Choosing to Work in Home or Out
Deciding where to operate is a big decision when considering the steps for starting a small business. Depending on your type of business you decide to start, you may have the opportunity to choose to work in home or out. Regardless of the location you settle on, each option has its advantages and disadvantage.
Home Office Pros
Cost. Typically, starting a business in home is the most cost effective. You’re already paying mortgage or rent for your home, so there are no added expenses there. Depending on what you’re doing, you might experience a flux in utilities and phone, but they’re typically less expenses than the cost of utilities and phone on a separate building.
Another advantage of running a business out of your home is the ability to claim tax deductions for the usage of your home. As with all my clients, I highly advise you to visit with your accountant to ensure you’re getting all the deductions and not claiming any you shouldn’t.
Working from home can also save you on commuting. Depending on your type of business, client contact can be done by phone, email, or even virtually through video meetings, such as InterCall. You can share documents with clients and collaborate through programs, such as Workshare.
Convenience. I already mentioned saving money by not needing to commute. However, the lack of commuting can also save time. If you’re not seeing clients at your house, there’s no need to dress up… or even get out of bed, in many cases.
Having a business you can do virtually may mean you can keep non-convential hours. So, rather than being available to your clients M-F 9-5 (normal business hours), you can work when it’s most convenient for you and when you’re most productive.
Home Office Cons
Cost. Your home may not be set up to do business. As such, you may incur additional costs in order to serve your clients properly. For example, you may need a workshop, studio, or even an office. You also need to be careful about the expenses you’re deducting from your home office. Items that dual as personal and business are subject to certain restrictions. Not paying attention to those restrictions can lead to hefty fines from the IRS.
Whereas clients can drop by a commercial place of business to pick up tangible items, your home may not be as appropriate. If you choose to ship items to your customers, the costs can add up, particularly if you don’t pass those expenses onto your customers.
Commute. As much as you’d like to do all your business virtually, sometimes it makes sense to meet with your clients face-to-face. For some companies, work can only be done AT the client’s location. For some, this may mean driving to a client’s location. Depending on your service area, this can divert time, money, and resources while commuting. Again, it can prove costly to you as a business owner, if those expenses aren’t or can’t be passed to the customer.
Inconvenient. As convenient as working at home can be, it can also be inconvenient. Depending on your particular zoning laws, you may be limited to the type of business you can conduct out of your home. Some localities may require you to obtain a special use permit and/or get permission from your neighbors in order to conduct business out of your house. You may even fine your permit being revoked for receiving too many shipments.
Motivation. Working from home requires a special type of motivation. Whereas a commercial location would encourage you to keep regular business hours, your hours are often at your discretion when working from home. Lack of a routine can lead to laziness for some individuals. If you’re not doing the work that’s needed to be successful, you can put the future of your company at risk.
Storefront Location Pros
Cost. Like working from home, a storefront location comes with tax deduction. In fact, you may find your business receiving greater deductions, as typically items purchased and used at your commercial location are specifically designated as business use.
In most industries, a storefront location also provides a place for your to conduct business with your clients. Having a place for your clients can cut down on shipping and commuting costs.
Exposure. Having a brick & mortar location can do wonders for company exposure. There’s nothing like having a big sign out front, advertising that you’re in business. A commercial location to do business also helps customers see you as a legitimate business. Keep in mind, just like there are zoning laws for residential businesses, your brick & mortar business may also be subject to special zoning regulations.
Routine. Having a brick & mortar location often requires you to keep consistent business hours to meet customer location. When I say consistent business hours, I don’t necessarily mean 9-5. Rather, I mean hours your customers can depend on you being open. If those hours are only advertised as Tuesday and Thursday from 3 pm – 9 pm, then those are the hours you’ll be expected to keep. The benefit to a routine required by having a storefront location is it discourages you from slacking.
Personal. Whereas working from home offers you convenience, a commercial location offers your clients convenience. Many customers prefer face-to-face business. I don’t know where I heard this, but “people do business with people, not companies.” Despite the increase in online businesses, majority of people still prefer to do their business in an actual store with a live person. Consumers may do their searches online, but they’re visiting you in person, at your office location.
Commercial Location Cons
Cost. Whereas much of the costs of operating from home can be absorbed into expenses which you’re already paying (mortgage, utility, etc.), operating from a commercial location creates an entirely new set of expenses (rent/lease/mortgage, utilities, phone, etc.). Like renovations for your home, your commercial location may also have renovation costs or even the cost to build new.
Routine. I talked about the upside of being required to keep a routine with a location outside of the home. However, the same reasons to keep a routine can also be a con. Whereas you can often work around your preferences at home, a brick & mortar company requires you to be available in the office based upon the predetermined hours you’ve set.
Inconvenience. An actual storefront location may require you to do all those steps you can conveniently forego when running a home office. For example, you’ll need to get out of bed, get ready and dressed to go to work, and commute.
Depending on your location, you may even find parking a challenge for you and your clients. It reminds me of when I lived in San Francisco years ago. My preferred method of transportation was to take the transit or have someone drop me off. I’d decided to drive for some strange reason one day and ended up driving around, looking for parking for a couple of hours before finally giving up and driving back home. It was the one and only time I attempted something like that. You’ll want to chose a location that doesn’t drive your clients to frustration when trying to reach you.
Determining where you’re going to run your business is a subjective choice. Sometimes finances can dictate what’s available to you. Other times, your industry can force you in a particular direction. Regardless of the route you choose to take, I highly encourage you to do your research and assess the pros and cons of your available options.
What other pros and cons come to mind when you think of working in home or out of home?
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