The ranks of home-based entrepreneurs are growing at a fast clip -- and so are their businesses. Why the new American Dream might just start in your living room.
About five years back, if you mentioned the term "home-based business," it would conjure up images of hobbyists tinkering in their garages on handcrafted products or eBay junkies who worked part-time peddling the contents of their attic. But in just the past decade, the home-based business population has evolved into a vital economic force that now totals more than 15 million, according to a recent study. And more than just their sheer numbers, new research shows that many home-based businesses can be just as substantial and financially successful as businesses operated in big-city skyscrapers.
A report released last October by Network Solutions, a Herndon, Virginia-based online marketing firm, takes a thorough look at the state of the home-based enterprise. The findings -- which were compiled by Lafayette, California-based Emergent Research and were based on an analysis of data from the U.S. Census, Small Business Administration, and survey data from Network Solution's Small Business Success Index -- show that entrepreneurs who work from home will have an increasingly significant impact on the U.S. economy.
"There has been a huge attitudinal shift in the way that home-based businesses are viewed now," says Steve King, a partner at Emergent Research, which is a home-based business itself. "It wasn't that long ago that if you said you worked from home, it meant that you were unemployed." But now home operations have reached the "legitimacy tipping point" -- in part because the Web and other technology allows people to work from anywhere -- and instead of entrepreneurs trying to hide their kitchen-table status, many shout it from the rooftops. King says this shift is largely due to the fact that bigger corporations are increasingly using home-based businesses as vendors, "so not only is there legitimacy in the eyes of the customers, but also from the larger business community as well."
One of the most significant findings from the study is the home-based business owner's role in job creation. While typically thought of as sole proprietors, the research shows that half of all home-based business owners have an employee in addition to themselves, many of whom also work from home -- accounting for more than 13 million jobs nationwide. These findings were compared to numbers from the National Venture Capital Association, which reported that companies that receive or have received venture money at one time, including giants such as Microsoft and Apple, employ approximately 12.1 million Americans.
Michelle Tunno Buelow who designs and distributes a line of children's accessories called Bella Tunno, oversees a team of more than 50 part-time or contractual employees, including her distributors and marketing people, from her home in Charlotte, North Carolina. Like many home-based business owners, Tunno Buelow's company grew out of a hobby -- designing funky accessories like reversible bibs with geometric patterns for her newborn daughter. But once people started taking notice of her designs, she expanded her product line and began branching out to retailers. Tunno Buelow's big break came shortly after starting up, when a Beverly Hills baby retailer asked if she wanted to provide Bella Tunno's products for the gift bags that were being given out to expectant celebrity moms at the Golden Globes.
That initial celebrity buzz led to partnerships with Gap and Nordstrom, which are Bella Tunno's two biggest retail accounts today. But even with consistent revenue growth of 140 percent each year and sales over $1 million, Tunno Buelow has always identified as a home-based business owner. Her desk is set up in one corner of her children's playroom, where she conducts business with toys strewn about. "Most of the time, it goes really well, working from home," she says. "I only work with and hire people that believe in our philosophy, and a lot of times I'm working at 11 p.m. because I chose to take my kids to the park that day." Tunno Buelow, who was one of Ernst and Young's 2009 Winning Women honorees for most promising business, represents a growing contingent of proud home-based business owners, who are proving that running a substantial business can be done from virtually anywhere -- and in many cases, offers a better lifestyle.
According to the Network Solutions study, home-based business owners are also generating significant revenue. Thirty-five percent bring in more than $125,000, and 8 percent are making more than $500,000, the report found.
Increasingly home-based businesses are being looked at as a competitive force, and some, like Anchorage, Alaska-based LeadDog Consulting, even have a niche market captured. In the cartography industry, there are only a handful of companies that are responsible for producing the majority of the digital maps in use around the world, and one of them is LeadDog, founded in 2000 by Jim Anderson. The company's operations are extensive, having digitally mapped much of Iraq and Afghanistan for the U.S. military, but what's surprising and different about LeadDog is that those maps are created right from Anderson's home. Using specialized software, an Internet connection, and data from satellites, Anderson says he is able to map the tiniest details on streets that are thousands of miles away from him home base. Like many entrepreneurs, he acquired most of his skills working for another major mapping company for seven years before venturing out on his own.
"One of the things I realized early on when I started LeadDog, at the height of the Internet boom, was that everyone was doing business through e-mail and it didn't really matter where you were," says Anderson, who grew up in New Hampshire but fell in love with the idea of living in Alaska after visiting a friend there. "I didn't have to have a brick-and-mortar site or a commercial presence somewhere to establish my business. Especially being in a niche market, as long as I could take a phone call with someone in Turkey, it didn't matter where I was." Anderson, who has four employees, says being located in Anchorage, which is considered a somewhat central location to the rest of the world, is actually advantageous because the time zone allows him to conduct business at pretty normal hours.
LeadDog has produced maps for more than 100 countries and focuses primarily on mapping developing countries where infrastructure knowledge is often lacking. In addition to the U.S. government and military, LeadDog works extensively with GPS tracking companies as well as other private companies on projects like location scouting.
Being home-based has never been an issue for clients that LeadDog works with, Anderson says, and much like millions of his counterparts, this kind of flexible work style -- in which the line between home and office is quickly diminishing -- helps keep him a more productive business owner. Not to mention a happier one. After all, not many can say they take walks in a nearby state park at lunchtime, or watch schools of salmon swim by in a stream near their offices. "It's not your typical company break," Anderson says, "but it works for us."
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