The dream of business ownership is as American as apple pie. That being said, it takes more than a marketable skill, idea or even exemplary work ethic to make starting a business a realistic endeavor.

E-Commerce, a Franchise or Something Else Altogether?

Starting a business online can be a money-saving approach to the home office idea. E-commerce requires setting up a website, registering its domain name, working with a company that hosts the site and perhaps also builds or designs it. In order for e-commerce ventures to be successful, it is crucial that the entrepreneur becomes well-versed with the various means for accepting payments, inviting consumer comments and also providing a web surfing experience that has the would-be customer come back time and again.

A franchise, on the other hand, makes starting a business a bit simpler from the vantage point of buying into an already working business idea. The downside to this approach is the need for an up-front investment, limited personalization opportunities and also ongoing fees and revenue sharing models that can result in larger initial expenditures when revenues are still low. This kind of business is best for the entrepreneur with some seed capital he is not afraid to spend.

Market Research

No matter which form of business appeals most to the would-be entrepreneur, market research is an essential task that helps gauge the likelihood of success. For example, a potential franchise should be evaluated with respect to market saturation. Prior to buying into a fast food enterprise, consider the number of competitors in a five-mile radius, determine the number of fast food business failures during the last 12 months and also evaluate if there is a need for an additional business of that nature. While three fast food restaurants may be easily sustained in a mostly residential and slightly commercial setting, four businesses may not be able to thrive.

Writing a Business Plan

Starting a business requires writing a business plan. Even if funding is not an issue and there is no need to present a lender with the document, it is essential for defining the scope of the business, setting the tone with a vision statement and also being honest with an economic assessment. Moreover, drafting a business plan helps to identify niches that the entrepreneur might serve, areas into which he may choose to branch out and also aspects of the business that require financing.

Licenses, Permits and Zoning Laws

Prior to setting up a home as a base of operations, consider if local zoning laws, homeowner associations or community covenants prohibit the establishment of a commercial enterprise within a residence. Generally speaking, homeowners associations only grant exceptions to daycare or e-commerce businesses. On the flipside, even if there are no neighborhood restrictions, remember that the local zoning authority may still prohibit the usage of signage.

Investigate further which local licenses and permits must be in place before the open the doors. In some cases, there is also the need for state or even federal permits. Some permits require an inspection of the premises and follow up appointments; this is frequently the case with home catering businesses or those that provide care for the elderly or for children. Starting a business that specializes in the sale of goods necessitates the use of a seller’s permit. Remember that this is tied to local sales tax laws and withholding – and paying – sales tax is a must.

Business Insurance

Starting a business in a location other than a home makes it easy to recognize the need for an insurance policy that not only covers the business but also the clientele. When it is an e-commerce or home business, this need is not as readily apparent. Some freshly-minted entrepreneurs believe that their homeowners’ insurance coverage holds them harmless if clients or customers are harmed.

This is generally not the case. Business property insurance, liability insurance and in some cases even insurance against malpractice are a must for the new business owners. It is also true that some homeowners’ insurance policies specifically exclude businesses from coverage, which make the loss of a computer and peripherals used for that purpose also the end of the business venture.

Financing the Business, Marketing, Employees or Contractors?

Financing concerns are generally discussed with lenders or small-time investors. In some cases, family members may become silent partners by heavily investing in the initial phases of the business. Marketing efforts depend on the kind of business the entrepreneur starts up; a strong online presence is a must, no matter what kind of venture the business owner decides on. Last but not least, consider how hired help is treated; contractors are independent and assist the new business owner grow the venture without actually requiring protection under current labor laws.