Are you legally allowed to run a business from home?

[sc name="pod_ad"]By this point in the Definitive Guide To Starting A Home-Based Design Business series, you’ve determined that you want to start a home-based design business, you’ve written your business plan, and you’ve figured out your workspace situation at home. If you haven’t done any of that, go back and listen to Part One and Part Two of this series.

Now that the ball is rolling, and you’ve figured out precisely what you want to do and how to go about getting it all started, it might be a good time to see if you are allowed to run a business from home.

Legal restrictions.

Are there any restrictions that may prevent you from starting your home-based design business? Depending on where you live, there may be certain rules and regulations in place dictating what is allowed and what is not allowed when it comes to home-based businesses.

Some municipalities and communities require all home-based businesses to have a business license. Some require a home occupation permit, and some may require a regulatory license depending on the business model. Contact your local government to see what licenses and permits your business requires.

These licenses and permits cost money and, in some cases, may take time before they are approved. Some of them are one-time fees, while others must be renewed on an annual basis. All permits and licenses are tax-deductible as a business expense.

On top of the licenses and permits, you must check if there are any municipal or even neighbourhood by-laws that may prevent you from running a home-based business. For example, the neighbourhood I live in has a by-law preventing me from seeing clients regularly in my home.

Something else to look into is whether or not you might require license and permits from nearby municipalities. For example, if you live in one municipality but regularly commute to a nearby municipality to do business, you may require a license in both places.

No employees.

Many municipalities have by-laws prohibiting home-based businesses from having employees other than family members residing in the home. In most cases, this won’t be a problem for a home-based design business. However, if you are starting as a partnership or want to hire a salesperson or anybody else, you may not be allowed to depending on where you live.

I suggest you contact your local municipality to find out exactly what you need to run your business in your area legally. You can also contact your local business center and your chamber of commerce for their advice as well.

Employment Contract.

If you are starting your home-based business on a part-time or casual basis while you work another job for someone else, be sure that your main job doesn’t have restrictions against employees owning or working at another business.

If you signed a contact at your current employer, review it and make sure nothing in the contract prevents you from moving forward.

Insurance

Another thing to think about is insurance. Both on your business and your property. Your home insurance premiums may increase if you are operating a business from your home. And some insurance companies may void your coverage altogether, so be sure to check yours.

Some municipalities require proof of insurance before issuing you any business permits.

When reviewing your insurance policy, consider increasing your liability coverage. This protects you should anyone come to your home for business purposes and are hurt while on your property.

You may be thinking you don’t’ need extra liability coverage because you don’t plan on having clients over. But what about delivery people? If you order a new printer or computer and the delivery person slips and falls on your steps, and your insurance company discovers they were delivering goods for your business, they may decide not to cover you.

Also, as a sole proprietor, you are personally liable for all debts. If you order a $10,000 print job and your client fails to pay. You are liable to the printing company.

You may also want to acquire business interruption insurance in the event of a fire, theft, etc. It can help cover the costs of getting things up and running again.

Permits, licences and insurance may not be fun, but they are something you need to think about when starting your home-based design business.

Marketing

Let’s talk briefly about marketing your business.

As you know, marketing is key to any business’s success. It ensures that your services are put in front of people who need them.

Because all businesses market themselves differently, and that includes design business, home-based or not, you must decide how you plan on promoting yours. Your skill levels, knowledge, experience and resources will help determine who your clients will be and how you will promote your services to them.

A business that’s just starting should ask both existing and potential clients what they should be doing to promote their business. Start conversations, interview clients and potential clients, hand out questionnaires, and use the valuable information you get back to determine the best way to market your services.

Networking.

Networking is a significant part of marketing. Every established designer in the Resourceful Designer Communityattributes networking to the success of their business. And it’s the same everywhere.

Design is mostly a word-of-mouth industry, and you cannot rely solely on your clients, spreading the word. You need to get out there and pound the pavement and let people know that you’re open for business. Networking should be a big part of your marketing plan, especially at the start.

Failure to develop a strong marketing plan is one of the reasons most new businesses fail.

• Pricing your services
• Defining your target market,
• Methods for promoting your services, including a website, brochures, maybe ads and trade shows.

All of this is part of your marketing plan.

Your website.

Build a website first. If you are not a web designer, hire someone else to design one for you.

In episode 149 - Starting A Design Business From Scratch, I mentioned how if I was starting over, the very first thing I would do is build a website for my business. I have a website for my side business Podcast Branding that brings me several new design projects every week.

Don’t underestimate the power of a well-designed website. When done right, it can become your most valuable client acquisition tool.

In part 4, the final installment of this series, I’m going to talk about the advantages and disadvantages of the different business structures you can choose and a few other odds and ends as I wrap up this definitive guide to starting a home-based design business.

Make sure you’re subscribed to the podcast, so you don’t miss it.

 

Tip of the week Asking for critiques

When asking people for critiques, don’t ask what they think about the design, instead ask them how they would improve the design. You'll get much better and more useful responses from them.