5 Myths About Being a Home-Based Business
Ever wonder what the secret to being a happy entrepreneur is? I know at least 11 founders that might argue that it's working from home. These deliriously happy 11 were featured in this year's annual list of "businesses you can start in your pajamas"—our tongue-in-cheek way of telling their story about forsaking the office and working from home. The entrepreneurs featured here weren't just Web start-ups or service firms, either. Many even made and sold real products—clothing and cheese, for instance—right from their homes. Some of them, like Melissa Lanz, owner of The Fresh 20, had actually opened an office when she launched her business, but decided to close it when she recognized it as an unnecessary expense. "In six months, I visited the office five times," she says. "It made me feel stupid."
Others, like Michael Cheng, owner of eCoupons.com, cited the flexibility and convenience of having an office in his house. "As a small business owner, I find myself working all the time one way or the other and it's nice to have all my equipment in the next room," he says. He, too, decided to close down an office.
Still, there's plenty of skepticism that surrounds the concept of being home-based. Can your business scale? Will clients think less of you? How do you establish a corporate culture among employees? And, maybe most importantly, how will it affect your work/life balance?
The entrepreneurs interviewed here insist that there are workarounds to these problems, arguing the benefits of working from home outweigh any negatives that might be incurred from not having a traditional office space. Here's five myths about working from home—and why they should be dispelled.
1) Clients won't take you seriously.
One oft-cited fear of maintaining a home-based business is that, depending on the industry, clients won't take you as seriously if you're home-based. This can be especially true for service-based industries, like marketing or public relations, where inviting a client to a luxurious office space with 20-foot conference tables can make you seem like you're a more established firm.
There are tricks to make you seem "bigger" than you actually are (e.g. buying a 1-800 number or hiring a virtual secretary to answer your phones), but that stigma may very well be dying off: the number of entrepreneurs who operate home-based businesses increased from 3.47 million in 1999 to 4.34 million in 2005 (a 25 percent increase), according to the most recent U.S. Census data. And according to Steve King of Emergent Research, who studied this trend with more recent data, that number could be closer to 6.6 million now.
2) Working virtually makes you less productive.
Plenty of management surveys argue otherwise—that employees who work remotely actually get more done.
British Telecom, for example, says it gets 20 percent more work out of its 10,000 home workers. The Computing Technology Industry Association found that 67 percent of the companies they polled said home-based employees were more productive, largely because they spent less time commuting. And a study by CareerBuilder found that 35 percent of virtual workers spend eight or more hours "at the office."
Melissa Lanz, CEO and founder of The Fresh 20, sees this in her own business. "I don’t think that by sitting in a cubicle, you're any more productive," she says. "I find that my virtual workers are able to get more done because they have more flexibility. They might be doing it at 11 p.m. at night, but it works for them. There's a sense of boredom about sitting in an office and you can get distracted."
3) Besides cutting overhead, there are no financial incentives to work from home.
Actually, there are plenty of tax incentives for home-based businesses. But you have to know where to look. Thanks to Bankrate.com for compiling this list of 12 tax deductible items for your home-based business.
1. Office supplies
3. Home office
4. Other equipment
5. Software and subscriptions
7. Travel, meals, entertainment and gifts
8. Insurance premiums
9. Retirement contribution
10. Social Security
11. Telephone charges
12. Child labor
4) Your business won't be able to compete with firms with offices.
By saving on an office space, you can put that money towards your services.
Doreen Clark, who launched her own PR company in November after 11 years in the industry, explains in an e-mail:
"The real reason that I chose to run a business from my home versus an office, is that this is part of my business model. Employees are struggling but so are companies. They are cutting back on many things and PR is generally expensive or at least thought to be. I wanted my company to be part of the solution to the problem that I have heard often over the years…I could work out of an office but I chose not to because I wanted to be able to service any client, big or small, that wants to grow or build their business... If I had an office I would need to pass those costs, in some way, onto my clients. They would, in a sense, be paying for my conference room table, staff, parking garage, fancy location, etc. I am taking that out of the equation, intentionally, so that they can just focus on the results, not the price."
5) You won't be able to focus on work if family is around all day.
For some entrepreneurs, this may indeed be the case: Having a family around presents logistical and sometimes emotional barriers to productivity. But by setting boundaries with family members and explaining—very clearly—that you're not to be bothered, entrepreneurs say work can be done, even with your kids in the other room.
"The perception that I'm not doing anything during the day except hanging around the house can be hard to dispel," says Ryan Anderson, owner and area director in Greensboro, NC for Club Z! In Home Tutoring, in an e-mail. "A few family members have needed reminders that although I can occasionally be available during the day, I'm not always available during the day."