Our December, 2002  newsletter is entitled "Home Based Businesses."   Our newsletters feature articles on various aspects of preparing a business plan and over time should lead you through the entire business planning process.  

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Home Based Businesses
Running a business successfully from home is a dream more and more people are now turning into reality. Studies indicate that as many as 25% of new small businesses are home based, and this trend is growing rapidly. These businesses begin in the den, spare room, basement or garage. Many are started on a part-time basis and expanded later into full-time businesses. The majority are started by women. Many home-based entrepreneurs are homemakers or people who are undergoing career changes. Others, such as retirees, single parents, people with disabilities, and hobbyists have also discovered employment opportunities in their homes.

Equipped with an affordable computer and communications technology, the home has become a practical and attractive workplace. Studies show that over 50% of the work force in North America is employed in service and information-related industries and this percentage is increasing. These businesses can very often be operated from a home.

Due to the fact that home-based businesses are relatively inexpensive to start and do not require additional building space, they can be a viable option for people living in small or remote communities. With the use of computers, telephones, fax machines, and the internet, people in these communities can now do business around the world.

Advantages of a Home Business

• A home based businesses can be less expensive to start. Organizing an office or work area in your home is less expensive than renting a commercial space. You can probably use your existing telephone to begin with, and the extra utility costs will be minimal. You may already have a computer that you can use. You will save commuting and parking costs.
• A home based business can be started on a part-time basis while still employed outside the home.
• A home business provides an opportunity to use household resources for business use, thus lowering your overhead costs.
• A home based business may allow you to have a flexible life style.
• A home based business can be used to test new business ideas without having to spend a lot of money.
• A home based business may provide a less stressful work environment. There is no boss and your success depends on your own decision making.

• One of the disadvantages of an office in the home may be the image that it conveys. Some customers may regard your business as being too "backyard" to consider seriously. The important factor is to know your customers and what they expect.
• You may be isolated from companionship and interaction with colleagues and fellow workers.
• There is a tendency to work too hard and not segregate your work from your leisure activities.
• You need to be disciplined to work at home to avoid disruptions from family and friends.
• It may be difficult for your business to grow because of the "small image" which you project. It may also be difficult to hire employees because of space limitations.

Almost any type of business can be operated from your home one way or another. However the following is a listing of some common home based business ideas:

• Answering service
• Artist or craftsperson
• Audio visual production
• Automotive repair
• Bakery or catering
• Barber or hairdresser
• Bed and breakfast
• Computer services
• Consulting and other professional services
• Cosmetics
• Daycare
• Desktop publishing
• Event and party planning
• Exporting / importing
• Employment search services
• Fund-raising
• Furniture repair
• Guided tours
• Home renovations
• Insurance
• Instructor (music, dance, art)
• Interior decorating
• Kennel service
• Lawn care and landscaping
• Mail order services
• Real estate
• Tailoring
• Videotaping
• Woodwork
• Word-processing

Starting a home based business is like starting any other business, it should be planned very thoroughly. It requires comprehensive research about the market and the competition just like any other business.

In planning your office or work space try to create an environment that has a professional appearance and that functions efficiently. Consider the following:

• The need for a separate entrance if customers will be visiting,
• Washroom facilities,
• Workspace requirements, and
• The ability to obtain privacy from the household.

Specialized equipment may be required for some small businesses, but all small business ventures will require some common equipment. The equipment to consider are as follows:

• Chair - If you will be sitting all day it is important to make an investment in a quality ergonomic chair to reduce fatigue and improve productivity.
• Desk
• Computer - A computer is not always a necessity for a home business, but most daily operations such as word processing and accounting are simplified and speeded up by the use of a computer.
• Telephone
• Photocopier
• Fax machine
• Filing system

• The work space is your principal place of business; or
• The work space is used exclusively for the purpose of earning income from your business and is used on a regular and continuous basis for meeting with the clients and/or customers of your business.

Beware of "Work-At-Home" Schemes
There are many advertisements out there for work-at-home schemes, guaranteeing such things as "earn $4,000 per month", or "make a million on 3 hours a day." One should be very skeptical and cautious about such schemes and research them fully before proceeding with them. In particular, you should beware of ads that want money up front, that do not indicate the total costs involved, or that claim very little time and effort is required.

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