September 19, 2014 Starting and Managing a Small Business

One of the biggest questions you’ll need to answer as you formulate plans for your business is where you will locate it. Will you work from home or set up an office, storefront or other commercial space? In some cases, you’ll have no choice, as the needs of your business or zoning laws may decide the matter for you, but very often, the decision will be yours. Each option has pluses and minuses, so here are some things to consider.

The Benefits of a Home-Based Business

On the plus side:

The commute is nonexistent. On those cold, snowy mornings, the only digging out you’ll do is unearthing a clean coffee cup from the dishwasher. You’ll have no commuting-related expenses, whether by automobile or mass transit. No gas, no tolls, no bus or train tickets.

You can multitask. Since you’re home, you can make productive use of your forced downtime by taking care of some domestic chores at the same time. While you’re on hold with a client, you can sort the laundry or take something out of the freezer to defrost for dinner. That load of wash can run while you’re updating your website. Dinner can cook as you work on sales projections. Many small odds and ends that would normally pile up for evenings and weekends can now be accomplished during your workweek.

You have more control over your schedule. If you’re a morning person, you can get up at 5 AM and start your workday. Clean out your email inbox, start on that next pitch and read today’s trade paper before you need to wake your kids up and get them off to school. Prefer evenings? When the family’s in bed and the house is quiet is the perfect time to work on your next client presentation. It’s difficult to keep such flexible hours when you’re at the mercy of an office complex. Should you have a half hour free, you can actually use that time to work instead of getting to work.

You don’t have to pay rent. Other than possibly upgrading your internet service to allow for more speed, working from home won’t cost you any more than your current living expenses. Find an unused corner in the basement, work out of your guest room, or clear off your dining room table. Your apartment rent or mortgage payment won’t change, and you’re utilizing the space you have anyway to actually make money.

There are tax benefits. You’ll want to familiarize yourself with the laws and regulations, but if you qualify, you can deduct part of your home’s expenses against your business income. These may include a portion of your mortgage interest, property taxes, utilities and home maintenance. The Internal Revenue Service is your best source for the rules concerning home office deductions.

The startup cost is lower. Working out of your home significantly cuts the amount of money you will need to get started, even if you don’t plan to keep the business there for long. Without the expense and commitment of signing a lease, buying furniture, and installing a commercial phone system, computers and other office equipment, you can jump right in and get going with your plans. Use your cell phone for a while, visit the library for a copier or printer if you don’t have one, and make do with your home computer for now. If and when the business grows, you can then decide if you’d like to keep it at home or move out.

There are no office politics. And no dress code! It’s true, you really can work in your pajamas if you want to (although you might feel more productive if you get dressed). Depending on whether you have any employees working with you at home, no one knows what you’re wearing and no one cares. Similarly, there’s no office pecking order and no gamesmanship from other workers.

You are a role model. Of course, this is true whether you dutifully pack your attaché case and leave home for an office every day or work out of your house, but if you have children, your commitment and hard work is a terrific example and can be a powerful influence in how they dedicate themselves in their own lives. When you work from home, they actually get to see you at work, and understand the discipline, focus, and effort involved. This can reap benefits for your family far beyond the paycheck you earn.

The Negatives of a Home-Based Business

Of course, there are some potential downsides to working at home, as well.

It can be lonely. Without the camaraderie of coworkers, you can occasionally feel isolated and alone. Now, some of us may work best with fewer distractions, but even then, from time to time we like to share a joke around the water cooler or bounce an idea off a colleague. You may want to schedule socialization time during your work day. You can work from the local coffee shop for a couple of hours, plan to attend a monthly networking meeting, or meet a client face-to face. Just don’t spend every work moment at home by yourself.

You’re in charge. While being accountable only to yourself is a wonderful thing, it also requires great dedication, motivation and self-discipline. If you are the type of worker who thrives on feedback and the energy of others, working at home can be quite challenging. You’ll also need to be able to say no to the distractions of your surroundings, like the big-screen TV in the den or the pool in the backyard. It’s tougher to get started and easier to procrastinate when working at home.

Boundaries can be overstepped. Similarly, your family will need to respect your boundaries, and the lines can sometimes blur. It may look like you’re not working even when you are. It may be easier for family and friends to take you less seriously when you work from home, so you need to be vigilant about maintaining a proper separation and level of professionalism, and teach everyone to respect your time and space.

Your clients may need convincing. Like it or not, there is something about an office that says “professional.” Unless you’ve got a separate entrance and a truly dedicated office space, home-based businesses don’t lend themselves especially well toward visits from current or potential customers, and meeting at the local diner isn’t always the best solution. Your neighbors might not appreciate the traffic, either. Depending on what type of business you’ve got, zoning laws may actually prohibit you from running it out of your home. Make sure you’re up on all the local rules and regulations.

There is no “walk-in” traffic. Having a physical location can sometimes result in bonus business just because customers can see you and decide to try your product or service. Your networking opportunities will also be reduced, simply because you’re not physically present with other people.

It’s not cost-free. Even though you might be saving on rent, you will need to heat or cool your home office space for the day, which means running the heat or air conditioner when you otherwise might not. You will also need the office supplies and equipment to carry out the business at hand. Your computer will need to be able to run whatever software you might require, and you’ll likely want a separate business landline installed or possibly another cell phone to handle business calls.

Expansion is limited. If your goal is to stay a sole practitioner, this is not a problem. But if success for your business requires additional employees, you will likely outgrow the space you have at home. Moreover, do you even want employees in your home? You sacrifice a great deal of privacy and personal space when you allow others to work with you, especially if you don’t have dedicated space in your home.

You can’t leave. Well, yes, you can walk out of the room and shut the door, but your office is always THERE. Will you be able to get the mental space you need knowing there’s a work issue just down the hall, or will you feel compelled to tackle it even when you’re supposed to be “off”?

Advantages of a Brick and Mortar Business

Looking over the lists of pros and cons of working at home, it’s easy to translate them into an understanding of the benefits and negatives of having a brick and mortar space.

Room to Grow. You can get more and larger space than you likely have available at home, so when you need to expand, you can.

Professional Front. Some people believe a commercially-based business presents a more credible and professional face.

Dedicated Work Space. You have a ready-made space to meet with clients.

Boundaries. Your work time and space is separate and distinct from your family life and your living space.

Room for Employees. Do you need to hire employees? Go right ahead. There are fewer privacy concerns with having employees.

Social Energy. You will have more people around to fuel your creativity, more of those “happy accidents” that sometimes happen just from talking with and being around others.

Single Tasking. You can leave most of your home concerns at home. No pressure to clean the bathrooms or defrost the freezer while you’re at work.

Disadvantages of a Brick and Mortar Business

Expense. It can be costly to pay rent, buy office furniture, equipment, supplies, and maintain insurance.

Commuting. You will have to commute and pay whatever costs may be associated with that.

No Home-Office Tax Break. You will lose the home-office deduction if you currently qualify.

Wardrobe Budget. You may need to spend more on office-appropriate clothing.

Inconvenience. Unless you take time off, you will not be at home for a sick child, repair appointment or package delivery.

Home-Based AND Brick and Mortar

As you can see, there are pros and cons to working from home and having a brick and mortar presence. Keep exploring where setting up your office will work best. Only you can decide which work environment is most beneficial to your business, and where your job and life satisfaction will be the highest.

Keep in mind there are no absolutes. You may be primarily based out of your home but lease space in a shared office environment a few days out of the month. You might take commercial space and telecommute one or two days a week. For many, a blend of the two works best. This past April, Yahoo’s CEO Marissa Mayer said, “People are more productive when they’re alone…(but) more collaborative and innovative when they’re together. Some of the best ideas come from pulling two different ideas together.” Perhaps this piece of advice applies to where you choose to work, as well.

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