When Kim McGrigg had her second child, she decided to leave her long-time public relations position to stay home. Before long, she missed the income and adult interaction. Not willing to go back to work full-time, she joined the growing ranks of women who operate home-based businesses.
During an economic slump, Ryan Vance’s long-time position at the advertising agency was cut due to a company restructuring. Ryan went on several interviews but realized that he was facing stiff competition. He had always wanted to try design without the constraints of the agency middleman and decided that now was the ideal time to start his own home-based business.
What are you looking for in a home-based business?
If you, like Kim, are seeking to balance career and family, or, like Ryan, are looking for flexibility and increased income potential, a home-based business may be right for you. Entrepreneurs enjoy independence, but that freedom comes at a price. If you are interested in self-employment but are unsure about whether it is for you, start by carefully weighing the pros and cons of starting a home-based business.
Pros and Cons of starting a home-based business
Pro: You are your own boss.
When you are calling the shots, your business can be structured around your passions. You choose the work, the clients, and the hours. You alone are responsible for the success of your business, and that is this best motivation.
Con: You are also your own accountant, marketer, tech support, customer service representative, and custodian.
Running your own home-based business is a lot of responsibility. The job encompasses more than just doing work you love, at times you will also have to do support work to make your business successful.
Pro: Balanced career and family life.
Working from home allows you to spend more time with your family. Setting your own hours and vacation time allows you to fit your family’s schedules together seamlessly.
Con: The scale can easily tip toward home responsibilities.
Working from home can be a distraction, especially if you have young children or have a difficult time ignoring home-related chores and errands. Setting up a distraction-free area to work and allotting a certain amount of time per day to focus on your work can help increase productivity.
Pro: Increased tax benefit and write-offs.
If you have an area of your home dedicated solely to your business, you may be able to take a home office tax deduction. Other expenses can also be deducted as well, just be sure that you are able to justify the expense as the cost of doing business.
Con: No health insurance benefits unless you pay out of pocket.
Paying for private insurance is expensive, but is worth the hefty price tag in case of a medical emergency.
Pro: Your office is down the hall and you can work in your pajamas. No commute and no required office wardrobe are two of the money-saving perks of working at home.
Con: You may miss the interaction with coworkers.
If having a sounding-board for your ideas is important to you, consider joining a networking group or professional association so you can interact with others in your field.
Pro: Increased income potential.
Owning your own business allows for far greater earning and growth potential. Plus, all your hard work and determination directly benefit you.
Con: No set income.
While there is the potential for greater income, there is also a possibility that you will have some periods where the work and the money dry up. Having an emergency savings account can be a great relief during times when you are not making any income. In addition, having a spouse’s salary to fall back on can also be beneficial. Should your spouse work, too? Use our free calculator to find out.
Starting a home-based business is not the right choice for everyone. Carefully weigh your options before you decide to take on this challenge. Remember, having a strong financial support system such as adequate savings and a spouse with a steady stream of income can help make starting your own business a smoother process.