Home-Based Business: When a House Is More than a Home

surviving and thriving on your own title
Surviving and Thriving on Your Own is taken from an ASCLA ILEX preconference program presented in New Orleans, June 1999.
A major cause of daily stress for many working Americans today is that unpleasant ritual known as the; "rush hour commute." Crowded buses and subways, lines of creeping traffic, clouds of exhaust fumes, the expense. It's becoming more and more aggravating getting to and from work.

Not to mention the time that's wasted. According to some studies, millions of Americans may spend: as much as ten years of their lives commuting every day. Increasingly they're looking for an alternative, and they're finding one. Their answer: home-based business.

Home-based business is growing up. Images of elderly family doctors, housewives crocheting afghans for the local gift shop, or Joe down the street who likes to tinker with cars are no longer representative of the over 13 million Americans who have chosen to work out of their homes.

Today, accountants, architects, public relations consultants and computer geniuses, as well as chimney sweeps, maid services, mail order businesses and answering services have swelled the ranks of home-based business and brought with them a new perspective on making a house more than a home. If you're like most people, you've probably already thought about working at home. Its appeal is obvious. Beyond the commute, the advantages include better use of time, more time with your family, flexible working hours and independence.

Do You Have What It Takes?

Yet not everyone is predisposed to work in their own living environment. For some, isolation is a problem; others lack the necessary self-discipline. Another consideration: starting a home-based business is similar to starting any small business in that you must ask yourself if you have what it takes to be an entrepreneur.

To determine whether you measure up, study the characteristics of successful business owners and decide whether your personality traits, experiences and values are similar to theirs. Assess your experience, skills and life goals; do you want to invest the energy, time and resources that successful entrepreneurship requires?

You should also survey your reasons for wanting to establish a home-based business. Are you unhappy with your current job? Do you have skills that could be put to better use? What is your experience in the business you want to start? What resources do you have that could be put to good use?

Other questions to ask yourself include:

  1. How does your family feel about a home business?
  2. How will it affect their daily lives?
  3. Will you expect them to help out?
  4. Will you have to remodel your home to create a usable business space?
  5. Will you keep your job and moonlight until you get your business off the ground? Or do you have savings, inheritance or retirement income to live on?
  6. Do you already own tools or machines that will help?
  7. Are you able to go back to school for training, if necessary?
  8. Have you built up a network of contacts and possible customers, or will you start from scratch?

Answering those questions honestly and completely will help you weigh your chances for success and choose the type of home business best for you.

The Good, The Bad and The Family

After taking a good look at yourself, it's time to consider the business side of the venture, i.e., the realities of running a business from your home. As with anything else, it has good points and bad. For many people, the pros must outweigh the cons because home-based businesses are multiplying faster than we can count.

The advantages are obvious. Desire for independence, convenience, financial gain, low overhead and low risk, decreased commute time, getting out of the rat race, more control over work hours, low business expenses (for example, money saved on commuting, lunches out and a professional wardrobe), and more time with family are positive factors most often cited.

The issue of quality of life also comes into play as both men and women look for a way to balance the demands of a career with those of a family. A home-based business allows you to do just that.

Further, you save money on taxes because deductions for automobile expenses, telephone, home improvements, business cards and major purchases, such as a computer, may be available. On the con side, if you were working in an office downtown you wouldn't have to worry about a neighbor stopping by for a chat or your kids bursting in the door after a day at school. You must be very self disciplined and goal oriented to create a good working atmosphere despite kids, spouses, neighbors and the telephone.

Without the deadlines imposed by supervisors or peers, it can be hard to do the least appealing jobs on your list. Now it's your responsibility to set limits and plan your time.

No longer will you have the luxury of submitting requisitions to the supply department when you need a bigger file cabinet, a new copy machine or basic office supplies. It's up to you to evaluate features and compare prices when you're considering a major purchase. You're also the one who must run out to the store when you're out of ribbons for your computer printer.

There's also your family to consider. Their lifestyle and privacy may be disturbed, and you may find it difficult to work out a compromise that's acceptable to everyone. Your teenager may resent having to turn down the stereo because you're meeting with a client in the next room. Your spouse may complain about having to move his or her hobby to another room so you can use the space for an office.

Another con for some people is that the buck stops with you. One former home-based business owner has returned to corporate life because "being the boss means taking ultimate responsibility for all decisions. You get the credit when things go right but you get the blame when things go wrong.

The Nitty-Gritty Details

To ensure that your business runs smoothly, you need to establish a solid structure. The success of your business depends on how well you manage it. First, you need to choose how you" will set up your business: as a sole proprietor, a partnership or a corporation. Most home-based businesses are sole proprietorships, but talk to an attorney to make sure that type is right for you.

Next, set up an effective record-keeping system. If this is one area that leaves you baffled or bored, plan now how you will cope. Take a course at the local community college, talk to a volunteer SCORE (Service Corps of Retired Executives) representative from the Small Business Administration or hire an accountant to help you set up and maintain a record-keeping system.

Don't forget taxes. Significant savings are available to home-based business owners. Every purchase and transaction you make has tax implications. However, you need to invest time, money and energy in maintaining good records and keeping current on tax law changes to ensure that you operate within the law. Once again, talk to your attorney and your accountant to find out your obligations and benefits. If you do not have an attorney or accountant, remember that the IRS offers free seminars to help small business owners.

Insurance is also an important consideration. Make sure business use of your home is compatible with your homeowner's policy. In addition to a personal plan, you will need a commercial policy for full protection.

Zoned Out

You've decided on your product or service. You've written your business plan and you're about to order business cards and stationery. Before going any further, call your city or town hall to obtain a copy of your zoning ordinance. If home-based businesses are allowed in your municipality, keep reading. If some or all are restricted, find out if a pre-existing clause might apply or if you have to ask your zoning board for a variance. Once you learn that your business conforms to zoning regulations, it's important to keep up with any new proposals that may affect your situation. It's also a good idea to join business organizations and neighborhood groups in case you ever need to rally together to propose or oppose new regulations. Always maintain good relations with your neighbors. They could be a crucial factor should adverse regulations affecting your business ever be proposed.

Zoning is an area where an attorney can be very helpful. If in the unfortunate and unlikely event your business does not conform and you are given a cease and desist order, consult with an attorney who is familiar with the regulations and workings of the zoning and appeals boards.

A home-based business in many ways is like any other small business. It takes time, hard work, planning and a willingness to do your homework. Just because you will be operating out of your home doesn't make the endeavor any less serious.

Remember, you'll be in good company. Apple Computer, Hershey Candy Bar, Mary Kay Cosmetics, Ford Motor Company and Hewlett-Packard all started out as home-based businesses.

You're Still a Professional

Don't let the relaxed environment of working at home make you any less disciplined. A professional image is an important part of building credibility with customers and also contributes to your self-esteem.

Create a specific and proper professional mood. Have a business-like office or showroom if you meet Customers face to face. A clean and organized environment enhances both your image and customer perception of your product or service.

The decor of your home office should be carefully considered. Determine what image and theme you want to create before spending any money remodeling.

Also pay attention to what you wear. You are your company. The psychological power of your work clothes will convince customers and clients that you are serious about your business and tell your subconscious that it's time to get down to business. No matter what you have scheduled for your day, always dress for work.

The identity your business presents to the professional world is also important. Design a logo or have one created, and print business cards and stationery. Set regular business hours and use an answering machine or service. Consider referring to your apartment number as your suite number or rent a post office box rather than using your street address.

What's My Line?

As with any other small business owner just starting out, you have to decide what product or service you will offer. You've listed your skills and your interests. You know your family's preferred lifestyle. The next step is to choose a business that accommodates all of them.

Once you've done that, you need to ask yourself who will buy your product or service. Make a list of potential customers, and ask friends and family to help brainstorm all possible markets for your product or service.

You should also analyze your competition to plan how you will fit into the marketplace. Look for a unique niche that sets you apart. The more you learn about the competition, the better you'll be able to decide how to position yourself in the market.

Whatever the type of home business you want to open, you will need to do market research to determine if there are buyers for your idea, where they are and how to find them. Visit your local library and talk to any pertinent local associations.

When you've completed your marketing research, you'll have identified your potential customers; found out all you can about their habits, needs, preferences and buying cycles; and decided how to reach them to generate sales.