Returning to the Nest: Home-Based Business


Click for bid opportunitiesBy Barbara Weltman, SBA Blogger

The usual scenario has been for businesses to start in the owner’s home and grow to a point where commercial space is needed. However, this pattern doesn’t suit everyone; some owners are leaving commercial space to go home for business or personal reasons. While there are no statistics on this type of relocation, anecdotally it does occur and may be a good option for you.
Why Use a Home Office?
It’s clearly less costly to work from home than to pay commercial rent and utilities. The US Small Business Administration (SBA) says fifty-two percent of all businesses in the United States are home-based. But cost isn’t the only reason to leave the confines of an office downtown to work down the hall from your bedroom.
  • Save commuting time. You can use this time for business activities or personal endeavors. In addition to saving time, axing commuting is a cost saver as well as a reduction in your carbon footprint.
  • Gain work-life balance. Working in your own home gives you some flexibility on scheduling and handling family responsibilities.
  • Downsize operations. Many assume that businesses only go in one direction: up (meaning they expand in revenue, employees, locations, etc.). However, for some owners, becoming smaller may be a goal, especially for those who want to transition from full-time to part-time (i.e., semi-retirement).
Home-based businessCollaboration today doesn’t require that everyone be present in a room at the same time. Smartphones, Skype, cloud-based applications, and other means of connectivity enable you to work with others, regardless of their distance from you.
Considerations for Moving
If you lease office space, it may not be so easy to simply vacate. Legally, you’re on the hook for the balance of your lease term. Even if you’ve incorporated or have a limited liability company, likely the landlord required you, as the owner, to co-sign or guarantee the lease payments. You may be able to avoid financial costs if you can:
  • Sublet your space for the remainder of the lease (check the terms of the lease to see whether subleasing is an option).
  • Work out terms with your landlord to get out of the lease. This usually is possible if rents in your area have risen since you signed your lease (the landlord can get more by finding a new tenant).
Recognize that there are costs for relocating. In addition to moving your furniture, files, and other property (which costs money for a moving company or your time and effort if you do it yourself), there are some added costs (e.g., new business cards reflecting the change of address, etc.).

Things to Check for a Home Office
Make sure you can legally operate your business from home before you attempt it. Zoning laws may restrict the type of activities that can be run from a residence (or require a permit to operate). Homeowners associations may have additional restrictions on residents in their communities.
Review the accommodations in your home for business activities. Do you have the space needed for your stuff? Do you have lighting, wiring? What changes have to be made before you move?
Review insurance coverage. A typical homeowner’s policy doesn’t cover business property (e.g., equipment, inventory) or injuries to business guests. Get a separate business owner’s policy or obtain a rider to your current homeowner’s policy to cover your needs.
If you have employees and a move means that they, too, are working from home (theirs, not yours), make sure that this arrangement suits them. Not everyone likes the isolation or has the space to work in their homes. If, on balance, you want to make the switch, recognize that a move may cost you a valued employee.
You also need to notify customers of your move and give them new contact information (e.g., a new phone number if you have a landline; a new address if they need such information).
Make sure you’re ready for the culture shock of working from home . . . noisy neighbors, barking dogs, and household chores in your face and waiting to be done. If you’re ready for this and returning to the nest makes business, financial, and personal sense, be sure that you’ve thought the move through and addressed the issues you’ll face.

Barbara Weltman, SBA guest blogger, is an attorney, prolific author with such titles as J.K. Lasser's Small Business Taxes, J.K. Lasser's Guide to Self-Employment, and Smooth Failing as well as a trusted professional advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day® and monthly e-newsletter Big Ideas for Small Business® and host of Build Your Business Radio. She has been included in the List of 100 Small Business Influencers for three years in a row.

Source:US SBA

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