52% of all Small Businesses are now Home Based. Are you one of them?

[Harold Mansfield]

A few interesting statistics from the Census and CBO.


Small Businesses make up 99.7% of U.S. employer firms
52% of all Small Business are run from a home office.
2% of those are Franchises
73% are Sole Proprietorships
19% are Corporations.
21% have employees.
78% have no additional employees (the fastest growing segment), and yet Small Businesses are responsible for 64% of net new private sector jobs.

Although rates dropped significantly from 2007 to 2010, start up rates are still around 700k new Small Businesses a year.

Just a few years back, it was seen as some kind of lower level of professionalism to run a business from home. I'd say we are over that now.

I can certainly say that almost 90% of my new clients are single person businesses ( or running it with a spouse), with less than 5 employees (most have none) , and running their business from home.

Where do you guys fit in and do you think the rate of home office businesses will just get bigger as tech gets cheaper and more accessible?

[billbenson]

Small business will continue to grow as you can make more money in general. Working from home will continue to grow as it's more economical even for large employers interested in cutting costs. Brick and mortar in most industries is a dyeing breed.

On the other side of the coin, however, most people need the structure of going to a workplace. Same with school. Not everybody can just pick up a book or sign onto the internet and learn. I think those are the people that are going to suffer in the coming years.

[MyITGuy]

I started out of a home office and worked there for a year...but it was difficult to define my start/stop times and things I would do during some small downtime. Due to this, I leased some office space and am going on my third year there.

Depending on how things go this year, I may scale it back to an executive office with amenities, or I may grow into a bigger space ;)

[Harold Mansfield]

I started out of a home office and worked there for a year...but it was difficult to define my start/stop times and things I would do during some small downtime. Due to this, I leased some office space and am going on my third year there.

Depending on how things go this year, I may scale it back to an executive office with amenities, or I may grow into a bigger space ;)

Sounds like maybe you have a family at home? That can be much more difficult than they make it out to be on TV.

Sometimes I'll talk to clients and hear the kids in the background and they'll politely excuse themselves and you can hear the hushed, muffled whisper yelling, "Don't you see me on the phone? What time did we discuss is Mommy's office time? And what time is it? Now go in the other room and keep it down until I get off the phone or no video games". And then they come back as professional as ever.

Most times it's actually cute and charming because I've been that kid that has no clue what business or an important phone call is and expect to be the most important thing that Mommy does all day. I also respect that they are juggling many balls in the air and are still trying to do their thing.

I think 5-10 years ago, the stigma of working from home was a lot different than it is now. Now when I tell people I work from home they are intrigued, "That's so cool".

[MyITGuy]

Sounds like maybe you have a family at home? That can be much more difficult than they make it out to be on TV.
Nope, no kids...but I am one at heart.

The issues I had were differentiating between work and personal time. When I worked from home I always had my laptop with me and I would think nothing of it to hop onto a client system and "knock something out real quick" which eventually turned into several hours...so pretty much every waking hour was a work hour.

Now that I have my office space, my work day doesn't start until I get into the office at 9AM and usually ends around 6-7PM, and when I'm home...I'm focusing on personal stuff. I still keep my laptop with me (In its bag most of the time) in the event there is an emergency...but now I avoid doing work when I'm not at the office.

Another thing I found myself doing is that if I had to wait on a report or something to finish running and I knew it was going to take 5-10 minutes or so...I would boot up the xbox to play a quick game during this downtime...that 5-10 minutes would turn into a 2-3 hour game session so my productivity for that/those days sucked.

So for me an office space suites me better...but everyone has their own needs/personality/willpower. Can I work from home? Sure...but my productivity/output is better when I'm at the office.

[KristineS]

So for me an office space suites me better...but everyone has their own needs/personality/willpower. Can I work from home? Sure...but my productivity/output is better when I'm at the office.

That's an important thing to know, and I think it's something a lot of people miss. When you work for yourself there isn't anyone watching you to make sure you're actually working, which is an awesome thing on one hand, but also can lead to lack of productivity if you aren't able to keep yourself on track. I love that in this case you realized the potential dangers of distraction and overworking and took steps to solve the problem.

I think we'll see more and more people doing things like this as time goes on. Either they'll have an office in their home, or they'll rent space where they work and keep home for other things.

[Harold Mansfield]

Nope, no kids...but I am one at heart.

The issues I had were differentiating between work and personal time. When I worked from home I always had my laptop with me and I would think nothing of it to hop onto a client system and "knock something out real quick" which eventually turned into several hours...so pretty much every waking hour was a work hour.

Now that I have my office space, my work day doesn't start until I get into the office at 9AM and usually ends around 6-7PM, and when I'm home...I'm focusing on personal stuff. I still keep my laptop with me (In its bag most of the time) in the event there is an emergency...but now I avoid doing work when I'm not at the office.

Another thing I found myself doing is that if I had to wait on a report or something to finish running and I knew it was going to take 5-10 minutes or so...I would boot up the xbox to play a quick game during this downtime...that 5-10 minutes would turn into a 2-3 hour game session so my productivity for that/those days sucked.

So for me an office space suites me better...but everyone has their own needs/personality/willpower. Can I work from home? Sure...but my productivity/output is better when I'm at the office.

This is a really important post. Running your own business requires that you be honest with yourself. Figuring out that a physical office provides the structure that you need to operate efficiently was a smart realization. A lot of people can't be that honest with themselves and wouldn't change anything.

In a way, it's one of the reasons I prefer a desktop computer. Besides the ability to run extra monitors and such, having a desktop fixed to a dedicated desk and work area means that I have to sit there to work. It makes it easier to separate this room as my office, and this is where I work from 9-5. No TV. No laying on the couch. Very few things can sidetrack me because I have a dedicated office where all of my tools and communications are so it's easier to treat it as "going to work".

[billbenson]

Some people need a more structured environment than others. My wife couldn't be self employed. She needs the structure of an office environment. Same for school. Online won't work for her. She needs the structure.

I knew a guy who worked out of his home. He got up every day an put a suit and tie on. It made him feel like he was at work and he needed that structure. Me, half the time I'm in my underwear.

To me working out of the house is more productive. No commute. If I feel like standing up for a few minutes I can vacuum the living room or some other household task. I can go out back and work out. When I was a bachelor my room mate and I had a lot of parties at my house. I could go into the kitchen and stir something that needed to cook all day. I didn't waste time watching TV. Even when I was first out of college I worked out of my house as a field salesman. My boss was in California and I was in Florida. I'd usually be traveling for a week or two, then home for a week setting up my next trip. Maybe that help build up the stay at home work ethic.

Jeff pointed out another aspect of it as well. If you work out of your house, you are always at work. As many of us have found out, there is always business related work to do. Working out of my house has pretty much made a workaholic out of me. That can be a negative, but for me I think the positives out weigh the negatives.

[huggytree]

the funny thing about home businesses is its illegal in my city to run a business out of your home.....and it sounds like its fairly common around here

when i built my garage/barn for my shop i was warned by the building inspector not to say its for a business....you cant have a building for a business on residential property

i think its a good thing i guess since i wouldnt like my neighbor to start a junkyard or a auto salvage business in his back yard....

[Harold Mansfield]

In most cities the rules get stricter when you start talking about storing and repairing things on the premises. The same with if you servicing customers in your home.

When I was growing up my Grandmother was a school teacher during the week, but she was also a licensed beautician and was licensed to do it at home. She had a full beauty salon in her basement and would take appointments on the weekends.

I now remember some of the things that of course a little kid wouldn't notice.
The lounge area for people to wait. The separate entrance that was used just for customers. When the inspector would come by.
I guess she had to get the OK from her neighbors as well because I remember how seriously she took it if one of her neighbors complained about parking on the street.
That kind of home business is a whole 'nother ball of wax. You have to really check the rules.

Most of the home based start ups and small businesses that I run across is one person providing a service or expertise that they can do simply from a computer. Accountants, Legal, Secretarial, Human Resources, and other kinds of consultants or service providers.

Rarely are there ever any rules restricting that kind of home business. Besides, how could anyone tell?

[mark2media]

I think the two great challenges facing home based businesses are how to leverage yourself and having a plan.

To me, I won't engage in a business unless it can produce leverage. Leverage to me means I don't do all the work, even if I'm the only person in the business. One of our clients is a successful online furniture company. They have 2 part-time employees and the owner. They outsource furniture production and shipping. They are responsible for sales and marketing. It's a great business and allows them to stay focused on what they do best. I think out-sourcing is key for home based business owners.

They also have a well developed plan. At the end of the day, the most critical thing any business owner needs is a plan. If you fail to plan, you're planning to fail.

[ozetel]

Hi guys

Absolutely the same type of movement to home business down here in Australia as well.

We have distributed staff to their homes if not full time, then part time between office and home. t is most definitely a trend, especially with the implementation of the fibre network in Australia to all residential properties (well when I say All that is tongue in cheek of course). We finally are catching up with the rest of the world with regards to internet speeds and quality so this is tending towards small business keeping management from homes absolutely.

Small business makes up a smaller percentage of the total market here in Australia and I think we tend to have a higher attrition rate for some reason.

But an interesting discussion indeed. The movement home for businesses is even further extended I have found also with the ability to work from anywhere in the world with VoIP phone systems and virtual services like Fax to Email etc etc.

Anyway, keep building all...

[Vickychen]

Small business will continue to grow as you can make more money in general. Working from home will continue to grow as it's more economical even for large employers interested in cutting costs. Brick and mortar in most industries is a dyeing breed.

On the other side of the coin, however, most people need the structure of going to a workplace. Same with school. Not everybody can just pick up a book or sign onto the internet and learn. I think those are the people that are going to suffer in the coming years.

Yes, you are right. Most businessmen who are starting up a small business choose to rent office space in the home. I think it is very useful to cut down the cost for the companies. And i laso like to work at this office which likes the home, too.

[Triandome]

Hello All,

First started with my own business in 2005, gave it up within the first year as I had no structure. Started my current home biz in 2007, have been going strong since then. Found I needed to have a rigid schedule. So I incorporated this schedule and have not deviated since.

Alarm goes off at 0555hrs, out of bed 0600hrs
Bodyweight workout, shower and breakfast 0600 - 0900hrs
Go to my office space in my home and proceed with e mails, client calls etc 0900 - 1200hrs
Lunch 1200 - 1300hrs
Afternoon duties involving clients 1300 - 1600hrs
1601hrs pc is shut down until following morning, I very rarely go past this time, as I left the workforce (was a cement driver, very irregular and unpredictable hours in this job) to start my own business so I could set my own hours. I believe the key to having a successful home business as with anything else is structure and discipline. After starting my own business and enjoying the freedom of having said business, I would never go back to working for someone else (too many missed family dinners, family outings and most of all too much missed time with my kids, all because my employer needed me for "one more load to deliver").

[broudie]

This is a lovely thread.

I find that having a set list of tasks during the day (planned ahead the day before) allows me to work effectively and not obsess and spend too much time on a single task. I'm also hopefully trying to stop by 5pm, so I can hit my bike and ride some trails.

[fluffythewondercat]

I started out of a home office and worked there for a year...but it was difficult to define my start/stop times and things I would do during some small downtime. Due to this, I leased some office space and am going on my third year there.


Now see, I've had the exact opposite experience.

I've been running my businesses from home for over a decade. Three times I decided to rent an office. The first time I had a larcenous landlord and a disastrous triple net lease. The rent was killing me. (This was during the dotcom bubble in 2000 and there was no reasonable office space to be had anywhere.) The second time the rent was more affordable but I wasn't making enough sales to support the infrastructure. The third time the rent was dirt cheap but I was in a building where the person occupying the office next to me was an obnoxious twit who would not leave me alone. After two years of that I came back home, where I can play music or watch a movie while I work. (Part of what I do is relatively mindless.)

Home works best for me. I do outsource some things using Fiverr. I have Photoshop work done by students in India and occasionally freelance writing, too.