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The Challenges of Starting a Home-Based Business

Filed under Home-Based Business. Fact checked on May 24, 2012.

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Starting a business out of your home can simplify operations for the boss, but it brings with it a whole new set of obstacles to overcome.

A decision to work in your home is likely to impact both your personal life and your business. Even if you carefully separate the business areas of your home from the residential portions, the existence of the home office can create conflicts that you wouldn't face in an office located away from your home. Friends and family might not fully understand the implications of a home office and may need some time to adjust to the fact that you require uninterrupted work time, even though you are at home.

Is the type of business you're considering suited to a home office? How will you deal with customers, clients, and suppliers? Will friends and family expect you to provide services at reduced rates or for free? Can you work productively at home, considering all the distractions? These are questions you need to consider in the very early phases of planning your business.

Is a Home Business Right for You?

If you're thinking of starting a home-based business, you have a special set of issues to consider, along with all the usual issues that must be faced by anyone who is starting a business.

There are major questions you need to answer. Is your business one which will thrive in the home-office setting? Will customers and suppliers want to deal with you when you work out of the home? Will family, friends, and neighbors support your efforts and allow you to be productive? Will being your own boss be an advantage or a disadvantage in your work? Can you look professional while working at home? Can you maintain a healthy lifestyle, despite the proximity of the couch and refrigerator? What kind of work hours should you anticipate?

Which Businesses Thrive at Home?

When you're thinking of starting a business that you can run out of your home, first consider the nature of the business. Some types of businesses lend themselves to being run out of a home and others do not. An important issue to consider is whether your home business will disturb your neighbors or have an effect on the character of your neighborhood.

The following are things to consider when thinking about what type of businesses lend themselves to being home-based:

  • Does the business require a lot of customer or client visits to your home; for example, tax return preparation or music lessons? Are there ways around this problem; for instance, could you visit the client's location instead?
  • Does the business require a lot of space for such purposes as inventory storage, order processing, or performing services such as, for example, auto repair?
  • Does the business produce undesirable side effects, like, for example, noise, air pollution, foul odors, excessive or toxic waste?

If this is the case, zoning rules could be used to put you out of business.

Businesses you can run from home. Some businesses are particularly well-suited for being run from the home:

  • Businesses customarily run in an office setting, such as desktop publishing, secretarial, bookkeeping and accounting, graphic design, and computer programming.
  • Service businesses, such as house cleaning, construction, or home repair work (concrete, carpentry, plumbing, etc.), particularly where you do the major part of the work at the customer's location.
  • Daycare businesses.

Making adjustments for your home-based business. Don't be easily disillusioned — with some adjustments, almost any business can be successfully run out of the home. We suggest you take into account your personal situation. Suppose you're thinking about giving music lessons in your home. Does your home have an entrance that is less noticeable to neighbors (a back or side entrance; a door behind a fence) that students can use? Are you teaching people to play the flute rather than the drums so that the noise is kept to a minimum? Are most of your students younger so that perhaps they won't have cars to park all over your neighborhood? In that case, giving music lessons in your home may be feasible.

An important part of choosing whether to work at home is matching up what you want to do at home with what you can do at home. If you want to work at home, a good approach is to match up your skills and interests with a business need. Then ask yourself if that business need can be met through work done from a home workplace. After all, running your own business from home should be satisfying as well as profitable!

Dealing With Customers and Suppliers

When you work at home, you want to make sure that you and your business are taken seriously by customers, clients, and suppliers. You can do your part to ensure this happens by keeping the following points in mind:

  • Appropriate dress. Dress in a manner conducive to doing business in your chosen field whenever you think you might be meeting with customers, clients, and suppliers. If your business involves frequent or unexpected visits from members of these groups, you may have to dress this way all of the time.
  • A professional workspace. When setting up your work area, make sure that customers, clients, and suppliers see a professional workspace, rather than someone's living area. You may want to have a separate entrance or even a separate structure for your business, if possible.
  • Answer your phone in a professional manner. If your home and business phone line are one and the same, you don't necessarily have to answer with your business name; a dignified "hello" is sufficient. The same principle applies to your answering machine message. If you can't answer your phone personally, you don't want potential customers, clients, or suppliers hanging up because they think they have the wrong number or because they're turned off by your message.

Fostering good client and customer relations. As a home business owner, you must be able to rely on your good reputation when you're dealing with customers and clients. Customers and clients who are happy with your service or products can get you more business through their good recommendations. If your customers and clients are not happy with you, while they may not bad-mouth your business, they're certainly not going to recommend it either!

A few simple steps will go a long way in fostering good client and customer relations:

  • Deliver what you promise. Whether it's a product or a service or a combination of the two, deliver accordingly.
  • Don't promise more than you can deliver. Let your customer or client be pleasantly surprised rather than disappointed.
  • Deliver your product or service in a timely manner. If you don't deliver on time, chances are you won't get paid on time!

A good relationship with suppliers. If you need suppliers in order to run your business, you will want to create a relationship based on good faith and trust. Pay your bills on time! This simple act will foster a good relationship between you and your suppliers and they will be there when you need them to go the extra mile for you. If you need an order delivered right away or you need credit with another supplier, they'll be happy to vouch for you. If your suppliers provide you with reliable, timely service, you can provide your customers and clients with the same.

Dealing with Neighbors and Family

When you run a business out of your home, the issue of dealing with your neighbors, your friends, and your family comes to mind almost immediately. A traditional work setting contains natural boundaries for the people in your personal life. However, when you work at home you will need to create these boundaries so that your business, as well as your personal life, can run smoothly and successfully.

What can you do to create these boundaries? Mentally separating "home" from "office" is the first step you should take. A part of setting up these boundaries is deciding how to deal with interruptions from neighbors, friends, and family while you are working at home. Another issue you may confront when you work at home is neighbors, friends, and family asking for business-related favors. It's important to be ready with a plan to confront these "boundary" issues when they occur if you want you and your home business to be taken seriously and to succeed.

Interruptions. As a person who works at home, you will be faced with an issue that people who work in a traditional business setting are not. When you work at home, you have the task of conveying to those closest to you, your family, friends, and neighbors, that when you are at home and working, this is your place of business. People who would never dream of just barging into your workplace in a traditional business setting may see things differently when you work at home. They may see the fact that you're working at home as an opportunity to ask you to do errands, baby-sit, call you, or stop by just to chat. In other words, if you're at home, you're not really working, at least in their mind.

Because the clear distinction between home and workplace does not exist when you work at home, you must create the distinction. How can you get neighbors, family, and friends to take you seriously when you tell them you're working and can't be disturbed?

Setting up a separate workspace helps, particularly if there's a door you can shut behind you. Even if this is possible, it probably isn't enough on its own.

Work Smart

When people try to interrupt you while you're working, whether it's in person or on the telephone, tactfully let them know that you can't be disturbed because you're working on something (tell them generally what it is), you're on a business call, you're with an employee, or you're in a meeting. Then let them know when you will be available and make sure it's outside your regular business hours. It may take some time, but your neighbors, friends, and family will learn to take your home business as seriously as you do!

Requests for business favors. When you work at home, you may find that neighbors, friends, and family feel free to ask you for discounts on your services and products or for free advice and merchandise. While someone close to you might not think of making this kind of request if you worked in a retail store or for a corporation, that same person feels that it's perfectly acceptable because your business is run from your home. What can you do? It doesn't hurt to remind those close to you that your livelihood (and in the case of your family, theirs as well!) depends on the success of your home business. The fact that your business is in your home doesn't make it any less of a business. Explain that if you give away your product or a service that you want others to pay for, you won't stay in business for very long.

Situations Unique to Working for Yourself

While working at home can provide you with a freedom from structure not possible in a traditional work setting, it can also result in loneliness and lack of concentration. However, if you make a conscious effort, these common pitfalls of working at home can be overcome.

Don't make the mistake of believing that working at home necessitates feeling lonely and out of touch with others in your line of work, particularly those who work in traditional settings. When you work from home, it's your responsibility to figure out what you need to run your business at its best and then take active steps to achieve those goals!

Avoiding isolation. When you're working at home, it's easy to feel isolated. In a traditional work environment, you work and network with co-workers, you might commute back and forth to work with co-workers, and you might socialize with your co-workers at work or after hours. Working at home, especially if you don't have employees or co-workers, can be lonely.

If you work at home, there are steps you can take to avoid feeling isolated and to make and maintain new business contacts:

  • Join professional groups such as industry organizations or associations.
  • Join professional groups for people working at home or people in small business.
  • Take classes in areas that are pertinent to your business and interest you.
  • Participate in and plan events that involve people in the business community.

Keep an eye open for business contacts and interaction wherever you are. Don't overlook the health club, the supermarket, the bookstore, or the neighborhood block party as places where those with interests similar to yours will be found.

Staying focused. Working at home can make it difficult to focus on your work. There are many distractions that don't exist in a traditional workplace such as chores and errands that need to be done and interruptions from friends, family, and neighbors. In the home workplace, guilty pleasures such as watching television or going to the beach on a beautiful, sunny day are very tempting. After all, there's no boss to answer to!

So how do you stay focused and get your work done when you work at home? We have a few suggestions:

  • Set routines. Some home business operators find it useful to set routines to get them on task immediately. For example, upon entering the work area, you could close the door — if there is one — as a mental cue to begin work.
  • List your goals. It's also a good idea to have a list of goals (or at least one task) to attack as soon as you enter the work area. To do this, you'll need to have targeted this task at the end of your previous work day. But if you do this, take care that you set realistic tasks. Nothing is quite so demotivating as starting the day on the "down note" by not accomplishing your first goal for the day. Some people find it helpful if, at the end of the day, they add a couple of things they did do that day, that were not on the original list!
  • Plan for distractions. Despite all plans to the contrary, recognize that distractions are inevitable when you work at home. Even a traditional work setting has its own distractions. To deal with the inevitable distractions, work them into your schedule where you can.
Example

Jason starts work in his home office each day at 10:00 a.m. Every day, his mail is delivered at 12:30 p.m. The mail carrier usually has packages and certified letters that must be signed for, and he and Jason usually have a brief conversation as well. Jason finds it hard to get right back to work after this daily interruption. To avoid this problem, Jason decides to take a break every day at 12:30. He's been at work for two and a half hours at that point and it's a good time to get something to drink and have a snack. By fitting the mail delivery into his workday schedule as a conscious decision to take a break, Jason finds he doesn't feel his work is disrupted. In addition, knowing he has a break coming up makes it easier for Jason to stay focused on his work until that time.

You can also stay focused on your work at home if you make every effort to set up a work area away from distractions. Stay away from the kitchen (unless your workplace is the kitchen!), away from rooms in your home where the television or radio are on in the background, away from areas where you are bothered by street and traffic noise, etc.

Your tolerance for distractions is a highly individual matter. While some people can write an entire novel with a television blaring in the background, others need total silence to compose a sentence. Here's an exercise we suggest. If you find yourself unable to focus on your work, take note of what exactly it is that distracted you. Was it a car alarm? The phone ringing in your bedroom? A neighbor's dog barking? The doorbell? Can any of the distractions be eliminated or minimized in the future? Once you determine what's necessary to keep you focused on your work when you're working at home, you'll be on your way to productivity!

Dressing for Work at Home

When you are working at home, the dress code is up to you. But don't just assume that working at home means working in your bathrobe.

Think about the way you do your best work. Can you focus on work, no matter what you're wearing? Or do shorts and a T-shirt make you feel like you should be at the beach? Are you more focused on your work when you're at your most comfortable with your lucky baseball cap on? Do you mentally feel "not at work" when you're not in attire that's totally presentable to the outside world?

Your workplace, your rules. When you are deciding how to dress in your home office, don't lose sight of the fact that a large part of your decision to work at home is largely based on the desire to make your own rules in your own workplace. Don't feel tied to the constraints of traditional work attire if you feel that you can be productive without it. The only person you have to impress is yourself!

Projecting a professional image. However you choose to dress, we suggest you keep one thing in mind. If you are meeting clients, customers, or suppliers, or have a meeting with your professional peers, dress according to the custom within your profession. When you're working at home there's no one to impress. However, you don't want anyone else you deal with on a professional level to discount you or your business because it's a home business and they don't take you seriously because of the way you dress.

This doesn't mean you should wear a suit when meeting with others if that's not the traditional dress for those in your field. In some fields, a person wearing khakis is dressed-up. In other lines of work, nothing but a business suit will suffice. Err on the professional rather than the casual side of dressing if you're not sure!

Maintaining a Healthy Lifestyle

Working at home will make changes in most people's lifestyles. For example, a person that walked 20 minutes each day to and from work now just has to walk across a room to be "at work." A person that played on the company softball and basketball teams now doesn't engage in any organized sport.

Staying fit. Does working at home mean you get less physical exercise? It doesn't have to! Here are some suggestions for getting physical exercise when you work at home:

  • Join a health club with time and money saved from commuting.
  • Organize or join a local sports team (check your local Y or post notes around town).
  • Take up a sport you can do on your own, such as running, walking, or working with weights.

Make time for your health. While it's understandable that you'll want to spend as much time as possible making your home business a success, you can't afford not to make time for physical fitness. Keeping fit helps keep you mentally alert, it gives you more stamina, and, if your sports activity involves others on a team or at a health club, it provides relief from the isolation you may experience working at home.

Hours That Make Up the Work Day

Setting your own work schedule is often one of the best perks of running your own business, especially from home. However, when you choose which hours to work you should take the following into account:

  • If contacting customers and suppliers is an important part of your business, you will want to set your work schedule according to their availability.
  • When you start out in business, you may want to hold to the traditional business hours of your locale, or to the hours of your type of business.
  • After you have been in operation for awhile, you may get a feel for whether you could better serve customers and get an advantage over your competitors by adjusting your work schedule.

Take advantage of the freedom to choose. You have much more freedom to choose your business hours if you don't speak directly with customers or suppliers. If you work best in the wee hours of the morning, do it! Being your own boss was probably one of the reasons that you went into business for yourself. You should take advantage of this freedom when you can — you'll feel better about what you're doing and be more productive.

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