A home-based business is simply a business operated from a home office. The managerial and principal administration is done within your personal residence. Many small businesses are run by one person, and so it’s common for small business owners to use their home as their office.
Home-based business owners work from home, but not all home-based business owners stay at home. Let’s say you're running a home-based business as a photographer, software trainer, trucker, or interior decorator. Your office maybe your home, but the odds are you’ll probably have to travel to provide your services to your clients.
Many online businesses are full-time home-based businesses. It’s also becoming more common to see professionals like travel agents and notaries public operating home-based businesses. But as a small business owner, is having a home-based business the ideal thing for you?
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According to Home Business Magazine, the number of home-based businesses increased to more than 38 million in 2010.1 A reason for this astronomical increase can be traced to the internet and rapidly advancing technology. These have made working from home more possible than ever.
Home-based businesses also experienced an upward surge in 2020 because of the coronavirus pandemic.2 The world went through a global lockdown, and businesses and SMEs had to think up ways to survive. Companies also had to find a way to keep their staff productive while the lockdown lasted.
The world is slowly adapting to a post-COVID life. The current norm of social distancing and remote work has opened up many business opportunities to meet the new and emerging demands of consumers.
People have different reasons for starting their home-based business ventures. Some people left the corporate world abruptly because they retired early or were laid off. Others left their 9 to 5 jobs voluntarily out of a desire to be their own boss. Other reasons include avoiding the hassles of commuting and having some free time to care for children or elderly relatives.
Whatever the reason people leave their jobs to start a small business, home-based businesses have become a significant trend in recent years. It was something that was once seen as an avenue for an unemployed person to make some money until a "real" job comes along. That's not the case anymore. These days, people take home-based businesses much more seriously.
Running a business from your home may or may not be right for you. There are several things to consider before setting up your office at home. You should look at your personality, the nature of the business you intend to start at home, and the way you work.
Are you one of those who needs to be in a real work environment before they can get any work done? Do you struggle with issues of self-discipline and only work best under close supervision? Do you enjoy the pressure of commuting and lack the drive to work when you're too comfortable?
If your answer to any of the above questions is yes, then you may need to pause and think carefully about your decision before you start your home business.
There are numerous advantages of running a business from your home. But at the same time, there are several disadvantages of having a home business that you should take note of. Let's take a look at both the pros and cons of running a business from the comfort of your home.
There are advantages and disadvantages to having a home-based business. But the same can be said for working in a traditional office.
From what we've seen, home-based businesses are quickly becoming the fastest growing form of business start-ups. If you have decided to start your own business, you should consider doing it from your home. You will certainly be saving costs when you do as opposed to renting a commercial space. Here are 5 other advantages of having a home business:
Running a home business affords you the opportunity to be flexible with your work hours. You determine when to carry out tasks and when to take breaks. You have complete control over your work schedule. You can work part-time and fit your lifestyle into your business time.
If you have a family, you can take the liberty to observe some family time. Operating a home business will give you more flexibility with child care or care for elderly parents and other household duties and responsibilities.
With the availability of computers, the internet, and communications technology, people can now send and receive messages, transfer data, conduct research, and carry out advertising activities from their homes. This largely eliminates the need to commute to any workplace.
Similarly, the widespread use of cellular phones, pagers, voice mail systems, and toll-free telephone numbers have ensured that people remain connected from wherever they are. Rapid technological advances have enabled large numbers of home-based entrepreneurs to earn the same income (or more!) that they could have earned working a regular job.
So, as a home business owner, the only commuting you may have to do is walking from one part of your house to another. Except you have work that involves actually attending events (like photographers) or meeting clients and delivering products. This way, you get to increase your earnings while lowering your expenses.
If you are running a new business venture from home, you can greatly reduce your overhead costs and business expenses.
First, you don't have to bear rent and transportation expenses. All home businesses share this advantage. This reduces the overhead expenses considerably. You don't need to maintain separate office premises, therefore, reducing the cost that utility bills would have incurred.
Depending on your tax regulations, you may even enjoy tax advantages in the form of deductions. You may also get tax benefits. You have to be conversant with the tax regulations of your area to determine if you can get an income tax deduction as an entrepreneur whose home is the principal place of business. You can contact the IRS to know more about this.
Running a home business makes it easy for you to involve your family in the work you do. You can allow your children to be a part of your work if they are old enough to learn, and you could even employ them. This way, you get to teach them the value of work and get them to appreciate the work that you do.
However, before you take steps to employ your children in your business, consult an attorney. This is so that you can ensure that you comply with all federal, state, and local regulations concerning employment. These regulations will depend on your locality.
Working from home is very convenient. Most owners of home-based businesses are self-employed. You can take any client you wish and turn down any job you feel less inclined to handle. Also, it helps you consolidate the basic aspects of your life (home and work) in one place.
As the owner of your home-based business, you are in complete control of all income. Because you get all the profits, this can lead to a boost in your income and help increase your savings. But this also means that you incur all the losses too.
Many people plunge into owning home-based businesses with great hopes and aspirations. They aim to set their own work schedules, make their own money, spend less time working, and increase their free time. But then, very few people realize the careful planning that is required to achieve these goals. In fact, the self-discipline required to run a business of this nature. Even home-based businesses fail. Here are some of the disadvantages of running a home business:
If you are working from home, it's easier if you are single and wholly independent. With spouses, parents, and children around, family responsibilities may give rise to disruptions in the course of business.
Domestic interruptions can clash with job deadlines and disrupt the free flow of work. If you're at home, there might be no excuse for you not to keep up with household duties and responsibilities.
With family around, it may be difficult to have a "private" space for work purposes. Your availability at home every day may give the picture of one who is free, especially if you have no clearly defined workspace. Distractions can easily come up, and this will affect your work output.
As a home business owner, you are likely self-employed, which means that you are your own boss. This means that you really have no one breathing down your back and insisting on deadlines – apart from your client, of course. There's also no one supervising your work (unless you have a business mentor who does this).
Working from home may affect your workflow and efficiency. You have to be highly disciplined and exceptionally hard-working so that you do not take unwarranted breaks. Since you answer to yourself, and you understand the excuses that you give, your work may be affected if the proper work ethics are not ingrained into your work.
Many home business owners find that running a home-based business means that their business can cause a conflict with family life. Running a business out of the home sometimes means that family time is constantly being taken up by business needs. Sometimes, you may have to work even after business hours and this blurs the lines between home and business. It can cause a strain on the family.
If you are working from home, it can get quiet and lonely. Especially if you are staying around the house all day.
Some people who run home-based businesses suffer from feelings of isolation and being out of the loop. This feeling can be particularly serious if you have spent much of your former career in highly collaborative office areas with co-workers all around.
When you leave that job and switch to a home business, you suddenly have no interaction with others. This can be counterproductive to the business.
To curb this, you may choose to employ one or 2 people (even family members) to work with you. This team may work with you physically or remotely. This will also eliminate any kind of boredom you experience from working alone.
A home-based business may be a bad idea if your clients need to visit you. This can expose your home and family to strangers. It may even create conflict with your landlord or other tenants (if you live in an apartment building) who may be uneasy with the traffic caused by non-residents.
Running a home business allows for flexibility that is difficult to get if you are working a regular job. But working at home requires self-discipline. With the right amount of commitment and discipline (especially in the early years), you can enjoy the benefits of running your own business. Here are some guidelines on doing a home-based business:
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