Starting a new home-based business can be incredibly exciting, particularly when you think about being able to quit your current job and focus instead on something you’re passionate about. However, it’s important to understand that many new businesses unfortunately fail, and that there are risks involved with beginning a venture, even if you start small from home.

To mitigate some of these risks and make it much more likely that your business will be around for the long term, there are steps you can take before you open your doors. Read on for the rundown on some of the most important things you need to do before you become an entrepreneur.

Education is Key

While many people just quit their job one day and decide to start a home-based business the next, you will be much more likely to succeed if you first spend time learning as much as you can about business and the particular industry you’re planning to trade in.

Education should be a priority for all budding entrepreneurs. It is a good idea to immerse yourself in comprehensive study, such as a quality online MBA or similar degree, as well as to attend multiple courses, workshops and business events. There are thousands of business books on the market that you can read as well, in addition to many magazines and blogs where you can find all sorts of helpful information on topics as diverse as sales, marketing, product development, website creation, and customer service.

It also pays to find a mentor who is very experienced in business, especially one who knows your particular industry if possible. If you have the funds available you can hire a mentor for a one-off intensive session or for ongoing advice. Alternatively, if cash is tight, consider looking to knowledgeable friends or family members, or talk to your local chamber of commerce or other business group to see if free advice is available.

Do Your Research

Next, it’s important to devote some time to research before you launch your business. If you’re thinking of starting a venture in an industry that you have never worked in before, you’ll need to find out as much as you can about it first. Look at the main competitors in the market, and what they do and don’t offer.

• Is there space for a new organization?
• What isn’t currently being offered that customers seem to be clamoring for?
• What is a problem that you could solve?

Try to answer all of these questions and more.

As well, you should investigate your likely target market and find out as much as you can about them. For example:

• Do your potential customers shop mostly online or in person?
• Do they have families or are they childless?
• Are they single or in long-term relationships?
• What is their income bracket and level of education?
• Do they make purchases on the spur of the moment or only after considered research?

Learn these things and more and you’ll have a much better chance of launching a business that will succeed.

Test the Idea

Once you’re clear on exactly what type of product or service you think you should sell, and who you will be selling it to, it’s time to test out the idea to see if your assumptions are actually correct. There are multiple ways to do this.

If you plan to create a product, you can look at selling some samples at local markets, or on websites like Etsy and Craigslist. If you want to sell a particular service, or range of services, then check out avenues such as Fiverr, Elance, and Gumtree. It is also worthwhile setting up a focus group (whether an official one or a more casual one that is made up of your acquaintances) to test out your wares and get feedback.

Write a Business Plan

Lastly, before you go full steam ahead with a home-based business it pays to write up a comprehensive business plan. This has numerous benefits. For starters, it will generally be a requirement if you plan to apply for a business loan, as it shows lenders that you have really thought about and planned out your new venture. As well, a plan helps you to think about potential issues that you might otherwise have glossed over, and it makes sure that you’re clear about your business goals and vision.

There are many templates and articles available online that you can refer to for advice on how to write a business plan, but you’ll find that a good document will cover things such as an Executive Summary, a business description, competitive analysis, marketing strategies, SWOT analysis, and financial forecasts.