Whether it is by choice or by default, many more people are opening home-based businesses. Each year continues to be a booming year for home-based entrepreneurs, also known as the “homepreneur.” Here is a look at why homepreneurs will likely become the largest form of small business in America.
The Trend of Homeprenuership
Going into business for yourself is an uncertain prospect. Although the rewards of working for yourself can be great, the fear of failure and the uncertainty of your next paycheck prevents many prospects from jumping into the fray.
However, due to the economy since 2007, there has been no better time to start a home-based business. Millions of people are suffering from company layoffs, and many more cannot find other work. What choice do they have but to start their own home-based business, using their expertise and contacts as a way to make a living?
According to the Small Business Administration, 52% of all small businesses are home-based businesses. Only about 35% of home-based businesses have revenues of $125,000 a year or more, compared to 75% of non-home-based businesses. Most home-based businesses, about 93%, do not have any employees.
Advantages of a Home-Based Business
The home-based business for the homepreneur does have certain advantages. First and foremost, profitability is better due to the lack of overhead costs. Here are some other advantages:
- Easy Commute – Many homepreneurs like that they do not have to spend time getting to and from work. The ease of working out of the home allows home-based entrepreneurs more time to spend on their business.
- Low Overhead – The money saved on overhead costs can be a major advantage to keeping a small business running. Operating a small business out of the home is more profitable, generating an average net income of 36% of total receipts compared to only 21% of small business who rent an office or retail space.
- Tax Write Off – The home-based entrepreneur can deduct dedicated office space used in the home from individual taxes. This includes rent or mortgage, utilities, telecommunication, renovation, and maintenance costs.
Disadvantages of a Home-Based Business
Of course, there are disadvantages to working at home as well. Here are a few common ones:
- Distractions – Homepreneurs may have to deal with distractions while trying to work. Children need care and attention, the laundry needs to be done, and the dishes won’t clean themselves. It may take more concentration for a homeprenuer to be successful out of the home.
- Solitary Life – Many homepreneurs find that the solitary life is too lonely. In an office or business location there, is socialization with other employees. In contrast, homepreneur must usually do it all him or herself.
- Limited Networking and Marketing Opportunities – A home-based business cannot succeed if you do not have customers or clients. You must be able to use your networking skills and formulate sound marketing strategies to attract business. Without them, your home-based business will fail.
If you are a homepreneur or have decided to make a go at a home based business this year, be sure you are ready for the lifestyle and have the skills necessary to make it a success.