Starting a business is a very challenging moment, especially if you will start it right at the place we called home. Although home-based businesses are considered small businesses, we can’t deny the fact that some of the world’s largest and most admired companies today have started their business in a garage and some in a dormitory room.
Consider the world’s most valuable company Apple, Inc., with a market capitalization of more than half a billion dollar as of April 2012. In 1976, Apple founders Steve Jobs and Steve Wozniak, when they are just 21 and 26 years old respectively, started creating computers in a garage in Cupertino, California.
Google, Inc., the Internet search giant and one of the largest tech companies in the world, was also started by Larry Page and Sergey Brin at Susan Wojcicki’s garage in September 1998 when they were still studying as graduate students in Standford University.
Facebook, the world’s largest social networking site, was also started by founder Mark Zuckerberg in his college dorm room when he was just a Harvard student in 2004.
People want to start business for many reasons, such as freedom from wage slavery, the dream to be rich, work-life balance, and the opportunity to have more time with family. Whatever reasons we have, we must learn the important business and entrepreneurial lessons we need to succeed in our every endeavor. If you are starting a business and planning to setup a home office, you must understand the following pros and cons of running a home-based business.
1. Being your own boss. As a self-employed and the owner of your own business, you are your own boss and you are your own employer. You don’t have an employer who will dictate you and you can decide whom to serve by choosing your own customers or clients.
2. Flexible working hours. You don’t need to wakeup early morning and start working at 8am. You can also go out from your home office and stop working anytime you want. With flexible schedules, you can have the time to go to the gym, attend to your family activities, or even have an unexpected vacation.
3. Less commuting. Since your workplace is right at your residence, you don’t have to commute to work. This will save you from transportation expenses, as well as hours in travelling.
4. No office attire required. You can work with your pajamas because there is no office attire required.
5. Near to your family. You are always near to your family. Your children can always see you and they don’t need to spend hours on waiting at your arrival at night.
6. Low investment requirement. Starting a home-based business doesn’t need a lot of money to put up as a capital. Since you will use your home as your place for business, you don’t need to spend on a monthly office or space rent expense.
7. Can be started part-time. A home-based business doesn’t need to be started fulltime. You can start it part-time or while you are still employed in a certain company.
8. You can employ your family members. You can involve your family members, who have the special skills and talents that can be utilized, to your business.
9. Increased tax deductions. You may claim tax deductions on your home-based related expenses, such as the expenses you will incur on office improvements, telephone, electricity furniture, and office equipment.
10. Unlimited income. You have the opportunity to grow your income based on your initiative, hard work and efforts.
1. Lack of human resources. You may be your own boss. However, you may also be your own manager, employee, accountant, marketer, et cetera, unless you have the money to hire employees or outsource service providers. Starting a home-based business or any small business requires the owner to be involved fully in running the business. That is why it requires hard work and extra effort.
2. High discipline requirement. Because of enjoying flexibility, a home-based business owner is susceptible to time abuse. Hence, it requires a higher and stronger discipline to establish the right working pattern.
3. Lack of social contact. Yes you don’t have to commute to work. But because of staying most of your time at home, you might miss the community, professional co-working and networking.
4. Lack of formal environment. Yes you are free to wear anything inside your home-office. But it may also be the reason why your business may lack a professional or formal environment.
5. Family and personal privacy disruption. You can enjoy working while within the reach of your family or children. However, this may also cause your personal and family lifestyle be distracted by your business, and vice versa.
6. Limited capital. A home-based business can be started with low-capital, and even without any financial capital. But the drawback in starting it small may include having a business that is financially limited and incapable of immediate business expansion.
7. May require longer work hours. Home-based business can be started part-time and can be managed simultaneously with your daytime job. However, you may end up working on weekends, holidays and even overnight to make up your backlogs.
8. Problems in balancing business and family relations. You can employ your family members depending on the appropriateness of their capabilities and qualities. However, once your family becomes a part of your business, problems on balancing business and family relationships may occur. This can happen since you are not only managing co-workers or employees, but you are also handling family members.
9. Additional cost on accounting and bookkeeping. As a self-employed owning a business or practicing a profession, you can claim expenses that are related to your home-based business or practice of profession as allowable deductions against your taxable income. However, this will also require more tasks and obligations for accounting and record-keeping.
10. Variable and unpredictable income. Home-based business owners can have unlimited earnings based on their efforts. However, they may also suffer from losses or fluctuating income, especially at startup.
Starting a home-based business can be a challenging attempt to follow our passion. It is also a promising act that can provide us work-life balance and financial freedom. But just like any feat, it has also drawbacks that may give us inconveniences just like the list of disadvantages we discussed above. However, as long as we are loving our work and we have a great purpose of venturing into the business world, we can have the power to overcome those great challenges. In our next post, we will discuss some important tips and remedies on how to cope with the problems of starting and managing a home-based business, as well as how to deal with the cons we have listed above.
Photo by Gregory Han My new home office at Flickr