Many people often fantasize about operating a business from home. The prospect of being their own boss is quite attractive to millions of people around the globe. Although there are many aspects to the home-based business that are very alluring, it isn’t without its own level of risk. Depending on the kind of business you operate, it can be more stressful and time consuming than having a traditional career for some big company.
Keeping Costs Low
Approximately 50 percent of businesses started today will end up closing down within four years. A large portion of these will do so within the first 12 months. Although there are many factors that play into why a business fails, one of the major reasons is that of overhead expenses. Many businesses simply cannot afford to pay rent, utilities and employees while trying to stay open. The home-based business eliminates all of these factors.
Putting the Burden On the Home
When moving the business into the home, you’ll eliminate a large portion of overhead costs. However, you’ll also introduce new elements into your residence. Some of these could include:
- Higher utility bills as a whole
- Finding workspace
- Visiting customers
- Registration of your residence as a place of business
If it’s just yourself operating an eCommerce website from your basement, then the only true addition would be finding space for products. However, bear in mind that a successful eCommerce business may quickly consume more square footage as time goes on.
A More Comfortable Environment
When developing a small business from home, many professionals often find themselves in their pajamas all day. It’s a level of comfort that cannot be simulated in any other workplace. Of course, this is also dependent on the work you perform. If you have a real estate management business from home, you don’t want your clients to walk into the office while you’re sitting at your desk in your PJs. The comfort level can go beyond attire as it could also include:
- No commute times to worry about
- No gasoline for traveling back and forth to work
- Easy access to lunch – which could save money at the drive-through window
- Easy to put on a movie in the background while you work
- Listening to the music you want to hear
Risk of Losing Professionalism
While working from home does promote a heightened sense of comfort, it can also be damaging to your professional mindset. Many home-based professionals have admitted that their lack of professional structure has damaged their relations with customers and productivity. It can become too easy to be distracted from work while at home. It can also lead to a lack of motivation to put effort into the job. This is why many people who work from home will still dress appropriately. It helps them keep the proper mindset for success.
Working For Yourself
One of the biggest attractions to operating your own business is that you’ll be working for yourself. When the company does well financially, you’re the one who reaps the profits. Your efforts go into making more money for you and anyone working with you. In 2015, nearly 80 percent of small businesses were self-employed owners. Part of this is because of the extent in which information technology has developed since 2000.
Effort Affects Your Income
Unlike a traditional job, your own efforts will dictate how much you make. When you work for some big company, you’re getting an hourly wage – even if you have to go to the restroom. If you’re a freelance writer on the Internet, those bathroom breaks are costing you money. If you don’t feel like giving 100 percent one day, your immediate pay is affected. It takes a great deal more commitment to maintain a business from home than if you were to get an hourly paycheck from the local grocery store.
Private Insurance and Retirement Plans
Owners of home-based businesses have to be more vigilant when it comes to saving money for things such as retirement plans. Even insurance coverage can be more expensive if you go through a private carrier. Most large corporations receive employee discounts when it comes to these aspects, which makes them much cheaper to manage. Some home-based business owners will set aside private accounts for these purposes.
Taxes are a common problem for many who operate businesses from home. Everything from sales tax to personal income tax can be directly affected. Unless you file taxation paperwork and submit your wages to the IRS, taxes can become quite the burden. A way to offset this problem is to set aside a savings account specifically for paying income tax for yourself. Putting 10 percent of your earnings each month into this account will allow you to easily pay the IRS every year while benefiting from the interest accrued. It would be like getting a refund each year instead of sweating how to pay your debts.
Spending Time with Children
One of the top reasons why people are looking more into creating a small business from home is the prospect of caring for their children. Many households cannot sustain high-priced day care. In many cases, mothers tend to quit their jobs because they would lose more money than they would make by using daycare facilities. A business from home remedies such problems. It gives the parent ample time to tend to their children without fear of going broke to pay for various services.
Children Can Be a Handful
While the home business allows you to care for children, it can also create a distraction. It’s a double-edged sword as your productivity can be greatly reduced by being a stay-at-home parent. If your children are old enough to go to school, this can be the golden moment to get some work done. However, infants and toddlers need constant supervision – which can take away from trying to operate your home-based business.
Operating a small business from home can be exciting as well as lucrative. However, you shouldn’t believe that it will be the end of your financial problems. A great deal of dedication and commitment will need to be put into the experience if you want it to be profitable. Plan out every aspect of the business and make sure you address all of your concerns immediately. It can help resolve future problems while keeping your business afloat.