Home Based Business – Pros and Cons

Many of my clients run home based businesses, but working from home isn’t for everyone. There are definitely pros and cons. But if you can make it work for you, it is a great way to find a workplace with flexibility and an understanding boss.

There are a variety of reasons why people may decide to run a business from home. These include: retrenchment, lifestyle choices – you can pick the kids up from school, and as mentioned, greater flexibility. Working from home can offer a great solution for start-ups or businesses looking to cut costs on the rent and utilities of an office space.

If you are looking to maximise potential, then a home-based business can be appropriate for you. People enjoy freedom, but this independence comes with a price. If you’re interested in self-employment but are uncertain about whether it’s right for you, assess the pros and cons of starting up a home-based business.

The Pros

You are your own boss
One of the most attractive aspects for many people is that of being your own boss. There is no one to answer to, and you can run things the way you think they should be run. That makes the accountability of running a successful business entirely your own. You need to be disciplined and well organised to work at home.

Reduced expenses
Another benefit of working at home is having fewer costs associated with eating out and travelling to and from a work place. You’ll probably save on clothing expenses too. By working at home, you will save on overhead costs. Also, you don’t have to pay rent as well as other expenses that come with an outside office space.

It’s easy and inexpensive to start up
Anyone can start their own business from home. Expenses are at a minimum and starting from home is a great way to test the waters with minimal outlay. All you may need is a desk, smart phone, computer and your tools of the trade.

The cons:

There is no set income
As with all situations where you ‘work for yourself’, there is a potential for greater earnings, it is also likely that you’ll have some periods where the jobs could dry up. In such cases, where you don’t have a partner’s income to fall back on, having an emergency savings account might be a great relief during periods when you are not making income. I recommend putting some earnings aside when times are good to cover yourself when times are slow.

One of the most common complaints I hear is that you may miss the interaction with people at work. Many of us are social by nature, so think about how you are going to get your ‘people’ fix now you don’t have the office photo copier to hang around.

Working from home might be a distraction, particularly if you have small kids or have a hard time overlooking home-related jobs. Many people I know with home-based businesses are busy parents. Setting up a distraction free room to work and allocating a certain amount of time each day just to focus on your job will help increase productivity.

You have to find your own clients
This is not just for home-based businesses. Getting new clients is going to be an uphill task if prospecting doesn’t come naturally to you.

This is essential for any business owner and can be viewed as a pro or a con depending on your attitude. Becoming a successful business owner requires an investment in personal and professional development because most of us don’t start off with those core business skills.

Working from home may not be for everyone, but there are certainly many benefits to being your own boss at home. And, it is widely accepted now. Many of my clients use their local cafes as meeting rooms and as they grow, may see the need for something more permanent, or not. The ATO has a great resource for people thinking about starting their own home-based business. It includes the tax implications and financial rules of running a home based business.