The benefits and drawbacks of a home-based business

What are the benefits of working from home?  They are vast and varied.

Probably the number one enticement of a home-based business is the personal freedom it affords.  Working from home allows you to shape your work life depending on the goals and environment of your business.  There is no corporate culture/politics to abide by or bosses to report to or rigid work schedules and time-clocks to punch.  You have the freedom to work and earn as you choose.  Of course, there is also a drawback of answering only to yourself – there is no corporate structure in place to pull from.  As an entrepreneur, you need to have good time-management skills and the discipline to push yourself to work.  I find it helpful to act as if I am still going to an office every day by putting a routine in place.  I set my alarm clock, get up and shower and get dressed and am by my computer at a designated time.  Putting yourself on a schedule might not be such a bad thing.  Of course, this takes away from the fun of working in your pajamas but it might just be the best thing for you.

Another benefit of working from home?  You can save time and money on your commute.  According to the U.S. Federal Highway Administration, the average American spends 348 hours each year commuting.  As a home-based entrepreneur, there is no monthly metro-card fee at over $100 a pop or gas tank to fill up at nearly $4 a gallon.  That could add up to a savings of over $1,000 a year for your standard subway commuter in NYC.  Additionally, you can spend those commuting hours with your family or exercising or working more if you like.

Additionally, as a home-based entrepreneur, you keep the money you make.  Your earning potential is directly proportional to your performance so you don’t have to wait for a raise or promotion.  The harder you work, the more money you make.  You save money on simple things such as eating out daily or corporate uniform.  There is little need for power suits in the exclusivity of your home.  You also save on the overhead of renting traditional office space.

There is also a tax advantage afforded to home-based businesses.  For starters, it allows you to deduct a part of the operating and depreciation expenses on your home.  “This means that a percentage of your rent or mortgage payment, depreciation, property taxes, insurance, utilities, and expenses for household maintenance, repairs, or improvements are deductible.  You can also be entitled to deduct expenses from using a vehicle for your business, including gas, insurance, depreciation, and others.”

Increased opportunity is another advantage to home-based business.  Good job prospects can be scarce in some industries and promotional opportunities within major companies are also shrinking.  “With so many corporations and industries in a slump, starting your own home-based enterprise means you can create your own income-producing opportunities.”

Working from home affords you more time to spend with your family, especially if you have kids and both parents work.  You can save on daycare expenses, see your children off to school and be home when they return.  There is little need for the framed family photo on your desk if you get to see them more regularly.

A home-based office may also be seen as a stress reducer.  The demands of juggling your work and home life are all but eliminated.  There are no deadlines from a boss to meet (only those self-imposed).  You can work and take care of a sick child or work late at night after you’ve had your family dinner or if you are a single, you can continue to partake in your personal hobbies such as exercise or meeting a friend for a drink.

Working from home also affords you opportunities for professional growth.  As your own boss, you wear a lot of hats – you are the strategy-setter, the researcher, the secretary, the manager, the sales/marketing director.  This is a difficult challenge for many entrepreneurs.  You don’t have the luxury of co-workers to pass tasks off to or to brainstorm with as situations arise but it also makes you more marketable.  While working from home means greater workload it also allows you to understand all aspects of business.

Increased productivity is also another advantage to working from home.  Gone are the hours spent on commuting and useless or what might be seen as never-ending meetings about nothing.  All that energy can now be harnessed into making your business a success.

A home-based business can be seen as a creative outlet.  You are finally able to spend your time and money on your hobbies/passions as you turn them into work and money-generating opportunities.

Lastly, working from home allows you to harness competitive advantage.  One of the biggest benefits of working out of your home is the reduced overhead cost.  Lower operating costs can enable you to be more competitive, not just in the prices you charge but also in the quality of service you offer.  “You can use the money you save on rent to increase your overall profitability, or you can pass it on to customers in the form of lower prices.  Competitors restricted by higher overhead costs have no such options.  What they charge is predetermined by their rental agreements.  The higher the rent, the higher their prices.  Moreover, a smaller business makes it easier to provide customers with personal service.”

So those are some of the advantages to working from home but what are the drawbacks?  As a home-based business, you run the risk of looking unprofessional.  What if you have to take a meeting?  You certainly aren’t going to do that from your bedroom or den.  What is your other alternative: the local Starbucks?  Do you really want to put your cell phone and home address on a business card?  What if you want to maintain that 212-area code or Park Avenue address?  Consider the benefit of a virtual office from companies such as Emerge212.  Check them out at: http://www.emerge212.com/.  You can maintain that high-prestige 212 phone number and NYC address.  You’ll have access to conference rooms on a pay-per-go basis and the luxury of having your phone calls professionally answered and forwarded to your cell or home number.  As you grow, you might consider actually taking up residence in one of their two boutique spaces which are fully furnished, fully wired and fully serviced.  They also offer a “stepping stone” program whereby you simply share your office space with one to three like-minded individuals but maintain all the accommodations of a traditional office.  The option of boutique or virtual space might also make you more attractive to investors.  When you sign a traditional lease at let’s say a minimum of 5-10 years, you show your liabilities.  What if the business fails in under a year and your investors are linked into a long-term lease?  Additionally, a boutique office space program such as the one offered by Emerge212 takes away the hassle of unique contracts with vendors for phone or internet or cleaning services.  All those aspects are covered by a boutique program.

So there you have it.  Starting your business out of your home offers many rewards such as personal freedom and money saved but it can also hinder you so think critically about spending some of your start-up costs on boutique/virtual office space and you might just get the best of both worlds.  You’re able to act as a traditional office in a non-traditional sense.

Until next time…