Bringing Home the Business
Helped by technology and a service economy, more Americans open businesses at home.
It's become the modern American dream, a niche that lets you to work from home, skip the hassle of commuting, spend more time with the kids, and take charge of your career.
That's what Terry Novak did last March. She no longer felt satisfied working as a news reporter for the Statesman-Journal in Salem, Ore.
"I felt like I had no autonomy, and I couldn't see the contribution I was making anymore," she says.
So she quit and went into business for herself as a full-time freelance writer.
Now, she says, her success "depends much more on me."
More and more Americans make the same choice every year.
A recent study by Wells Fargo Bank and the National Federation of Independent Business finds that more than twice as many businesses are now started at home as in storefronts and offices. That adds up to more than 3 million home businesses started in 1995 alone, contributing to a total between 20 million and 25 million.
Behind the trend, says William Dennis, a researcher at the National Federation of Independent Businesses (NFIB), is the growth of service industries and computer technology that allows people to communicate easily with customers and business associates.
For self-starters, it's a chance to build a career that depends on you, not the whims of an employer. By one survey, a desire for independence is the motivating force for more than two-thirds of home-based businesses.
A home business also lets families balance work with parenting. A fringe benefit: Studies also show that having more residents working at home makes neighborhoods safer.
But starting a home business takes more than a home computer and a good idea. It takes discipline, dedication, and a belief in what you're doing. It also takes a lot of coordination with family members and even local officials.
Before jumping in, consider the pitfalls, and develop a strategy to avoid them.
For starters, talk with your family, says Beverly Williams of the American Association of Home-Based Businesses, because it will affect them. Ground rules are crucial. "You have to learn how to close the door to the office when there is no door," says Ms. Williams.
Talk to your family ahead of time about what's work space and what's family space. Let the kids know what constitutes an emergency worth interrupting you. Try posting your office hours.
And people who run their own businesses "have to wear all the hats," Ms. Williams says. In addition to nurturing the core business, you're the secretary, bookkeeper, office manager, and sales rep.
The hardest part for most people is marketing themselves, Williams says. "One challenge of working at home is that clients don't walk through your door."
Novak concedes that self-promotion is not her strong suit. But she has a steady core of clients who keep the bills paid when other work is scarce. "I've been able to eat dinner," she reflects, "but I haven't seen the inside of a Nordstrom in months."
Beyond that, she says everyone who goes into business for themselves should hire a good accountant, no matter what their skills. Working for yourself requires a different approach to taxes and tax deductions. Anybody who doesn't hire a professional may "be in for a rude surprise at the end of the year," Novak says.
To minimize start-up risks, many entrepreneurs look for a home-business to buy, rather than starting their own, according to Paul and Sarah Edwards, experts on the home-business phenomenon and authors of six books on the subject.
The trap, they say, is that many such businesses promise more than they deliver.
Tips When Starting a Home-Based Business:
* Have a specific focus. Customers like to hire specialists.
* Think about where in your home to locate your business. Make it a separate room if possible. That helps draw a line between your personal and business life.
* One phone line usually isn't enough. Check out options such as a high-speed, ISDN line for data traffic and distinctive ringing for separate business and personal numbers.
* Consider ergonomic issues such as a comfortable chair and proper desk height, especially if you'll spend long hours at the computer.
* Buy small furniture designed for home offices.
* Value your time as you value your money. Don't spend it driving back and forth to the copy center, bank, or other business services. Consider buying a machine that faxes, photocopies, and scans/prints for your computer and checkout banks and other services that let you do business via computer.
* Use accounting and online banking software, but keep paper receipts, checks, and invoices for six years for tax purposes.
* Have proper insurance. A normal homeowners policy probably won't cover your business assets.
Resources on Working at Home
Scores of books, organizations, and Internet sites offer help for a home-based business.
The Best Home Businesses for the '90s and Working From Home
By Paul and Sarah Edwards,
The authors have a Web site with articles and advice: homeworks.com
Guerilla Marketing for the Home-Based Business
By Jay Conrad Levinson and Seth Godin,
These can give you discounts on products and services (computers, insurance, accounting services, etc.) or information, such as newsletters, articles, contacts. Often they charge fees for membership.
American Association of Home-Based Businesses, Rockville, Md.
Small Office, Home Office Association, Reston, Va.
Home Office Association of America (HOAA)
About Work's Work From Home Community