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Advantages And Disadvantages Of Home Based Businesses
by Toni Seger
TheSyndicatedNews columnist

Co-owner of a media/communications firm called ProseWorks(tm) Associates since 1992, Toni Seger has been a professional writer for four decades and since 2004, has produced a public affairs television show for the largest chamber in Maine.

The low overhead and convenient nature of a home-based enterprise can be especially attractive in a rural area. For example, Maine's rural character, with large driving distances and unpredictable weather, has seen a growth in home-based businesses that exceeds the national average. All told, 59% of Maine's small businesses are home based compared to 54%, nationally and that percentage can be expected to grow along with the cost of gasoline.

Home based businesses are overwhelmingly run as sole proprietorships, owned and operated by one person. However, expansion can take place and, in some cases, a home base can surpass the micro-business definition of 4 to 5 employees. According to economic specialist, Jim McConnon, there are 122,000 micro-businesses in Maine. Of those, 42,000 - 56,000 are home based.

McConnon's research has demonstrated the popularity and significance of home based enterprises. Almost 100,000 of Maine's small businesses are sole proprietorships and 64.5% of those are based in the home. The diversity of these businesses, manufacturing and services, speaks to the ingenuity and entrepreneurship of Maine enterprise.

Misconceptions about home based businesses include classifying them as marginally profitable hobbies that contribute little to the overall economy. In fact, home based businesses like micro-enterprises, in general, are the most important source of job creation during economic recessions and, in the aggregate, dwarf big employers in the number of people who support themselves in this fashion. With the proliferation of cost effective communications technology, virtual businesses run from a home base have flourished in areas like writing, photography, graphic art and web design. Put these skills together and you have complete 'B to B' web services which could also include hosting.

Home based businesses (HBB) tend to help local economies directly. In overwhelming numbers, HBB tend to purchase business supplies within their local communities and/or within their own state in contrast to large corporations who tend to purchase supplies from remote locations. HBB owners are also more integrated into their communities than we realize. Most of these businesses tend to sell products or services within their own state, often within an hour's drive of their homes.

Still, it's easy for home based businesses and home based employment to remain invisible to the public and to policy makers who may not realize the important role it can play in providing employment and economic growth. Though communication systems have opened up remarkable opportunities for small players, at home and overseas, working from a home base can still mean less visibility for a business.

Researchers, in this area, have encouraged policy makers to support home-based enterprise by studying local zoning regulations which frequently don't reflect current realities. Regulations, including licensing and permit procedures, were often put in place to discourage business growth where it would interfere with community life. Today's home-based businesses utilizing the 'clean' industry of computers can find themselves burdened by restrictions designed to protect the community from the building of a noisy smelly factory. Similarly, deserving home-based businesses can face prejudice in obtaining credit or loans. "All too frequently, access to affordable capital makes the biggest difference in success or failure", says Jim McConnon.

The biggest disadvantage of a home base can be the perception among other people that you’re 'just home' and can be dropped in on at any time. Because some people don't take home-based offices seriously, they might drop in to chat, without an invitation, assuming you must have the time because you're home. No one likes to be rude, but establishing the idea that your HBB is a real business can be necessary. Another disadvantage can be the difficulty of getting business discounts from some retailers who are suspicious of a home location because they assume purchases are just being made for personal use.

Home based businesses can be less advantageous than conventional storefronts because they can’t get walk-ins, but they can also enable more intimate and creative custom service even when it’s delivered on a remote basis. When businesses make it possible for special client relationships to develop, the return can be more remunerative or simply more satisfying.

Primary among the reasons for having a home-based business are often life style issues. HBB owners are making a choice due to the personal importance of their surroundings for a variety of reasons. Making a living at home can give parents more flexibility to home school children during conventional work hours. After children are grown, the convenience and cost saving aspects of a home base can be very attractive, especially in the winter when the weather is bad. Control over time and attention are often very important issues to HBB owners. Though a home based business can dominate your time just like any other owner/operator establishment, you can still make choices about your work hours which can sometimes mean working in the middle of the night. In the case of disabled people wanting to work and possessing the necessary tools at home to give them all the independence they need, HBB can be an ideal solution.

Jack and Wendy Newmeyer have owned and operated Maine Balsam Fir from a home base for 25 years. The Newmeyers have considered relocating to a conventional storefront, but always elected to remain on their own property. The combination of low overhead and convenience gave them a life style they enjoyed. Wendy says their new retail gift shop is out of sight from their house to help them separate work from play, but there's also a larger issue involved.

"For us, the biggest disadvantage to having a home-based business is that it's impossible to sell", says Wendy, "because we're living with it. When Jack and I decided to build a gift shop, we also began talking about our exit strategy." The Newmeyers still didn't want a conventional storefront in a commercial location, so they chose a middle ground locating the shop far enough from their home to be sold as a separate entity.

Published: Sep 2,2008 15:14
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