Things to consider when running a home-based business

Key points

• Benefits and drawbacks of running a business at home
• Assessing business suitability
• Finding solutions for common challenges

More and more Australians are choosing to start small businesses from the comfort of their homes. It’s a smart way to trial a fresh business idea on a lean budget. Before setting up a home-based business, it’s worthwhile contemplating the ins and outs of working from home.

Making the choice

If you haven’t worked from home before, it may take some getting used to. Before setting up a home business, take some time to weigh up the pros and cons.

Benefits

• No commuting (except when visiting customers or suppliers) - so you could save on time and transport costs.
• Freedom - depending on the needs of your customers, you can wear what you like and work when you like.
• Cheaper costs - particularly rent, which can be a significant expense for most businesses. You can also share some of the costs of running your home, such as telephone, rates and electricity expenses.
• Lower risks - setting up a home-based business can be a low-cost way of trialling your concept without making a huge outlay upfront.

Drawbacks

• Your office is always with you, so it can be difficult to switch off. That can lead to burnout if you don’t actively maintain boundaries and cultivate a healthy work-life balance.
• Maintaining focus, motivation and disciplined work routines can be challenging.
• For some people, having colleagues to chat to and bounce ideas off can help to drive new ideas and boost motivation.
• If you need clients to visit your premises, they will expect it to look and operate like a professional business with a clean, quiet, dedicated workspace.
• If you come from a corporate environment, you may be used to having easy access to specialist expertise like an IT helpdesk or in-house legal experts. When you’re working from home, you’ll likely need to source external guidance more often. 

Is your business suitable?

If working from home sounds like it’s right for you, consider how it will work for the type of business you’re starting.

Service and consultancy businesses (freelance writers, bookkeepers, financial advisors, marketing consultants, virtual assistants), technology businesses (IT consultants, software developers), online businesses (ecommerce retailers, digital course providers) and microbusinesses (dressmakers, artisans) are generally well-suited to being based at home.

Other types of businesses may not be as suitable. If you have regular meetings with clients or customers, having children at home or dogs barking during phone calls can be challenging. Renting space in a serviced suite of offices or co-working building will afford you some privacy and enable you to benefit from facilities such as a reception and waiting area, meeting rooms, and shared business equipment including photocopiers and printers.

Your local council or regional authority is a good place to find out if permits are required to operate your business from home. If you’re renting, you should also check your lease as there may be restrictions you’re not aware of. For example, there may be restrictions on the number of employees you can have working in the business, noise levels or number of customers you can have visiting the premises.

Your local council is also a good place to find out about signage rules, licenses, building modifications (such as smoke alarms if you’re running a homestay business) and special requirements such as OH&S, food-handling and liquor licensing.

Maintaining motivation

It’s common for small business owners to sometimes feel isolated. People accustomed to busy offices can find it harder to remain motivated and disciplined.

Strategies to stay motivated include:

• Getting out of your home office – schedule face-to-face visits with customers and suppliers, or regular breaks to go for a walk and clear your head.
• Networking – join groups with shared interests, from your local Chamber of Commerce to professional associations.
• Getting a business mentor or confidante – talking through your business challenges and opportunities with someone else can bring valuable new perspectives. Approach someone you respect or contact the Small Business Mentoring Service.

Managing interruptions

Communication is key when managing interruptions from your family or friends. Explain to family members that you need to be left alone at certain times to do your job. Make your office hours clear to your friends – and treat them more formally if they do ‘pop in’ when you’re working.

Insurance

Normal home and contents insurance policies may not cover equipment used for business purposes, so it’s worth checking with your insurer.

Growing your business

Growing your business sometimes means moving out of your home office into larger premises. For many businesses, moving out of home can spark a real growth phase. Other people prefer to maintain the freedom that a home-based business offers. Ultimately, it comes down to being clear about what’s important to you.

Building a support network

Put a contingency plan in place to manage challenges such as power outages, website glitches, overlooked tax payments or cash flow issues. Having a network of experts (such as accountants, lawyers and business bankers) to turn to will help you navigate common business challenges with ease.

Rewarding yourself

Succeeding in a home business takes discipline and flexibility, but always remember you're part of a great tradition. After all, Apple was formed in a suburban garage. So stay focused on your goal - and don’t forget to reward yourself regularly for your achievements along the way.

Next steps

Download our Business plan template (PDF 591kB).