By COLLEEN DEBAISE
Adapted from THE WALL STREET JOURNAL COMPLETE SMALL BUSINESS GUIDEBOOK (Three Rivers Press).
So maybe 2010 will be the year that you finally break out on your own. Voluntarily or not.
As we continue to dig ourselves out of the deepest recession since the Great Depression, many of us have lost corporate jobs. Others worry that layoffs are lurking. We're taking on free-lance assignments, contract work and short-term projects -- and getting them done in the extra bedroom, eat-in kitchen or spare corner in the utility room.
Flexibility -- and Distractions
The home is the new hotbed of entrepreneurial activity.
For those who have temporarily joined the ranks of the self-employed, a home office is the natural (and cheapest) place to get work done. For others who are using severance packages to take a shot at entrepreneurship, the home can be an ideal incubator to test out ideas. Many a successful venture began life in a garage (Hewlett-Packard, in 1938) or launched from a living room (LinkedIn, in 2003).
In many cases, it makes sense to grow the business at home before moving into a separate physical location. Other times, your new venture, career or sideline is simply well-suited to be run out of your home. And in a tough economy, a business owner who has rented office space might return to a home office to trim costs.
About 52% of all small businesses are home-based -- representing a broad swath of industries, from software development and mail-order sales to plumbing and general contracting -- according to statistics from the Small Business Administration's Office of Advocacy.
Is it Right for You?
If you're thinking about a new career as a home-based entrepreneur, consider these questions first:
1 Am I passionate about my product or service? The start-up phase is stressful. You'll need zeal to get through the rough patches, especially in the early days when hours are long and initial profits (if any) are lean.
2 What is my tolerance for risk? There's no guarantee of success -- or even a steady paycheck. If you're risk-averse, entrepreneurship probably isn't the right path for you.
3 Am I good at making decisions? No one else is going to make them for you. Consider how you might handle these early decisions: Do I incorporate? Do I advertise? Do I borrow money from friends or family?
4 Am I willing to take on numerous responsibilities? A start-up entrepreneur must juggle many roles -- from chief salesperson and bookkeeper to head marketer and bill collector.
5 Will I be able to avoid burnout? Many entrepreneurs find it hard to step away. You'll need to develop a work/life balance to avoid working seven days a week, losing touch with friends and upsetting loved ones.
What are the advantages of working from home? The easy commute, for starters, followed by the flexibility and the informal dress code. There also are tax write-offs: As long as you use a portion of your home exclusively and regularly for business, you can deduct a percentage of your rent or mortgage interest, utility bills, repairs and other costs.
Yet there are some distinct disadvantages, too. Most frequently cited is the lack of social interaction. For others, the home is one giant distraction. A pile of dirty dishes, a screaming child or even a sunny patio might compete for attention. Often, friends and family who don't understand you are truly working might call or stop by.
The home can be a difficult place to meet customers or clients, especially if you don't have an extra room or an appropriate place for a business discussion. When it comes to hiring employees, some home-based entrepreneurs say there isn't enough space or that it feels too invasive to have staff in the house. Most home-based businesses (about 93%) don't have employees, according to SBA statistics. Often, it's the need to hire employees that forces home-based entrepreneurs to rent space elsewhere. Lastly, the line between work and personal life can easily blur when working from home.
The Ground Rules
As such, it's important to come up with a set of practices to maintain some degree of separation between your work and personal life. Here are some ways to do so:
Have a separate office space. Ideally, your work space is in a separate room, with a door that closes, good ventilation and lighting. The bedroom is the worst place for a home office, as work becomes the first and last thing you see each day. If you don't have a spare room, screens or cabinets can help divide your work and living spaces.
Install office equipment. Make sure you have a phone line and a computer (with high-speed Internet access) dedicated to your business. Install any necessary business software on the PC, and consider other office-grade equipment as needed: copiers, scanners, work desks, filing cabinets and the like.
Set a timetable. Keeping regular business hours (such as 8 a.m. to 5 p.m., Monday through Friday, with weekends off) will assist you in dealing with clients, customers, suppliers and vendors -- and make it easier for you to have a social life.
Fashion work hours around logical periods of productivity, such as when a spouse leaves for work or kids go off to school. If you live by yourself, set a finite end of the day.
Take breaks. A big challenge for home-based business owners is setting aside time for small breathers or lunch. Short breaks can reduce stress, improve productivity and prevent burnout.
Limit household tasks. Be disciplined about not letting household errands and chores interfere with your work day. Consider getting housekeeping help to free up more time and energy for work.
Get child care. While many parents choose to be home-based to be closer to their kids, young ones can easily distract you from work. Consider getting full- or part-time child-care help, or sharing responsibilities with a spouse or family members.
Communicate to others that you are really working. Make sure those close to you respect your decision to work at home. Ask friends and family not to call or stop by during the day, or if they do, to keep it brief.
Chris Russell, founder of the job-posting site AllCountyJobs.com in Trumbull, Conn., says even his wife, who works outside the home, sometimes forgets that he's trying to work. "My wife will say to me, 'Can you go to the dry cleaners for me? Can you start dinner early?' " he says. "I give her a little friendly reminder: 'I'm working, dear.' "
—Adapted from "The Wall Street Journal Complete Small Business Guidebook" by Colleen DeBaise. Copyright 2009 by Dow Jones & Co. Published by Three Rivers Press, an imprint of the Crown Publishing Group, a division of Random House, Inc., New York. Used with permission.
Write to Colleen DeBaise at colleen.debaise@wsj.com
