Is a Home-Based Business Right for You?

Mike Armour

The majority of business startups are one-person affairs. As a result, it's increasingly common for small business owners to use their home as their office.

Is that a good idea for you?

As is often the case, it all depends. There are both distinct advantages and distinct disadvantages to having a home-based business. The same can also be said for a traditional office.

Whether you are best-served by a home-based office or a traditional office is factor of your personality, the nature of your business, and your work style.

I've gone both ways. I started my first business out of my home. Later, as new ventures were added, I leased an office. And today I have a hybrid approach — some of my enterprises (like this one) operate from a home office, while others rely on my leased office.

The Positives of a Home-Based Business

The reasons for choosing to base your business out of your home typically revolve around three issues: reducing the cost for office space, having more time for interaction with the family, and eliminating the commute. Another consideration is convenience.

Convenience is a "biggie" for me. I'm an early riser. And I also happen to do my best writing early in the day. So it's great to roll out of bed early, make a cup of coffee, stroll down the hallway to my office, and knock out several hundred words of copy before anyone else is stirring around the house.

The Pitfalls of a Home-Based Business

Based on your personality and self-discipline, however, convenience can be a two-edged sword. Even though people often start a home-based business to have more time with their family, the very convenience of having an office down the hall frequently works against that goal. It's just too easy to have dinner with the family, then slip back to the office to do a little more work.

Convenience also means more disruptions of your work routine. You are easily drawn into whatever is going on around the house. Neighbors or friends drop by. Delivery workers ring the doorbell. Pets invade your workspace and demand attention (particularly cats).

Or in my case, a regular interruption is grandkids. My wife babysits four small grandchildren two or three afternoons a week. When they show up, I'm then faced with a tough choice.

If I ignore them and stick with my work, I risk having them think that I don't want to be around them. On the other hand, if I make myself accessible to them, even for a few minutes, I've set the stage for them to interrupt me several more times over the next two or three hours.

Other Considerations

In addition, operating from a home base may simply be inappropriate if your business requires clients or vendors to visit your office. This is especially true if your house is the center of a lot of family activity. Trying to carry on business in the midst of noise and distractions from family activity is hardly a way to establish a professional presence.

That's one reason for my hybrid approach. In addition to my home office, I maintain a leased office for those several times a week when I need to meet face to face with people in a professional setting.

There are also other factors to consider before deciding to base your business out of your home. Some cities prohibit home-based businesses or require special licensing to have one.

If your business is internet-based or if you're a consultant who meets clients primarily on their own turf, your business is not likely to attract the attention of city code enforcement. But if you are shipping and receiving goods on a regular basis or if you do have clients calling on you regularly or if you are providing a service like child-care, someone is likely to take notice.

Some Guidelines

Despite the drawbacks and limitations of a home-based business, I would do all of my business from home if I could. If you have a similar preference, let me offer some guidelines for you to consider.

1. Create a designated area in the house for the business

We hear all sorts of stories about people who started a business on their dining room table. In fact, friends of mine did that very thing and sold their business a few years later for $14 million. But such stories notwithstanding, it's generally unwise to intermingle household space and work space, even at the outset of your business.

First there is the efficiency consideration. Continually shuffling your business items to make way for household activities makes for a lot of wasted motion, not to mention misplaced files and paperwork.

Then there's the psychological consideration. When you "go to work," you need to be in a work state of mind. That's harder to do when you're working from the same chair in which you ate eggs and bacon 30 minutes ago.

If possible, carve out a room for your office. Where that's not possible, create a designated area of a room that is used only for the business. And use it ONLY for business.

2. Get a separate phone line for your business

You want to answer business phone calls with a professional business greeting. You can't do that if business calls are coming in on a home line. You have no way of knowing whether the incoming call is personal or business-related.

I've equipped my own house with multi-line phones and put a distinctive ring on the business line. This way we can answer calls appropriately wherever we are in the house.

3. Don't answer your business phone after work hours

Let the calls go to an answering machine designated for your business calls. Even though you are operating your business from your home, you need to treat it like a business. You should present your business to the community as one that operates during normal business hours.

When the business line rings after hours, just tell yourself, "I'm not in the office right now, so I don't know that a call is coming in." Because, after all, if you based your business from a traditional office, this would be the case.

You need this kind of self-discipline to minimize the intrusion of your business into family time — especially if one reason for having a home-based business is to afford yourself a better work-family balance.

4. Rent a post office box and use it for your business correspondence

As you develop business cards and web sites, you need to advertise a mail address. Using what is obviously a home address (particularly an apartment address) impedes your ability to project yourself as a legitimate, established business.

Even huge businesses, however, routinely receive mail through post office boxes. So do the same yourself. For nearly 15 years my business cards have contained only a mailbox address, no physical address, and never once has it created a problem.