By his own admission, Paul Mann used to be a corporate stiff. Sure, he had a successful career, as CEO of Informative, a technology company that he co-founded in the late 1990s, but he hated putting on a suit and tie and trudging to the office every day.
All that changed—almost by accident, Mann admits—one day back in 2002 when he was looking for someone to watch his dog in a pinch. "I got very few responses back to my query," he recalls. "And the people I met, I just didn't feel comfortable handing them the keys to my home."
What followed was an "aha" moment that led him to start Fetch! Pet Care, a local network of pet sitters and dog walkers that busy people like himself could rely on, especially on short notice. What started as a service for San Francisco pet owners little more than six years ago has grown into a nationwide franchise with 200 locations and a network of more than 3,800 pet sitters servicing pet owners in 1,800 cities. This past year, Fetch! ranked No. 964 on Inc.'s list of the fastest-growing private companies in the nation, bringing in $6.25 million in revenue.
Oh, did we mention he works from home?
Looking back, Mann says he wouldn't trade his newfound flexibility as a home-based business owner for even the most prestigious office job. "I was disenchanted working in a glass fish tank," he says.
Fetch! Pet Care's rapid growth underscores the growing potential of home-based businesses these days. Using his technology background in systems processing, Mann built a software program that monitors and tracks everything from booked appointments to customer feedback—a completely virtual system that allows him to manage his entire company, quite literally, in his pajamas.
Mann is hardly alone in his success. Last month, StartupNation released its second annual list of the top 100 home-based businesses in the United States, on which Fetch! Pet Care ranked No. 1 in the category of "Best Financial Performers." The list also includes a "Recession Busters" category—a ranking of home-based entrepreneurs whose companies are thriving at a time when most of the business world seems to be struggling. (Joseph Pickett and his company Expert Briefings, which provides teleconferencing and webinar services to companies in the pharmaceutical and medical device industries, tops the list.)
"The reality is that the options are narrowing for people in the employment arena," says Rich Sloan, an expert on start-ups and co-founder of StartupNation. "More people are going to be taking control of their life by not counting on someone else for the paycheck."
Entrepreneurial success stories are often born during recessions, but with the current crisis making credit more difficult to secure, starting a business in the traditional way is no longer the most viable option. Instead, the convenience and low cost of starting a business at home is becoming more attractive to entrepreneurs in a variety of industries.
The percentage of micro businesses—defined as 10 or fewer employees—operated out of the home has grown steadily since 2005. According to the National Association for the Self-Employed, 55 percent of micro businesses in 2007 were home-based, up from 48 percent in 2005. Home-based businesses count for more than half the estimated 27 million small businesses in the United States.
Home-based entrepreneurs face the same challenges as their office-based counterparts, of course, especially in a tough economy. Gene Fairbrother, the lead small business consultant for the NASE, says the current economic climate is challenging micro businesses like never before. "Even though there are legitimate business opportunities out there, entrepreneurs have to be cautious and that much more smart about starting a business," he says.
But home-based businesses have one key advantage, especially during a recession—they're cheap to start and even cheaper to run. "Keeping overhead costs low has always been a strong point for starting a business out of your home," says Terri Lonier, founder of workingsolo.com. "But it's even more important now as each industry gets more competitive."
Many home-based entrepreneurs have found success in the service industries, from staffing and accounting services to technical support, and typically they have done so by filling a need for a larger company. Lonier says that while there is less certainty when it comes to the strength and financial stability of the larger companies right now, home-based businesses are also well-positioned to provide the services that many companies are now seeking to outsource. The viability of many home-based businesses this year is going to depend not only on the products and services being offered, but also on how the entrepreneurs position themselves with their clients. Home-based business owners, many of whom are sole proprietors, have an edge when it comes to making business personal.
Kathy Sweeney, founder of The Write Resume, has grown her resume-writing service over the past 20 years by establishing strong relationships with her clients, most of whom she has never met face-to-face. Instead Sweeney spends long hours on the phone consulting with her clients and gleaning information about their professional lives in order to write resumes that will stand out to a potential employer. "One of the things that's really unique about my business is that I have to know a lot about every industry," Sweeney says. "And that comes from being observant and from knowing what questions to ask clients that will elicit the best answers."
Sweeney has written resumes for thousands of professionals all over the world and is considered one of the foremost experts in the industry. Her impressive track record—if the resume does not land the client an interview in 60 days, Sweeney will rewrite it for free—has not only won her a huge customer base, it is also proof that the corner office is no longer the only gold standard for success in business.
Even with her business flourishing, Sweeney has chosen to stay a sole proprietor because of the specialized nature of her service. However, many home-based businesses are growing beyond the capacity of just the founder, and as a result, their owners are turning to franchising. For Paul Mann of Fetch! Pet Care, franchising has allowed him to grow his business exponentially while still allowing it to operate as a home enterprise. Mann is finding that the home-based franchise is an enticing opportunity in this economy—franchisee applications for Fetch! jumped by more than 200 percent in December.
Allan Young, CEO and co-founder of the home-based franchise ShelfGenie, is experiencing a similar phenomenon. Young started ShelfGenie, which installs custom-made glide-out shelves in people's home, in 2000 and decided to franchise the business in April 2008. In less than a year, he already has 51 franchise locations. "The business is very scalable, and we have a relatively low investment range," he says.
Young believes his company is very attractive to potential franchisees because they have a built-in support system. ShelfGenie franchisees receive management and bookings support through a call center. Without the burden of dealing with operational issues, Young says his franchisees are free to focus on marketing and growing their own part of the business. "It's a really good fit for all the parties involved," he says. "Our franchisees value their time and they are doing this because they love the product and they love the idea of having a business."
Thanks largely to the Web, there are now more options than ever for aspiring entrepreneurs looking to make a million in their living room, but it's important to remember that there is more to running a business than a commute to your couch and working in your PJs. Without a passion for what you're putting out there, your business won't survive the tough times, Sloan cautions. His advice to entrepreneurs starting out is to structure the company around a product or service that customers are going to care about. "Make your business meaningful to the customer," he says. That way, "when it comes down to the decision of giving you their business, it isn't just based on math, but on whether the business stirs a sentiment beyond their wallet."