Types of home-based businesses

With the increase in home businesses, more and more people are discovering ways to pursue entrepreneurship with their business headquartered at home.

In today’s world, technology affords us more flexibility in how and where we work. As a result, home-based businesses come in a variety of forms. Some require you to convert a spare room into a mini warehouse for products while others are run completely online. In most cases, you can start your business using your existing space and resources.

What are the pros and cons for making a home-based business?

Most home-based businesses use the home as the base of operations. However, a few businesses, those that sell online and avoid holding lots of inventory, can be run on the go, without the need of a home base. They can be run from a laptop anywhere in the world.

Naturally, there are pros and cons to consider when deciding whether a home-based business is right for you.

Pros:

A low-investment business has fewer overhead costs.
The option to sell products or services locally or internationally.
Flexible work-life balance, which is ideal if, for example, you are a stay-at-home parent.
You can create a family business where your relations or your partner/spouse can chip in as needed.

Cons:

You may need to convert space in your home to support the needs of your business, such as holding inventory, creating a home office, or storing equipment. The challenge can be doing this without disrupting your life at home.
You still must comply with any regulations that pertain to the business you want to start. For example, you may need to rent a commercial kitchen if you plan to sell food products or a licence/permit to hold inventory.
Your business may outgrow your home and require you to rent additional space and hire employees.
Working from home offers you a lot of freedom, but it can also be lonely. You might find this difficult if you enjoy being around other people.

While there are plenty of ways to go about starting a home-based business, the following examples are some of the most approachable paths to create a home business for yourself.

1. Buy products in bulk and sell them online

Many businesses focus on the simple concept of importing products in bulk and selling them individually for a profit.

Maybe you recently travelled abroad and came across unique products that are not readily available in your market and, you sensed an appetite for them. Possibly, you have zeroed in on a niche market and know the perfect way to serve it. Either way, if these products are relatively easy to show and ship, you may have some solid home-based business ideas on your hands.

You can even initially use your home as a showroom to sell locally, giving you the option to expand with additional storage space and employees as you validate your idea and sales start to ramp up.

2. Sell homemade products

If you are a maker yourself, consider turning that hobby into a business. Even if you have to create your products elsewhere, such as in a studio, commercial kitchen, or workshop, you may be able to store and sell them in your own home.

When you have gained control over nearly every aspect of the products you sell, you can make them more cost effective. Look for ways to improve their quality and aim to cater for a certain audience and target demand in the market.

Whether you choose to start using an established marketplace, like Etsy, or build your own branded store front, selling your creations is a great way to share your passion with others and make money. Just be wary of safety regulations, such as those for children, those concerning products that customers ingest or put on their skin and food allergies.

Best of all, producing your own products does not have to be overwhelming. When you are ready to expand, you can establish a process and recruit new employees to help with production.

3. Start a dropshipping store

A variety of home-based businesses move away from the need to hold inventory in your home. This reduces the worry of inventory and shipping.

These businesses employ a dropshipping model. Put simply, a third party produces, stores, and ships your products on your behalf, leaving you with the responsibilities of marketing and customer service.

Your dropshipping supplier can be local or overseas. It is essential to find a supplier you can trust to deliver a consistently great customer experience after the sale. Always check diligently on the services of your supplier to avoid putting the reputation of your business at risk.

At its core, dropshipping involves becoming a distributor of a third party’s products, taking on the costs (both financial and time-based) of marketing to be rewarded with the margins when you make a sale. In many cases, this can make your products a commodity with limited opportunity for you to brand your customer experience. Luckily, there are a few different ways you can still compete, even when there is no shortage of your products in the market. Here are four useful tips:

Locate products from different suppliers to create a store that serves a specific niche.
Compete through strong quality content and close customer service, creating value beyond your products.
Target an underserved region of the world. (Be sure to pay attention to your shipping costs.)
Target a different audience with the same products. For example, LED shoes can be marketed to music festival goers or runners.

4. Affiliate marketing

Affiliate marketing is where you promote other people's products online and earn a commission for every sale or lead that you generate.

It's a performance-based marketing model, which means that you only get paid when you successfully promote and sell a product.

How it works:

- You sign up as an affiliate for a product or service.
- You get a unique affiliate link that tracks all the sales or leads you generate.
- You promote the product or service using your affiliate link through various marketing channels.
- When someone clicks on your affiliate link and makes a purchase or signs up for a service, you earn a commission. .

Commission rates vary from company to company, but you can expect somewhere between 30%-50% for digital products and 5-10% for physical products.

5. Grow an audience that will provide the income you need

Have you already created your content based marketing sites and gained a sizeable audience? Or have you always thought about starting your own blog, YouTube channel, Instagram account, or podcast? Aim your content and efforts at the niche you have chosen. Widening your network will potentially increase your following as well as your income.

You can increase your audience by exploring how to become an affiliate. This entails selling products or services for a commission or accepting payment for sponsored posts to give more brands a chance to connect with your audience.

Building a loyal audience is essential to success and requires patience, consistency, and focus. This is not the easiest part of starting a home-based business, especially in the short-term. However, success reaps benefits as securing a keen following around something you love is very fulfilling. Enduring support provides you with the flexibility to pursue multiple revenue streams at once.

Find a home business idea that works best for you

The best home business really depends on your goals and current situation. Do you want a strong work-life balance, perhaps as a stay at home mum, or do you want to hustle to achieve success quickly? Are you looking to boost your pension income? How much capital do you have to start up? What skills are already in your arsenal that you can tap into?

A home-based business in today’s world is simply a remote-friendly business where technology can close the gap between you, your suppliers, your employees, and your customers. Altogether, a home business provides an opportunity to start small, grow nimbly, and invest conservatively, especially when you can cut out the costs of travel and renting an office.

As you would when starting any type of business, think carefully about your goals. What motivates you? Consider what you enjoy working on and create a home business that works for you.