Perhaps I should start by asking the question “What is a Home Based Business? This is any business operated from the comfort of the residential home of the owner.
The next question is who is a Home Based Business owner? This refers to an Entrepreneur who decides to run his business from the comfort of his home.
I decided to clarify these terms because there is a huge difference between a Home Based Business owner and a Home worker who might be working with a government/private organization but decides to be working from home once or twice during the week.
Evolution of Home based Business
Many businesses operated from home usually start as a Micro or Small Enterprise. Some eventually metamorphose into Medium Scale Enterprise and others eventually grow into quite large companies.
The desire by Entrepreneurs to start operating businesses from home actually started in the 1980s. During this period, a lot of things combined to precipitate this massive desire by people to own Home based businesses.
In the main, the combination of many factors like socio- economic change, improved technology and new management thinking resulted in the loss of otherwise permanent paid employment and this encouraged people to attempt to revalidate their freedom by opting to set up a business at home.
The advent of new management thinking and theories like downsizing to make an organization Lean and more agile and efficient created fears in the mind of the average worker
So mass lay- offs helped create the right environment for some workers to go it alone and set up a Home based business.
The period of late 1990 to 2010 can be appropriately described as the period of massive explosion in the establishment of businesses at home. The use of Computer, Internet and Mobile Technology helped in the growth of this idea.
I strongly believe the idea of setting up business at home will continue to be positive and will remain so for a long time.
The continued upsurge in the desire of people to own businesses has attracted the attention of Universities and other higher institutions. They have responded by introducing different courses and programs on Entrepreneurial studies to cater for these needs.
Unlike earlier belief that businesses run from home are not well managed and don’t make good money, the present situation is that many Entrepreneurs motivated to set up business at home now have college degrees including a lot of high level professionals with business exposure.
The entrepreneurial spirit is innate in all of us and we only need to be adequately motivated to take the necessary action.
It’s really an exciting world out there.
THE HOME BASED BUSINESS EXPLOSION
As stated earlier, though the crave for running businesses from home started way back in the 1980s, what can be termed the explosion of this way of doing business was between the late 1990s and the first decade of the new millennium.(2010+)
This coincided with the time when the setting up of a Home based business became a Fad. According to Mr Lewis of the National Association of Home Based Businesses, Home based business in the United States grew from about 6 million in 1984 to 23 million by 2007.
With the help of modern technology like computers, mobile phones, printers and the huge power of the internet, more work is being done virtually than ever before and more global businesses are routinely being run from home.
According to the 2012 GEM report, 69 percent of American entrepreneurs start their business at home from either a spare room in the house, the dining table or from the garage. The report further revealed that more than 50 percent of entrepreneurs continue to operate from home even after the business has taken off successfully and stabilized.
Again according to Mr. Lewis of the National Association of Home Based Businesses, his own companies do training in 20 countries, import eyeglass frames from China and also develop condominiums.
Mr. Nuyten of the Home Based Business Statistics in America quoted the following statistics as at 2012:
38 million Businesses were operating from residential homes in America
A new business is started from home every 12 seconds in the United States
The Home Based Business sector in the United States earned Four Hundred and Twenty Seven billion dollars.
It revealed that 70 percent of Americans would like to be self- employed.
Entrepreneurship has become entrenched in the psyche of the average person. The Baylor University study of 2005 revealed then that more than 5 million jobs had been lost in Fortune 500 companies since 1980 while 34 million were created in small businesses.
The United States Census Bureau data of October 2012, also revealed that the number of businesses being operated from home have been on the rise since 1999.
The United Kingdom Experience
The continued growth in the Home based business sector appears to be a global phenomenon as the report from the United Kingdom will show shortly.
The United Kingdom department of Business, Innovation and Skills released a report titled ” Backing for Home Business” which revealed that 2.9 million home based businesses in the United Kingdom contributed 300 billion pounds sterling to the UK economy. The report also stated that 70 percent of all new businesses in the United Kingdom started from home.
According to Home Business report compiled by Enterprise Nation, 1,400 new businesses are started from home each week.
This report also confirmed that out of a total of 4.5 million small and medium enterprises, 2.1 million are Home based businesses.
Factors contributing to the growth of Home Based Businesses
There are many factors motivating people to set up Home based businesses such as:
Losing one’s job
Being laid off in a time of economic downturn could be very devastating. With difficulty in getting new job offers, the next best thing would be to start a Home based business.
You are your own Boss. Literally, you can come and go as you please. You maintain better work/family balance. There are no set opening and closing times. You go for lunch and vacation when you feel like
Reduction in Stress level
The daily commuting, especially with the present heavy fuel costs is avoided. Also those train/bus rides to and from work with all sorts of characters is avoided.
No corporate office politics
You are not thinking of how to always please the boss and climb the corporate ladder. You don’t have to engage with difficult colleagues. Best of all, there are no dress codes.
Cheaper start up and running costs
It’s cheaper to set up a Home based business. A serious entrepreneur can get started with just $5,000. The main requirements could just be a computer, mobile phone, printer and a good internet connection. No rent of physical store space.
Some entrepreneurs set up business at home to bring in extra income to support a day job. Some people start the business as a part time hobby. Eventually the business may become very successful and the entrepreneur will now take the decision to resign from the day job.
Be your own boss
You are your own boss. You have the freedom to do things the way you want. There is nobody breathing down your neck reminding you of targets.
An otherwise loyal employee may become unhappy with the company for lack of promotion and motivation. The next thought is to set up a Home based business.
Opportunity to achieve Self actualization
Having your own business gives you the opportunity to make as much money as you desire. This of course depends on how much money you want to make and the amount of time and effort you decide to invest in the business.
Advantages of running a business from home
The desire to get out of the rat race, avoid the daily grind coupled with the power of modern technology make telecommuting more productive.
Together with some of the factors already mentioned above, listed below are more advantages:
You can deduct some of your expenses as business expenses. These could be utility bills, insurance, mortgage and property tax.
Opportunities for Professional improvement
It is safe to assume that with the day to day running of your business, you will develop more business management skills.
Multiple streams of Income
With more time to yourself and the freedom to follow your lead, you can decide to explore other areas of interest and create multiple streams of income.
Disadvantages of running a business from home.
In spite of the almost glamorous attraction of Entrepreneurship, there are some disadvantages which must be effectively managed in order to improve the chances of success.
For some one that had been used to regular pay checks, having to go through some weeks without income could be a huge challenge.
Lack of adequate space
This could arise where work sometimes spills into the home space
Nearness of Family and Friends
The nearness of family and friends could become a distraction if not properly managed.
Lack of Fringe benefits
Fringe benefits like health and dental insurance and paid vacations which were hitherto being enjoyed in paid employment are no longer available.
Friction with neighbors
The type of business you are involved in could create friction with neighbors due to noise pollution and lack of packing space
Staying glued to the computer screen and in a small space may affect health and fitness. So try and create time for exercise and recreation.