From Randy Duermyer,
Your Guide to Home Business.
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When you go into business, you'll potentially be exposing yourself, your home and your family to a variety of risks. You need to think about how you'll manage those risks before it's too late.

Consider this:

• Will you need health insurance? If so, how can you get it and how much is it going to cost? When one spouse is still working, the ideal situation may be to get the other included on the working spouse's health insurance coverage if you can. If not, either the cost or the lack of availability, or both may prevent you from starting your business. More on health insurance...
• If you're carrying inventory, need equipment or are storing hazardous materials what kind of property insurance will you need to avoid suffering financial hardship? How much will that cost?
• Will you need liability insurance? Where can you get it and how much is it going to cost?
• What about your auto insurance? Will you be using your car for business?

Remember, your homeowners' and auto insurance policies weren't designed to cover your business pursuits or business property so there will be restrictions, limitations and exclusions. Know what they are ahead of time.

Insurance is a major expense of doing business, but some coverages like General Liability may be quite reasonable depending on the nature of your business. More on liability insurance...

Record any cost estimates for this step - you'll need them to determine your startup and operating costs.

More on managing your money.