Dorothy was right. There is no place like home--especially when it comes to launching a business in the 1990s. The trend toward small home-based businesses has been amply chronicled, but what's less well known is that those businesses don't all stay small. Just ask the CEOs of the fastest-growing privately held companies in the nation. An astonishing 45% of the companies on our 1996 Inc. 500 list were started in their founders' residences. What's more, those companies spent an average of 13 money-saving months at home.
What happens when a home-based business starts to grow? Sooner or later, CEOs tell us, they begin to see unmistakable signs that other office arrangements are called for. More often than not, the impetus to move is one of five common pressures.
Pressure Point 1: Family
You can't tell where your business ends and your family begins.
When Erica Swerdlow started EBS Public Relations, in 1993, it was just she, her husband, and another full-time person in the Swerdlows' basement. As both the business and the family grew, the line between the two became increasingly blurry, to Swerdlow's dismay. By mid-1994 "it was all mishmashed together," she says. "I had just had my second child, and I was nursing around the employees." Swerdlow knew it was time to move when she overheard her toddler telling someone his sisters were Barbara and Kara--both EBS employees.
Pressure Point 2: Neighbors
Your neighbors grow restless.
As Greg Johnson's neighbors went off to work his four employees would arrive at his home to help produce and market his Parrot Ice frozen drink. Johnson had an off-site mini-warehouse, but one day the delivery trucks accidentally showed up at his house. "We had half the block out there reviewing what was going on," he says. Johnson soon received a notice from the neighborhood deed-restrictions board, reminding him that the area wasn't zoned for business. He took the hint--and moved the business.
Pressure Point 3: Space
You have to step around an employee to get to the orange juice.
Tom Wilson of Major Motion Dancewear was fortunate to have a 600-square-foot attic above his garage to house his fledgling dancewear company. Unfortunately, there wasn't quite room for shipping and receiving or inventory, so those functions were relegated to elsewhere in the Wilson homestead. "You couldn't get through the dining room because of all the fabrics stacked in there," he says. Wilson, his wife, and three employees were working out of the increasingly crowded home. Not only did Wilson trip over employees during working hours, but he also had to contend with workers underfoot as he shaved, dressed, and had his morning coffee. The reason? One key employee could get a ride to work only at 7 a.m.--and Wilson didn't get up until 8.
Pressure Point 4: Staff
Your lack of a "real office" bothers employees--or prospective ones.
To Nigel Hook, starting a computer consultancy out of his home made perfect sense. He and the other employees at Dataskill International primarily worked at client sites. He could forward the company phone and do administration from home. But once Hook had 15 consultants on staff, he wondered if a permanent office was necessary--especially when one prospective employee got lost trying to find Dataskill. "He was looking for a corporate area and got confused when he saw the residential neighborhood," says Hook. Now that he has a traditional office, Hook says, employees new and old are much more comfortable.
Pressure Point 5: Customers
Your clients sense there is something awry.
Home was really the only option Mark A. Fischer of MAF Ground Services could afford for his start-up. So he set up a desk in the corner of the family room--an arrangement that would have worked fine if it hadn't been for Fischer's two-year-old. "He and his sticky fingers were always ransacking the office," he says. The final straw came when Fischer was on the phone negotiating a big project with a corporate customer, and his son started crying in the background. Fischer moved his business to an outside office at his earliest opportunity.