We've all heard the legend about wildly successful entrepreneurs who got their start tinkering in their basements, ultimately creating the next big thing. But these days, it's not all that surprising to find entrepreneurs who are starting businesses out of their homes -- and staying there, even as the businesses begin to grow.
The home-based business owner, once a title associated with the likes of stay-at-home moms and dedicated eBay sellers, is now a pursuit of entrepreneurs from all kinds of backgrounds and demographics.
"The home-based business is more than just the multi-level marketing that can be done off the kitchen table," says Gene Fairbrother, lead small-business consultant for the National Association for the Self-Employed. "More people are starting to look to the home-based business as their primary business."
This is especially true in the professional services sector. Whereas service-oriented offerings such as dog walking, plumbing, and construction have long been typical businesses started at home, many newcomers to the home-based sector are simply professionals who have discovered that their careers are no longer bound by the corporate world.
"Many people who work from home today are doing the jobs they've always done in the corporate world," says Jeff Zbar, home business expert and creator of chiefhomeofficer.com. "They find that they've done something all their lives and have a trade or skill that they can tap into." As a result, there has been a migration of professionals -- many of whom have been successful in careers such as accounting, business coaching, and human resources -- into the home-based business sector, where they are exploring entrepreneurship in the capacity of independent consultants.
According to Joanne H. Pratt, an expert on emerging trends in the home-business marketplace and founder of Joanne H. Pratt Associates, professional services is the area where she has observed the most growth in the past year.
The latest U.S. Census statistics on nonemployer firms -- defined to include home-based businesses and those run by one or more individuals -- show that the number of self-employed reached 20.4 million in 2005, an increase of 4.4 percent from the previous year. Additionally, home-based businesses constitute 53 percent of all small businesses in the United States, according to NASE.
Experts are predicting that economic factors will drive the growth of home-based businesses even farther in 2008. "I believe we're heading into a recessionary period," says Terri Lonier, author and founder of workingsolo.com. "Traditionally, in these times, more people turn to self-employment because traditional jobs are more difficult to come by."
But Americans are not just leaving the workplace because their fear of the ax has heightened. The standards that have defined the American workplace for years are finally being uprooted. Not only are fewer Americans working out of the office to avoid long commutes, but the structure of the 9-to-5 workday has also largely disappeared. More people are working non-traditional hours in order to spend time with their families, and many are taking advantage of increasingly mobile technology, allowing them to work not just at home, but virtually anywhere.
"Technology is not only there in terms of functionality, but it has dropped in price," Pratt says. "Now, anyone with any kind of entrepreneurial interest can functionally operate a business, and on their own terms."
The ease of connectivity is also allowing people, particularly baby boomers, to enjoy the benefits of their retirement while also having the freedom to run a business. "It used to be [in retirement] you had a full life of work, got your gold watch and traveled," Pratt says. "Now you put your BlackBerry in your pocket and go travel."
One of the trends experts are observing among boomers is that they no longer want a traditional retirement path. Instead, many see their 60s as a time to finally pursue their passions, and as such, they are increasingly joining the ranks of home-based business owners.
According to Pratt, many baby boomers are entering the retirement era with a dark image of corporate America, which is affecting their decision to be self-employed. "The employer was supposed to take care of you in terms of retirement and health," Pratt says. "If employers are not doing that anymore, is there incentive to have someone telling you what to do, or is there incentive to take your knowledge and start a business?"
On the other end of the spectrum, young people -- Generations X and Y -- are also questioning the workforce they are about to enter. "The younger demographic is finding that they don't want to go to work for somebody," says Fairbrother of the NASE. Instead, they are creating opportunities for themselves outside of the traditional workplace.
For a generation that was raised on computers and the Internet, Lonier says the growth of younger home-based entrepreneurs is not all that surprising. "This group grew up in households where being self-employed or having multiple jobs within one career was very common," she says. "They see having their own business and being entrepreneurial as a very natural extension of their personal interests."
While not all of Gen X and Y businesses are Web-based, Lonier says a defining characteristic of this group is that "they are all leveraging the power of the Internet to some extent." Lonier is predicting that new developments in mobile technology will be one of the main issues to impact home businesses in the coming year.
Apple's successful launch of the iPhone raised the stakes, challenging competitors to put out a superior phone with an integrated browser. "The cell phone browser wars are going to heat up quickly, especially as micro businesses who are very mobile want access to information without a computer," Lonier says.
As consumers become increasingly comfortable and accustomed to buying online, home-based entrepreneurs will find new opportunities in e-commerce, according to Fairbrother. "E-commerce is where we're going to start to see some real strong growth," he says.
So, if 2008 is the year you're planning to finally break free of the office and dive full-force into your consulting business, or you're ready to start operating your weekend retail business full-time, there are some important steps that you should think about taking. Zbar of cheifhomeofficer.com cautions entrepreneurs against rushing into anything. "You're not going to go and quit your day job and start your home-based business the next day," Zbar says.
Zbar advises spending about nine months to a year preparing for the transition to the home office. "Write a business plan, even if you're not going for funding," he says. And, when reaching out to potential clients, he says not to forget that your current boss could one day be your best client. "I always say, 'If you have the opportunity, give your boss the pink slip, and then be able to turn around and ask that person to be your first client."