Valerie Parham-Thompson had hoped a polite note on the door would be enough: Please don't ring the doorbell.
The baby was sleeping, and the Durham, N.C., Web developer was trying to get some work done.
But soon enough, a neighborhood kid came by and rang anyway. "What does that sign say?"
Oops.
The Bureau of Labor Statistics (BLS) counted 7 million self-employed people who worked at home in May 2004, the most recent figure available. Two-thirds of those had a home-based business, one that they ran from home and nowhere else. The others included people who divided their work time between home and other locations.
Starting your business out of your home certainly has appeal, especially if you don't have enough money for separate office space. It's hard enough to cover the rent on your apartment or house in most urban areas, much less take on a commercial lease. The home-based business enjoys a significant edge in terms of keeping overhead low.
There are other advantages, too. For Ms. Parham-Thompson, the impending birth of her son pushed her to set up her own home-based business in 2000. "I just knew I wasn't going to feel comfortable leaving him."
So she quit a job handling database development for someone else to start her Web development company, Tortuga Tech. The business has been a success, allowing her to make more money than she did before while spending time at home with her family.
But before you set up shop in the living room, here are a few things to consider:
YOUR BUSINESS. Some small companies are better suited for the home option. If your business is chiefly service-based, and requires little more than your brain, an extra phone line and a laptop, home will likely be the best place for you. But if you have lots of inventory, or need to meet with clients frequently, a separate commercial space might be wiser. The numbers bear this out: The BLS survey found that 45 percent of people with home-based businesses were in management and professional fields.
YOUR TIME. Is this a full-time pursuit or a part-time one? Will you still have other responsibilities, such as a day job, while you get the business off the ground? Part-time jobs are often better suited for the home option. The self-employed workers in the BLS survey worked an average of 25 hours per week at home.
If spending time with your children is part of your motivation, make sure you're realistic about the demands on your time. Some parents hire help to watch the kids while they are still within earshot, but this won't work for all families, as Ms. Parham-Thompson discovered. "I thought the kids would have just played in the background," she said. But it turned out the children, now 5 and 2, weren't interested in hanging out with the "mother's helpers" she hired. Now, she just works around the kids' hours, putting in most of her 30 hours a week at night.
YOUR TEMPERAMENT. If you're a social butterfly, you may find working for yourself at home stifling. To counteract that, push yourself to network. Ms. Parham-Thompson even helped create a local group to support working mothers in her area, the Triangle Moms in Business.
YOUR HOME. Do you have the space available? If you have roommates, how will they feel about the common areas of your apartment being used for your moneymaking venture? How difficult will it be to handle client phone calls in relative peace?
YOUR NEIGHBORHOOD. The impact of your activities won't end at your front door. How will your neighbors feel about the bustle your business could bring, especially if it's in the form of client visits or frequent shipments and deliveries? Do you have sufficient parking to accommodate any employees, if you have them, or visitors? Are there zoning laws that affect your options? Required permits?
YOUR TAXES. Being able to claim a deduction for your home office could help your bottom line. Or it could create an IRS nightmare that you would rather not deal with. As you're working out your business plan, invest in an appointment with an accountant who specializes in working with small businesses. The fee might seem like an unnecessary expense while you're struggling to break even, but a good accountant pays for her fee many times in the long run.
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