The Home Field Advantage
Every business has to be somewhere. Even if your business is somewhere out there in the computing cloud you still need to have a physical address for your business in order to register it properly with the state.
Keep in mind that there may be additional licensing and permitting requirements in your particular community or county. For instance, some cities or counties require a permit if you’re going to have customers come to your home-based business since there are traffic and parking mitigation issues associated with this type of arrangement. If you rent your home, you may want to check with your landlord to make sure you don’t violate your lease by running a business out of your rental. Some communities also place restrictions on home-based businesses, particularly when it is in a development with homeowner association covenants.
There’s no shame in being a home-based business. Lots of famous businesses have started in the garage or basement. While running a business out of your home has many similarities to a bricks-and-mortar operation, you need to be honest with yourself in assessing the viability of operating out of your home.
Here are some things to consider before you clean out a spare bedroom or the garage to make room for computers or inventory.
MINDSET. Running a business out of your home can be filled with distractions, from the warm bed in the next room to the TV and refrigerator upstairs. Many remote workers learned this the hard way during the pandemic. Can you keep your eye on the ball and not get distracted by everything on the sidelines?
SEPARATION OF LIFE AND LIVELIHOOD. No business is 8 to 5 in the beginning, but you need to ask yourself if you’re able to resist checking your email every 10 minutes for new business or wandering back to the office down the hall in the wee hours of the morning because you had an epiphany. It’s easy to lose that all-important sense of balance between work and home life.
CUSTOMER RESPONSE. If your business requires meeting with customers, a home can be an uncomfortable place to meet. You may want to come up with a different meeting place away from the home office so customers are comfortable and not distracted by your home décor or your two-year-old throwing a fit on the couch. A coworking space may be a good option. And, of course, a Zoom meeting is perfectly acceptable these days.
VERNACULAR. With the right word choices, a customer doesn’t even need to know you’re working out of your home. Learn to use business descriptions for different locales, such as “fulfillment center” instead of garage, or “lunchroom” instead of kitchen. It’s O.K. to sound like you are bigger than you are but if you’re asked directly if you’re a home-based business, don’t lie. If you’re conducting Zoom meetings, choose a professional virtual background for them.
SPACE. Make sure you have the dedicated space available to run a business. A spare bedroom, the basement or garage are great. Keep the office out of your master bedroom; it will become an unwelcomed mistress. If you are doing virtual meetings, make sure the background isn’t cluttered, or better yet, invest in a portable green screen for the background you’ve chosen.
Advantages of a Home-Based Business
- You can run it part-time.
- There’s no commute.
- Startup and operating costs are lower.
- Work hours are flexible.
- There are home office tax benefits.
- You can work in your jammies.
- Family members can help out in a pinch.
Disadvantages of Home-Based Business
- Space can be at a premium, especially if your business and family are growing at the same time.
- Family life can be disrupted.
- You can feel isolated and lonely, ending up in a rut because you lack networking opportunities or social interactions.
- Balancing family and work demands can be difficult, such as keeping on task when the kids come home from school and want to tell you about their day.
- Neighbors may begin filing complaints if you have too many customers visiting your home.
- It can be hard to establish solid working-at-home patterns.
- Customers or clients may feel uneasy about meeting in your home.
The Away Game
Either at the beginning or somewhere down the line, you may want to go with the “Away Game” and site your business outside your home. This option could mean a traditional bricks-and-mortar style operation or you may choose to go with a shared space strategy, using a co-working or maker space as your base of operations.
Here are some things that could influence your decision:
BRAND IMAGE. Will the location be consistent with the image you’re trying to create or maintain? For instance, if you’re opening a dollar store it probably won’t be a huge success in an affluent neighborhood. Alternately, it might not make sense to open a hip indie coffee café across the street from Starbucks. Location can greatly influence how your brand is perceived and you want your location and brand to align as much as possible. Our SizeUp tool can help you with this.
COMPETITION. Who else is in town or even on the same street competes with you, either directly or indirectly? Sure, you may be the only Mexican restaurant in town, but other eateries are also competing for your customer’s discretionary income. Consider all your potential competitors, not just the obvious ones.
LOCAL LABOR MARKET. The building you’re looking at may have rock bottom rates but there may be a reason for that. Before you sign a lease or make a purchase, make sure the local labor market can support your needs.
EXPANSION POTENTIAL. If you think you’re going to grow as a business (and you should be thinking this way), can the property, facility or neighborhood handle the growth?
ZONING. Make sure the property or facility you’re looking at has the proper zoning for your type of business. Also, double-check to see if there are any local, regional or state projects in the works that may involve your property.
SAFETY. No matter how wonderful your business is, potential employees and customers will shy away from you if you’re in an area where they don’t feel safe and secure.
HIDDEN COSTS. Few properties are turn-key. Identify the hidden costs of renovation, signage, IT systems, upgrades, etc. Most spaces are an empty box without a lot of extras. You may want to have an attorney take a look at the lease to make sure you cover all the bases before signing on the dotted line.
Play well with others?
One option open to entrepreneurs is to go the co-working, incubator, makerspace or shared space route. These are communal spaces where you share basic services such as high-speed internet access, administrative assistance, meeting space and equipment.
Incubators may provide you with educational programming, a subsidized workspace, free or heavily discounted business and support services and access to others who have complementary skills or are eager to help your business grow. Entrepreneurs can also benefit from mentorship through advisory boards, investors or strategic partners. You just can’t show up on the field and expect to play on an incubator team. You need to be accepted into the program through an application process. If you are accepted, you’ll be on the active roster for a specific period of time (the average is about 33 months) at which point you should be ready to go out on your own.
Co-working spaces are another option. These range from a desk or cubicle space offered “hotel style” to a dedicated office. Co-working spaces may offer shared office services such as printers and copiers or even administrative support. Makerspaces are a variation of this theme and are geared to individuals and teams that make stuff. A makerspace can vary in its focus. Some offer space to dabble in projects such as woodworking, ceramics or sewing while others provide access to machine shop tools, testing and manufacturing equipment and high-end 3-D printers. The environment is highly collaborative and may even offer the mentorship and expertise you’ve been looking for to jumpstart those creative juices.
Check out our interactive map of co-working, accelerator, incubator and makerspaces in Washington.
We discuss location in even greater depth in Lesson 6: Choosing the Right Location in the Entrepreneur Academy.
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