Many people seek out the ease and convenience of a home-based business because they hope it will help them balance career and family, while affording them with greater income potential than a 9-5 job. True, a home-based business might be right for you if these are your goals, but all that “entrepreneurial freedom” comes at a price. If you’re interested in self-employment but you still don’t know if it’s right for you, then take the time to carefully weigh the pros and cons of running a home-based business.
Pros and Cons of a home-based business
Pro: You get to be your own boss.
When you are both the boss and the employee, you get to call the shots. This means your business can be structured around your schedule, your passions and the type of clients you want to work with. One thing is certain, when you alone are responsible for the success of a business it will keep you motivated.
Con: You also get to be the chief marketer, accountant, tech support and customer service rep; not to mention the custodian.
Running your own business is a huge responsibility. The job encompasses much more than just doing the work you love; you will also have to perform support-related tasks and keep up with the books, answer customer questions and maintain the web site. Be sure you are realistic about what this entails.
Pro: Your career and family life will be more balanced.
One thing that home-based business owners enjoy is the ability to spend more time with friends and family. Now you will be able to set your own hours and time off so it fits in seamlessly with your family’s schedules.
Con: There will be many, many distractions.
Working from home may seem idyllic if you’re accustomed to being in an office, but give it time. The push-pull of a home-based business may make you feel like you’re not giving anything 100 percent attention. If you have small children or if you have a hard time ignoring household chores, the workday will be fraught with distractions. Set up a “distraction-free zone” where you can spend a certain amount of time focusing on your work. This will help increase your productivity.
Pro: You will enjoy more tax breaks and write-offs.
When you own a home-based business, chances are an certain part of the home will be devoted solely to your business, and that portion will become eligible for a tax deduction. Other business expenses can be deducted as well, but just be sure you can justify the expense as being pertinent to your business.
Con: You might have to purchase private insurance.
If you have been on an employer’s group health insurance plan, starting a business might force you to buy an individual plan. The Affordable Care Act makes this a little easier through your state’s health insurance marketplace, but it can still be a lot more than you were paying previously.
Pro and Con: You can work in your pajamas.
Sure, you might save a lot of money by not having to purchase an office wardrobe, not to mention the cost of commuting, but you might miss the interaction with coworkers. It’s nice to have a sounding board for your ideas and it can be inspiring to hear how other people go about solving everyday problems. Be careful not to isolate yourself too much; consider joining a networking group or a professional association. This will get you out of the house and interacting with others in your field.
Con: You will not have a guaranteed income.
While owning a business will set you up for greater income potential in the long-term, you will need to be prepared for some dry spells. Having an emergency savings account can be a great relief during times when you are not making any money. It would also be nice to have a spouse’s salary to fall back on.
As you can see, starting or buying a home-based business is not for everyone. It is crucial to weigh all the pros and cons before you take on this challenge. Remember, having a strong financial support system can help make starting your own business a smoother process.