Is a Home-Based Business Right for You?
8 Things to Consider Before Setting Up Shop
There was a time when a home-based business was considered a hobby. In recent years, for many small businesses, a home-based business has proven to be cost effective and has become more respected. Many service-oriented businesses do not need a store front if their major contact with their customers is at the client site. Here are some items to consider when setting up a home based business:
- Where will most of the customer contact occur?
If most of your time is spent on items which do not require customer contact or your contact is on the customer site, then a home-based business might work. The more contact you have with the customer in your home the more things that need to be considered and possibly changed. When I worked as a private consultant, I had a home office. Most of my face-to-face contact was at the client site. Reports, follow up questions and emergencies were usually taken care of at my home office by phone or email to be followed by a visit to the site at appointed times. There was no need for a storefront, so overhead was low.
- Make sure your home is zoned properly for the type of business you have.
Many people start the process thinking “It’s my home – I can do what I want.” Be aware that in many county, and city areas there are zones set up for residential, business, industry, recreation, and others. Check with your city or county zoning to see if you can have the business in your home. If it is disallowed see if there is a cost effective way to get a variance. If not you may have to look elsewhere. It is also wise to check the rules for your homeowners association. In some regions the homeowner’s association rules are stricter than county and city zoning.
- Remember a home-based business is still a business.
Be serious about it. The old joke about doing your work in your pajamas is possible, but consideration should be taken to set the right frame of mind. Every morning before going to work I shaved, showered and got dressed for work. My daily commute of about 30 feet down the hall got me ready for the day ahead. As I made phone calls and answered emails, I was ready to go see a client if needed.
- Set up the office as an office.
Make the office an office. Sometimes it is difficult to keep your focus if the office also serves as the guest bedroom, the kids’ computer room, the exercise room or the sewing room. If you are a sole proprietor you can deduct a percentage of several costs if the office is a dedicated office. This is not allowable if the office is a multi-purpose room. Equip your office with the needed machines and furnishing to perform your tasks.
- Make sure you have the proper safety procedures in place.
If you will have customers in your home, make sure that you have clear, unobstructed pathways from the driveway to the step, and on through the house. If you are going to have frequent or regular visits by your customer base, you will need to keep the home and exterior in top condition for both safety and aesthetics.
- Make sure you have the proper security procedures in place.
It is important to consider the security of your office and home with the addition of potentially high priced office computers and other equipment as well as proprietary records of yours and your clients’. Proper steps should be taken to protect the items in your office. It is sometimes advised that you keep the office out of sight of the front door. Sometimes there are people at your front door who come hoping that you will open the door so that they can see what is available to steal. Also, if you have children in the house, it is important for safety and security that they have little or no access to equipment that might cause them harm or that they could inadvertently cause to destroy client documents.
- Set up consistent workable office hours.
Establish structured, consistent office hours for you, your customers and your family. When I was an independent consultant, my boys knew that when I was in my office, that I was making money for the family and if I didn’t get my work done I was not going to be able to buy them the latest Pokémon game. Clients needed to know my work hours so that they did not disrupt my family time. I needed to know my scheduled work hours so I could structure my time and productivity.
- Make sure you have adequate insurance for a home-based business.
Make sure that the insurance you have for you home covers your business equipment and any liabilities that you may encounter with your business located in your home. You may have to get additional coverage if not. The more clients that enter and exit your building, the more risk you incur and the more liability you may have to insure.
A home-based business can be a good cost effective way to conduct business if you set it up properly within the scope of the various rules and regulations. For some small business owners it is worth the time to investigate the possible benefits.