For a long time, working from home was mainly reserved for the lucky few. After the pandemic and subsequent rise in remote working, however, people have become more and more accustomed to doing work at home.
Whilst many of us have returned to our workplaces, whether full-time or in a new hybrid structure, others have set about creating a business that enables them to do so.
Running a business from home gives you the flexibility and freedom to make your own decisions, work around your own schedule and build towards your own individual goals.
Starting a small business from home minimises risks, too – you won’t have to worry about paying significant overheads for offices, employees or other costs. Keeping things small and manageable seems to be the preference for the majority of UK business owners, considering that out of 5.5 million private businesses operating in the UK, more than half of them (3.1 million or 56%) are sole proprietorships.
Once you start your business, however, your plans for the future may change. There are plenty of examples of small home businesses, especially in the technology sector, that started out as one-man bands but grew into successful brands.
But you don’t need to worry about that just yet. Instead, starting a business from home is all about setting the right foundations to help you achieve your early goals. Whether you intend to keep things small as a sole trader, or you like the idea of building a team and eventually getting your own premises, starting a business at home gives you a safe, sensible platform from which to grow.
In this guide, we’re going to cover everything you need to know about starting your own business at home. We’ll make sure you’re aware of all the rules and regulations, but also give you winning examples of small business ideas from home you can use to get started.
Understanding the pros and cons of home businesses
Starting your business at home has plenty of advantages, some of which we’ve touched on already, but we’ll explore more clearly below. Before you start your business, make sure you know these positives and consider how they relate to you and your lifestyle.
It’s also worth noting, however, that working from home isn’t always sunshine and rainbows. If you add the pressure of running a business into the mix, you’ll discover there are plenty of drawbacks as well.
- Running a business from home minimises your operating costs, since you’ll be using the space you already pay for.
- You won’t have to worry about a commute or eating out during office hours, so you’ll save even more money.
- You can be fully flexible around your hours and work schedule.
- The cheaper costs associated with starting from home mean you lessen the risk of a new business, as you won’t need to generate as much income as a business with higher operating costs.
- Running a business at home often means a lack of differentiation between work and life, which can impact your personal relationships and work ethos.
- It can be harder to network and meet new business contacts if you work from home, though there’s better support than ever for video meetings, digital networking and more.
- A lack of resources may hamper your ability to grow – you’ll either have to hire remote staff or freelancers or move into premises.
- You may get distracted more easily or feel isolated or lonely.
Generating a home business idea
One of the hardest things about starting a business is just deciding what you’re going to do. But too many potential entrepreneurs let this paralyse them, allowing the potential dream to slip by.
The truth is that practically any business can be started from your home – even if it’s one that eventually outgrows your house, such as an e-commerce store that will eventually need larger stockholding facilities.
The real crux of a good business idea is to focus on what you can offer that a customer may value. You need an idea that isn’t just appealing to you – but one that will generate revenue.
To find that idea, we’d encourage you to do some market research around the following core concepts. Doing this will help you come up with a business idea or explore an existing one, in a more results-driven context.
Map your interests to your skills
The first stage of coming up with a good business idea is one you’ve probably already considered – your own interests and skills. Don’t think of these in isolation – as the two are more linked than you may assume.
Think about what you’d like to do, but also what you are good at doing. The best business ideas are things you can be passionate about, but also do to a high standard. We know that some people want to launch a business that is completely different to their skills and experience – but remember that skills aren’t solely related to your current job. You should always dig deeper into what your skills are – some of them will surprise you.
For example, someone who works in digital marketing will build skills in marketing itself, but ALSO in a wide variety of things, such as customer relationships, sales, communication, proofreading, editing, team leadership, management and more.
Almost every new business owner needs to learn quickly, as there are business-specific issues you’ll need to deal with, such as writing a business plan, creating an invoice system, finding customers, etc – but the owners who are experienced in their core service have less to learn than those who need to learn all of the business side of things as well as their actual service offering.
At this stage, you don’t need to have a defined business idea. Instead, you’ll have a list of your skills and interests to weigh against potential ideas. To find those ideas, it’s time to look further afield…
Brainstorm using general research
So, now you have your interests and skills mapped out, how do you actually find out what sort of business you can run? We’ve left some great examples further down in this guide, but you can also discover your own ideas via this fairly simple process:
- Identify the interests that you’re most passionate about
- Visit Google and type in the name of the interest + ‘business ideas’
a. For example, if ‘baking’ is an interest, search for ‘baking business ideas’.
- List each type of relevant business you discover. Remove any that are not suitable for people working from home.
a. Google returns many examples like catering, baking subscription boxes, baking classes, baking blogger, etc. Baking classes aren’t really suitable for home workers, as you’ll need a classroom, so you can remove it from your list.
- List these businesses' associated skills and requirements by searching for more information in each niche.
a. A baking subscription box business would likely require someone with skills in baking, marketing, customer service and branding.
- Match business ideas to your own skills. You don’t need every relevant skill to run a business – but some ideas will suit your talents better than others.
Gauge the local market
Once you’ve got an idea for a business type, it’s worth checking out local competitors. Since you’re working from home, your geographic impact is fairly restricted, so you’ll need to identify how much competition exists or whether you have spotted a gap in the market.
Facebook and Google Maps can help you assess local competitors – all you’ll need to do is search for the type of business within a set area. If there aren’t any, you’ve either found a potential gap in the market that you can take advantage of, or there’s not enough consumer demand to support that business type. The only way to be sure is…
Do some light customer research
You haven’t committed to an idea yet, so it’s hard to do real customer research. You can, however, do some early work to justify your budding idea. Build out an idea of your customer based on the interest and business idea you’re working with, then use the internet to find social groups of potential customers on sites like Reddit, Facebook, Pinterest and Instagram.
You can actively reach out to certain groups with your questions if they’re receptive to it – or you can simply sit back and see what is being discussed to see whether you think your business will be useful for them.
This is by no means an exact science, but it’s an excellent way to get you started. Let’s take a look at putting all of this together with some successful examples of great home business ideas…
10 profitable and home-friendly business ideas
Looking to speed up your ideation process? Here are ten tried-and-tested home business ideas you can start quickly, provided they match your interests and skills.
If you’ve got digital skills, you’re off to a good start when it comes to starting a business from home. With low overheads and a simple route to launch, digital service-based businesses are a great idea. All you’ll need to do is set up your business, create a website and market yourself to attract clients – then ensure you deliver quality work.
- Social media manager
If you’re savvy with social media, you can sell your services to businesses looking for someone to manage their accounts. Tasks involve posting content, managing conversations and reporting on your efforts.
- Dropship e-commerce seller
Ever wanted to sell products? Starting a dropshipping company lets you sell products in an area you’re interested in without having to buy and ship stock yourself. To dropship, you’ll need to contact a supplier and agree to an arrangement where they will ship to your customers. That means you’ll have to create an online shop and handle the orders – but you won’t have to deal with the logistics of delivery or stockholding, which is perfect for people who want to run a business from home!
- Digital coach
Thanks to the utility of video conferencing tools like Zoom and Google Meet, it’s easier than ever for people to arrange 1-2-1 meetings with people from the comfort of their own home. If you’ve got a marketable skill or have experience in an in-demand sector, you could set yourself up as an online coach delivering training sessions to your clients.
- Crafty seller
If you’re an artistic person, you could consider setting up an online business selling your products. Marketplaces such as Etsy exist solely to sell crafty goods – see our guide to selling on Etsy here. You’ll need to be certain you can supply enough items to sell in a profitable way, which may mean looking into printing services and outsourcing to mass production.
- eBay seller
While eBay has been around for a long time, it’s still one of the best marketplaces for new business owners to get involved in. eBay facilitates the buying and selling of secondhand and new goods alike – which means it has lots of room for exploring different business models. Some people succeed by ‘flipping’ secondhand items bought and sold at a profit, whilst others use eBay shops to sell affordable products sourced from overseas.
- Self-published author
Fancy yourself a writer? Try self-publishing eBooks. Amazon’s eBook marketplace is huge, so competition is high, but if you’ve got the expertise in your industry and a good writing style, the rewards for publishing your book can be huge.
- Domestic cleaner
If you’re a neat and tidy person, perhaps you can help others keep their homes clean by starting a cleaning business. Sure, you won’t technically work from ‘home’, but you don’t need to purchase any new premises, and you still enjoy the flexibility of home working.
- Dog sitter/walker
Britain is a nation of dog lovers, many of whom have jobs or want to go on holidays and rely on qualified sitters and boarders to care for their precious pups. You can set up a dog walking or sitting business with minimal effort, with the only real skills required being experience with dogs and being able to self-market yourself. Be sure to check with your local authority to ensure you have any necessary licensing for home boarding, for example.
If you’re really strong with a certain skill, regardless of the field it is in, there may be a market for tutors in your area. It might be more common to hear of tutoring in the context of children’s education, but many successful tutors offer lessons in music, art, language, crafting, sports and more.
- Airbnb/holiday home host
The UK’s domestic holiday market is booming, and virtually any type of property can be made to work for Airbnb. You can set up as a host even if you only own a small flat, but the most profit comes from larger properties where you can offer guests whole buildings or areas to themselves.
Even if you don’t own your own property, you can still make money as an Airbnb hosting assistant, managing check-ins and property listings for other hosts.
Developing a Business Plan
Now that you’ve hopefully got an idea of what sort of business you want to start up, you should create a business plan. This is a document that fleshes out the idea and demonstrates what it is, why you’re creating it and how it will generate revenue.
Business plans are essential not only to give you something to refer back to whenever you lose track, but also to show to third parties who may offer advice, tutoring or finance for your business.
The structure of a business plan is not set in stone, but we’d advise sticking to these sections:
- Executive summary: This section summarises the key points in the rest of the plan, so you’ll have to write it once you’ve completed those. It’s placed at the front to grab attention.
- Company description: This describes the core business and its product or service offering. See this page for guidance on how to write one.
- Market analysis: Describe the market your business will operate in - who are the customers, what trends are relevant, how will upcoming events change your business?
- Competitor analysis: Demonstrate existing competitors and how you will compete with them, with a view to showing any readers that there’s demand for your business and you have enough unique appeal to stand apart.
- Marketing plan: How will you market your business to customers? What tools and platforms will you use? How regularly will you post on social media, etc?
- Financials: We’d advise working with an accountant to devise the financial plan for a business, which includes targets and projections. This section is the most scrutinised by any third party, so make sure you’ve given it the proper attention.
Legal and financial set-up
Starting a business from home carries with it a number of legal and financial steps that you need to follow to make sure you don’t make mistakes. To keep things simple, we’ve created a checklist of steps you can use.
- Purchase or attain any of the certificates or qualifications required to run the business.
- Register your business as a sole trader or limited company, depending on which suits you best. See our guide to sole trader vs. limited business to learn more.
- Create a business bank account with your chosen banking provider.
- Create your website and social media accounts.
- Decide on how you want customers to pay you and then set up the appropriate payment system. For service-based businesses, you’ll need to send invoices and record payments against them, which can be done easily using our accountancy software.
- Read about your tax obligations and make sure you complete regular self-assessments with HMRC. See our guide to small business taxes here.
Setting up your home office
So you’re all set up and ready to go… or are you? To work from home, you’ll need to make sure you have the right equipment to offer your products or services. That means acquiring the following essentials:
- Business-specific tools: If you’re operating a business that needs certain equipment or tools, such as home baking, you’ll need to ensure you have everything you need in your home before you get started.
- Ergonomic furniture: Working from home means spending a LOT of time at your desk. Keep your body healthy with ergonomic furniture that is specifically designed for long-term office use.
- Computer/laptop: To make sure you’ve got access to useful software such as Crunch Accounting, we’d suggest that you invest in a quality computer and a second monitor, so you can multi-task at will and dedicate a workstation area in your home specifically for your business.
- Daylight lamp: This one comes directly from a freelancer friend of the Crunch team – when you’re working from home, especially in the winter, you may not get much access to natural sunlight. A daylight lamp helps emulate this light and will make you feel way better in the darker months.
When it comes to designing a home office, we’ll keep things basic because no one’s home is the same and available space differs. Maximise the amount of natural light hitting your workstation, ensure you’ve got comfortable furniture and invest in a desk with integrated storage that allows you to keep your vital assets close at hand.
Even though you’re working from home, you may be able to claim some of the tax paid on office furniture back from HMRC. See our guide to this topic here.
Overcoming the challenges of a home business
Before you rush off and start your new business, let’s quickly look at some of the most common challenges associated with setting up a business at home so we can show you the best ways to overcome them.
Problem: Struggling to find business opportunities and contacts
Solution: Explore regular networking groups in your area, which will help you socialise with other business owners and expand your network.
Problem: Losing sight of work/life balance
Solution: Set and stick to permitted working hours and invest in a business phone rather than using your personal number.
Problem: Failing to manage time correctly
Solution: Try systems such as the Pomodoro technique, where you work in 25-minute stretches with a 5-minute break. You can also try time-tracking apps and plug-ins to keep you productive.
Problem: Failing to keep adequate financial records
Solution: This is a dangerous issue that can lead to expensive fines. Invest in an accountancy tool to help you track your invoices, costs and taxes – Crunch offers an all-in-one solution built for sole trades.
Stay on track with Crunch
If you’re ready to launch your new business, remember that keeping accurate financial performance records is essential for calculating tax obligations. Crunch offers accounting software built specifically for small businesses, so you won’t need to pay for a dedicated accountant. Set yourself up for success by subscribing to Crunch Sole Trader today.