money have you made?
There's a pause. How much volume of business do you have? What is the total amount of sales? Where is the money? And it becomes the same scene over and over again.
Launch doing the minimum and then, when something hits – you work like hell to catch up to it and expand that. Tweet that!
Launch doing the minimum and then, when something hits – you work like hell to catch up to it and expand that. Click To TweetSoft Launch into Success
Doing a soft launch of your business is a great way to get initial consumer feedback, develop estimates for operating costs as well as sales of your product, and determine the level of time you’ll need to invest to get the business going. It’s at this stage that you prototype your product and begin offering your items to market at varying price points.
If you plan to sell a physical product that cannot be purchased from an existing manufacturer, take advantage of this phase and start a Kickstarter campaign. Crowdfunding your startup costs for initial fabrication and production is a great way to determine if there's an audience interested in your product enough to buy into having it become real. Using community funds to launch your business also helps develop a fan base before launching.
For those who want to sell a product, they make by hand or can be purchased wholesale and resold, use thing time to find a small test-audience. Where crowdfunding wants as many people as possible to see their idea, those with a product ready to test need to start small and gather data.
Offer your product or service for free to a few customers. Have them use your product and write a review for you on what they liked as well as didn’t like about the item. If you’re offering a service, give clients a chance to use your expertise for free in trade for a testimonial as well as your ability to put your results into a portfolio of work. Be sure to ask them how much they would be willing to pay for the product if they had to buy it from the shelf.
If you can't afford to offer a product or services for free, offer a steep discount or sell the product as-cost. Be sure to ask this test audience not only about their impression of what you're offering but also how much they would be willing to spend on the product in the future too. Using this opportunity to determine the value of your product to your customers will make it easier for you to know how to price your products going forward.
Consider Your Goals for Your Business versus Your Lifestyle
Before moving to your business structure, I want you to think about the kind of lifestyle you want and match that with your business structure. Consider three different factors: Flexibility, Complexity, and Liability.
If the goal of your small business is to work a few hours a week on creating a product to sell on Esty you would need a very different structure than opening a full-time business from home in which you may need to hire staff in the future to help grow your business.
You can always incorporate it in the future. It is also much easier to add layers of complexity to your business than it is to try to remove them as you go. If you're just testing the waters with your idea, there’s nothing wrong with starting as a sole proprietor and then expanding from there should you want to scale your business.
Think about what you want the goals of your business to be. Ask yourself questions like these:
- How much money do you want to make per month?
- How much time do you want to spend working each week?
- Will you need any help to manage the workload?
- What’s the maximum level of production you can reasonably complete?
Knowing answers to the scale of the business you’re wanting to start helps you put some stakes in the ground as to what your initial plan needs to be. If you’re only looking to work 5 hours a week on your small business you most likely don't need to incorporate. If instead, you want this to be your full-time income making tens or hundreds of thousands of dollars per year, you would probably benefit from the tax structure of a formalized corporation.
Make It Official
Depending on your type of business, you may need to register with the state as a business. While many will prefer to set their business as a sole proprietorship, you may need to incorporate to protect you from legal liabilities.
There are several different types of businesses, but below are the most common operations for small businesses:
- Sole Proprietorship
- Partnership
- Limited Liability Corporations
- Corporation
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Quickly breaking each of these down, you’ll want to review each structure and determine which makes the most sense for your personal operation.
A Sole Proprietorship is as simple as it gets.
By being the only owner of your business, you control all aspects of it. You don't have to do any additional paperwork to establish this type of company, and you report all money earned or spent on a Schedule-C form on your income taxes. You won't have to pay separate business taxes, you can take advantage of some self-employed tax deductions, and you can quit your business at any time. Most freelancers operate as a sole proprietorship.
A Partnership Versus Sole Proprietorship
The most obvious difference between partnership and sole proprietorship is the number of owners. Sole means one owner – you. A partnership is a entity with at least two owners.
- All owners are held liable.
- 80% of all partnerships fail.
- Partners share the profits.
- Partners share the losses.
The ability to set up a partnership is just as simple as a sole proprietorship, but you will want to leverage a lawyer or online business set-up service, such as LegalZoom, to ensure split ownership of your business is clearly documented.
This does have additional tax forms you’ll have to submit each year, but you’ll also be more likely to secure startup funding from a bank or business loan by having a partner applying with you.
Limited Liability Companies (LLCs) are a great option if you need to separate your personal income from your business income.
Starting an LLC is more involved than the other options previously mentioned, but they are worth the extra effort if you will be offering a service rather than a product.
- Easy to Setup.
- Easy to Raise Capital from Investors.
- Tax advantages.
- Liability protection
I fully recommend leveraging a lawyer or other business-establishment service to help complete the necessary paperwork. Our partners at Incfile will help you setup your LLC for $0 and answer any of your business questions. Click Here for Details
In an LLC, any work you do will be legally separated from you as an individual person. That’s a great perk for someone looking to protect their existing assets of other income streams while also starting a new business at home.
Corporations are the most complicated ways to start a small business from home.
If you're starting small, a full corporation most likely won't be the best option for you. While there are some benefits in the forms of taxation, business ownership, and the ability to sell shares of the company through stocks, the effort to track and report your business as a corporation is not a small undertaking. Only if you're someone already financially savvy in the business industry you're entering, or you can afford to hire an accountant to help manage your books and tax liabilities should you start with a corporation.
There are multiple types of corporations, with the most common being C-Corps and S-Corps. The differences between these types and others all come down to how they’re taxed. If none of the other options discussed above seem to fit for you, research beyond this article to get the nitty-gritty details on the differences between each to determine which is best for your small business.
Nail Down the Details
Once you have an idea for your business, prices you want to charge, and have an idea of the scale of your operation: it’s time to make a budget.
Consider initial costs you may need, as well as gather estimates for any recurring costs or supplies needed. If you don’t already own the things you need to run your business, you can purchase them and use them as a deduction on your taxes. This means you always need to keep a detailed record of purchases as well as receipts.
Some common starting expenses may be:
- Computer, printer, and desk setup
- Internet access and a work-only telephone
- Materials for products if selling handmade goods
- Camera and editing software for posting pictures of products
- Website development and hosting if necessary
Keep in mind, do not skip over MVP and go straight to buying things. That's one of the biggest reasons businesses fail. I've seen it far too many times and I've heard far too many excuses like “you gotta spend money to make money”. Yes, so what is the least amount you can do to launch. Do that first!
Not all of these things are needed to start a business. If you’re looking to offer consulting services, you can get started with a free email address, and use your phone or computer to set up a Facebook business page! That's enough to get started and connect with new clients until you can prove your business is viable enough to upgrade to phones, websites, or professional content creation.
Let’s return to the Esty shop. Maybe you want to sell one-of-a-kind custom greeting cards. You'll need the internet to connect to Etsy, and you'll need a computer or smartphone to manage your storefront. Etsy also charges fees for each product you list on your site. To make your cards you’ll need cardstock, markers, scissors, maybe stickers or stamps or glitters. You may want to purchase a crafting machine that can design custom pieces to include in your cards.
All of those expenses need to be included in your start-up costs, as well as an estimate on any recurring costs for supplies. Saving all of the documentation you can from these purchases will help when tax-season happens as you will be able to deduct all of these expenses from the gross profits from your greeting cards, overall reducing your tax liability.
Create Pricing Structure that Makes Sense
Creating a pricing structure that is scalable or that is profitable is one of the challenges many businesses face. For example, if you're a life coach – you may think that charging $100 per hour is a rewarding rate. But what if you charged a monthly fee and created a “group” coaching program where you are coaching 100 people instead of just one.
For example, if you had one client paying $100 per hour – you made $100. If you had 100 clients paying $100 per month – you made $10,000. Same amount of work involved on your end, way more profit and lifestyle on the backend.
But what about people who want one on one? Those may not be your market OR those people who are willing to pay your new price of $10,000 per hour since that's what you're making with your one hour of work.
Register an EIN for Your Business
Once you have setup your structure, you can register an identification number for your business. Click here to register an EIN for your business. You'll need this number when you open up any bank accounts, lines of credit, brand sponsorships and merchant accounts.
Then, you'll take your registration paperwork and your EIN to open up your business checking account. Most of this can be done online as well.
Get Funding for Your Business
Remember the MVP – always launch your business / product / service at the lowest possible cost to prove the concept first. If you're business takes off and you need additional funding, there are many ways to get funding after the launch.
The top ways to get funding for your business.
- Friends and Family
- SBA Loans
- Govt Resources
- Lines of Credit
- Home Equity Loan
- Crowdfunding
- ROBS
- Microloans
- Credit Cards
- Angel Investors
- VC Money
- Grants
I've created this exhaustive list of all funding available for your business. Click here if you need funding ideas.
Market, Advertise, Connect
Now, it's time to build your audience & connect with your audience. Platforms come along like Tiktok that showcase your journey, your backstory, your processes that quickly build your audience (your customers). We are now sitting at 400,000 in our TikTok with just a few posts per week.
I approach every situation with an open mind. Every single DM or contact is a question and concern that can direct us to create additional training, form additional partnerships and steer the direction. Also, we try to create the brand I Love Making Money and create an identity that you matches from platform to platform.
BRANDING! You want your audience to start recognizing your logo and look no matter where they see it.
Leverage social media as your first marketing program. You can create business pages for free across platforms, including Tiktok, Snapchat, Pinterest, Instagram, Facebook and LinkedIn.
These are the major players in social media. If you're launching a business to sell handmade products, you may also want to develop a business profile on Pinterest to help spread your creations across the internet.
And then, you can start building a website like this one and start building a list to email your customers / visitors special offers and updates. Remember, none of this takes a lot of money. Aweber and Convertkit allow you to get started at no cost and start a list for free up to 500 or 1,000 subscribers.
See Our Aweber Review
See Our ConvertKit Review
Take Advantage of the Online Tools to Help Your Grow Your Business
One of the biggest mistakes I made was ignoring the tools that shortcut the process. I always wanted to get my programmers involved and build out something huge when a simple 30-second plugin was the solution. If I could go back in time, I would tell my beginning self to just plug into the ready to go tools and sell on platforms that fit my business model.
I don't need to create the next Amazon for my business when I can sell on THOSE platforms faster and make way more money. Take advantage of the tools that are out there. These tools have helped me grow my business over the years.
- Website Hosting
- Complete CRM with Landing Pages and Order Forms
- Email Newsletter
- Clickfunnels – Done for You Sales Funnels
- Wix for Appointment Businesses
- Evergreen Presentations and Webinars
- Free Online Course Platform
- SEO Keyword, Competitor and Audience Research
Final Steps
Now that you've read through this article, here's the to-do list you need to tackle to make your small home-based business a success
- Determine your business based around your lifestyle goals.
- Define your customer to understand what problems you're solving.
- Analyze your competition to get ideas on your own offerings.
- Identify potential partner companies to create joint ventures.
- Complete market research to identify the need.
- Set your business goals & draft a business plan to match.
- Make it all legal with formation and registrations.
- Set up your finances and separate accounts.
- Launch your business by connecting with your audience.
- Market and stay consistent every week.
That ten-step list may feel like a long way away from completion, but every business owner has had to work through these same steps. Nothing decided here is set in stone forever, but instead is just the first foundation for you to build from as you continue to grow.
To succeed at business, set a consistent way to stay engaged with your audience. Set the expectations upfront so they'll know what to expect each week. And then, direct them when you have sales and special offers.
A Little Encouragement
Starting your own small business from home is not a simple task. It requires hours of thought, planning, and a willingness to take a risk. Your first iteration may fail, but that’s okay. The luxury of starting small and starting from home is that you have the privacy you need to develop your idea until it’s ready for the world.
Don't compare your chapter one to someone else's chapter 23. This is my 12th iteration of I Love Making Money, and each month I plan my training weeks out and give it a slight design tweak to freshen up the look.
Your home-based business can be as large or as small as you want to make it. Set your prices at what you believe the market can bear and get creative with the offering (i.e. like the group coaching idea).
You set your own hours, your own products, your own brand. You are in control of every aspect of your business, so take the time to enjoy the process along the way.
Learn More
If you want to learn more about starting your own business, check out the other articles within this series. I cover other aspects of running a small business that you’d find helpful as you continue researching your own ideas.
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How to Apply for a Free EIN for Your Business
How to File a DBA
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