Starting a business from home? You can get set up pretty quickly, but it’s worth doing some planning.
From the big idea itself to building a list of businesses to run from home, plus specific taxes and insurance, proper planning should help you build a really successful home business. Read our guide to businesses you can run from home, and don’t forget to sort out your specific home business insurance, too.
From online business ideas to practising as a therapist in your own home – you know you want to set up a home business, but are you settled on your product or service? And what’s the easiest business to start?
Lots of people end up diversifying and offering a couple of different things, but when you’re starting out, it’s best to keep your plans simple.
Whether you want to turn your current job into a freelance service – from accountancy to childminding – or set up in a completely different line of work, there are hundreds of home business ideas with low start-up costs.
The question is, what are you good at, and can it generate an income? If the answer’s yes, you have the beginnings of a business plan. See how to develop it below.
Knowing your product inside-out will give your business a solid starting point. Maybe you’re planning to set up as an acupuncturist, or you’re turning your tech expertise into a website consultancy.
Whatever your products and services, your business idea will need thorough market research to succeed. A great place to start is with your local competition, or similar business set-ups.
On the one hand, you’re going to be competing for local business and customers. On the other, you can learn a lot from successful business set-ups, and there’s often potential for collaborations and joint-projects – and maybe even referrals.
Spend some time researching your target customers – are they local, or mostly online? Where are they likely to see your advertising? What sort of prices will work for them? Once you’re clued up, build a list of the businesses currently serving their needs and get a feel for what they’re doing right. Can you approach a couple of owners and tap into their experience? They may have a long waiting list for their services, and be happy to pass on advice and referrals.
For example, you might be setting up a home business as a violin teacher, and live nearby to someone teaching flute. Their advice could be invaluable, with lots of potential for exchanging referrals.
Every business evolves as it grows, but nailing down a plan of your own business ideas, target customers, competitors and skillset is a must, before you commit time and money.
Even if you’re planning to set up your business without any support or financial input, having a business plan keeps you focused, and helps you plot a few milestones. It’s also handy if you’re looking to get funding down the line, and need a document that puts your business into a few simple words.
You don’t need a sophisticated Dragon’s Den-style presentation, just a straightforward plan that includes the basics for driving success. Include these five sections and revisit them over time, tweaking your plans as your business develops:
This can be a quick summary of your business idea, who your customers are, how you’ll drive business and the milestones you’re looking to hit.
A bit of detail around your potential customers, the gap in the market you’re looking to plug and where your competitors are at.
Give an overview of who’s involved in running your business or providing services (even if it’s just you) and a complete list of the services, products and/or packages you offer, with their up-to-date price.
This section gives details of how your business will run, day-to-day. You’re setting up at home, but which room will you be based in? If customers will be visiting, how will you separate home and work life? Will people be waiting in your living room, for example? If you’ll be making products to sell, will you need a separate, dedicated space?
Include everything from your home business set-up and insurance details to marketing plans and any qualifications you need to work towards.
You might also want to include plans for hiring an accountant, or carry out research into the best business bank accounts.
Set out your current financial position, even if that’s just your own savings or account balance and a financial goal for your first month of business.
In time, this section might develop into more detailed financial projections. But the key thing is to know how much money you have to put into your business, and how to make it viable. This might be simpler if you’re planning to hold on to your regular job (with its dependable salary) alongside your own home business plans, but less certain if you’re handing in your notice and setting up as a sole trader.
This all depends on what sort of business you’re setting up in your home. Most won’t require big structural changes, but you might need to factor in planning permission, or at least think about notifying your neighbours. Here are the key things to factor in to your planning, when setting up a business from home:
If your home is going to remain pretty-much as it is now, with your business ‘quietly accommodated within it’, government guidance states planning permission shouldn’t be required.
Planning permission requirements kick in when your home is no longer used mainly as a private residence, or you have a marked rise in traffic, with customers coming in and out. You’ll definitely need to investigate planning permission if you’re located in a residential area and any of your activities may cause disturbance – from noise and car parking practicalities to things like cooking smells and rubbish disposal.
Not sure which category your home business falls into? Gov.uk can point you in the right direction to check with your local planning authority.
It shouldn’t mean any change in your mortgage repayments, but the government guidance advises you to let your mortgage provider know if your home is going to accommodate a business.
Whether it’s a whole new policy or just a tweak to your existing insurance, it’s a good idea to get clear on your responsibilities and options. A tailored home business insurance policy is quick to set up, and keeps you covered against the risks unique to your new venture.
You can read more about this in the section on home business insurance below.
If it’s just you working from a laptop, this won’t be so important. But if you’re expecting customers to visit you at home, or you’re going to be preparing food, for example, health and safety checks will be part of your venture. For the basics, take a look at the Health & Safety Executive’s website.
If you operate in the business-to-business space, potential clients may be wary of dealing with a service provider who doesn't have a professional business address. Equally, if you're a tenant in your current home, you may not be in a position to register your business at that address.
In either case you might want to consider signing up for a virtual office space.
Even if you're free to register your business at your home, using a virtual office address can save you the hassle of having to update your correspondence details with the bank, HMRC, on your marketing materials – and the list goes on – every time you move.
They could be the key to your success or failure, so keep your neighbours on side. Let everybody know well in advance what you’re doing, especially if you’ll be getting lots of visitors or deliveries, or your business may cause some disturbance.
What might seem inconsequential to you could be a big deal for one or two of your neighbours, from the sound of trumpet practice to a van obscuring their view. Explain up-front that you’ll try to keep disturbance to a minimum, and keep that promise.
If you do expect an increase in noise or any other disruption, let your neighbours know. Listen to their concerns, do your best to address them and if all else fails, pop round with a bottle of wine once the dust has settled.
Insurance for a home business will be a must, depending on what sort of set-up you have, and your unique products and services. You’ll be guided through a tailored application, but the main covers you’ll need to think about are:
Many home business insurance policies will include this as standard. Public liability insurance is important if customers will be visiting you at home – it protects you if someone is injured or their property is damaged because of your business.
Quick example: you’re running your hairdressing business from home, and have just cleaned the floor before a client arrives. The client slips on the wet floor and injures their hip. Public liability could cover the resulting legal fees and compensation costs, up to the policy limit.
This one protects you against claims for personal injury or property damage caused by products and goods you’ve designed, sold or supplied. A specialist home business insurance policy will give you the option to include it, and remember, you may still be liable for a claim, even if you didn’t make the product.
Quick example: you’re making and selling children’s toys at home, and a faulty one causes an injury. Product liability insurance could cover a resulting claim.
From accountants and IT consultants to copywriters and designers, professional indemnity insurance is relevant to home businesses who offer services and knowledge, and process information. It protects you if a claim is made against you for negligence or error.
Quick example: your home-based accountancy business receives a new data file from a client. When sending on the data, you accidentally copy the wrong person into an email and your client sues you for breach of confidentiality. Professional indemnity insurance could pay the compensation costs, as well as your legal expenses.
If you employ anybody as part of your home business, employers' liability insurance is almost always a legal requirement. In fact, most employers must have at least £5 million of employers’ liability cover, or risk a fine of up to £2,500 per day.
Quick example: you take on your first employee to work for your home-based carpentry business. Whilst using specialist machinery, they’re injured and make a claim against you. Employers' liability insurance could cover the claim, along with the legal costs involved.
These are some of the basics, but you’d probably also want to look into business interruption insurance, stock insurance, contents insurance, vehicle insurance and check your existing buildings insurance, to make sure it covers you correctly.
Every new UK business needs to contact and register with HMRC. If you’re setting up as a limited company, you’ll also need to inform Companies House (on the other hand, if you’re just planning to work as a self-employed sole trader, you can skip informing Companies House and the additional admin that comes with it).
Not sure which business structure is right for you? Read our guide to the differences between sole traders and limited companies to get the ball rolling.
Businesses turning over £85,000 or more, or who are close to this threshold, must be registered for VAT. You can put this in motion voluntarily any time – our VAT – is it right for my business? guide is a good place to start if you’re thinking about VAT registration, or aren’t sure what applies to you.
If you’re running your home business from your kitchen table or a desk in the corner, you probably won’t be subject to business rates. But if you’re working in a room that’s used exclusively for non-domestic activities, for example a workshop or therapy practice room, business rates charges may start to apply. Check gov.uk's business rates guidance to see what applies to you.
From trade marks and patents, to copywright and design protection, depending on your business you’ll want to make sure your intellectual property and unique name, brand and inventions are protected. Read our intellectual property law for small businesses guide for more.
What’s the easiest business to start in the UK? Let us know in the comments.
12 August 2015 • 2-minute read
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