When should you base your business at home?

The idea of working from home is an attractive one – and one that many thousands have acted upon.

According to Women’s Network Australia, women setting up businesses from home is the fastest growing start-up sector in Australia.

Forty-six per cent of women run their businesses from home, which is a 20% increase in the past five years. So why are more and more people choosing to base their businesses at home?

Home-based businesses are becoming more viable and acceptable through technology improvements and the trend for companies to downsize and outsource elements of their business. And the people who choose to start-up a home business do so for a wide range of reasons.

Testing the concept while working

Some continue to work from an office in another role but have decided to dip their toe into a home-based business to see how they go. This brings an element of financial security.

Maria Falas, co-founder of the children’s clothing range Mini Mate is one that has followed this trend. She continues to work two days a week as a lawyer while running her business from home.

Mini Mate was formed when Falas and her cousin both had sons and discovered how difficult it was to get Australian-made clothing for boys.

“We decided to manufacture boys and unisex clothing and spent a couple of years undertaking the research and preparing samples before we launched nearly two years ago,” Falas says.

All stock is sold online and both women work from their respective homes. “I have my own office and try and work out of one room,” Falas says. “I’m lucky in that I don’t need much sleep so I’m often sending emails at 2am, but I do find running a business from home is a juggling act.”

Taking the plunge

Some jump straight into running a home-based business full-time, giving up their former work. These can be people who have retired or taken redundancy, have decided to pursue a long-held passion, or are after a better work-life balance.

The baby skincare range Little Innoscents has been successfully operating for a number of years – all from a home office.

Founder Antonette Golikidis is the creative force behind the babycare brand and in less than four years, she has developed a range that is now sold in more than 800 stores and exported to Asia.

“I began producing the products when I couldn’t find a chemical-free solution for my child,” Golikidis says. “Then a woman in Queensland called me to say she had used one of my creams and it helped with her daughter’s eczema so I then decided to go out on my own.”

Prior to establishing Little Innoscents, Golikidis had been running a corporate massage business. She has no regrets about making the change.

“I love the ability to work from home,” she says. “And it was becoming difficult to manage my massage business as I had four to five staff.”

Golikidis has a factory where all the dispatch takes place, which is 10 minutes from her home and the manufacturing is contracted out. “Most of my meetings are at my home,” she says.

“I have CEOs coming here sitting around the kitchen table. My concerns about being taken seriously by running a home-based business are long gone.”

She says being taken seriously was one of her initial challenges. “When you work from home people tend to think your business is small scale – this is a major misconception,” she says.

“Other challenges are the ones all small businesses face, such as the need to be disciplined – to do your work and not your laundry.”

The advantages she says are the flexibility and freedom. “I can take time off when I need it and I’m here for the kids,” she says.

Flexibility

Mini Mate’s Falas also likes the flexibility working from home offers. She says you become more efficient because when you have kids you know you only have certain windows of time to work within.

“The downside is that that despite having a separate Mini Mate office I am constantly moving around the house with my laptop,” she says. “You never really leave your business when you work from home. But this is a good thing as well as you are constantly thinking of new ideas.”

The uptake of home businesses can be attributed in some part to improvements in technology. The internet is a cost-effective way to advertise products and email allows you to communicate with customers at any time of day or night. Golikidis says she wouldn’t be able to function without technology.

“Without email my business wouldn’t run,” she says. “It’s technology that allows me to work at odd hours. Unlike the days of telephone contact you can email a message at 10pm and often receive a reply but you wouldn’t dare make a business call at that hour because nobody would be in the office.”

Golikidis says she can access her emails though her phone and that allows her to address items quickly regardless if she is on the road taking a delivery or at the park playing with the kids. “It really helps you to maintain a professional presence at all times,” she says.

Managing growth

Being able to contract out various parts of the business helps with managing growth and often the work is contracted to other people running home-based businesses. Golikidis employs contractors such as a publicist, graphic and web designer. While Golikidis is based in Melbourne, her publicist works from her home in Queensland.

Despite her plans for expansion – Golikidis is working on a strategy to export to Dubai and China – she has no intention of moving her office to one outside the home. “At the moment I’m enjoying working from home and don’t see the need to move,” she says.

Cutting overheads

Business adviser Greg Chapman says one of the main pros to basing yourself at home is the low overheads – you don’t pay rent and there is no commute time.

“It’s easy to fit things into your life, especially if you have kids,” he says. “Overall it’s much easier to be flexible so there are a lot of lifestyle advantages.”

There are disadvantages he says although it is a matter of opinion as to whether you think they are positives or negatives. “One is the isolation – you are not mixing with other business people,” he says. “And if you need staff, do you really want them to work from your house?”

He says you also have to consider whether you want customers coming to your house and sitting around your kitchen table. “And there are traps with separating the time between work and home life – something that is difficult when you have an office in your house as the boundaries are more blurred.”

Not for everyone

Chapman says running a retail business is difficult to do from home unless it’s an online one. “Manufacturing is also difficult as it’s hard to scale up from a home-based office,” he says.

“One of the issues is you may get to the point where traffic is becoming clogged in the street with delivery vans. One solution is to have an off-site storage area and maintain the office at home.”

But Chapman says the decision about whether to locate your business at home comes after you ask the following questions: how will you run your business, how will you find clients and how will you support your clients.

“The question of where you locate will be straightforward after you answer these questions,” he says.

Should you base your business from home? Consider these key questions.

1. What savings will you make compared to the extra revenue that could be gained by having an office? Do a cost analysis of the overheads of a home-based business compared to those faced an office but factor in any extra revenue from the latter option.

2. Are you disciplined? In other words, are you able to sit down and focus on your business or are you the type that will make sure the housework is done first?

3. Are you happy to work on your own? Many people need to interact with others during the day to be productive. If you work from home there may be times when you don’t speak to people for hours.

4. Would you be happy having clients or customers come to your house?

5. Is your business likely to expand, meaning that you will need new premises anyway? If this is the case perhaps you should start off with a separate office.