Home Based Business - Entrepreneur Small Business Encyclopedia

Summary

Two out of three companies (of all sizes) begin in a spare bedroom, garage, basement or sometimes even a bathroom. That's how companies as diverse as Apple Computer, Baskin-Robbins ice cream, Electronic Data Systems, Hallmark cards, the Lillian Vernon catalog, and Purex began. Of course, the internet makes operating a virtual company from home more feasible and popular than ever.

If you want to hang your shingle at home, either permanently or temporarily, here are some things you must consider:

Two out of three companies (of all sizes) begin in a spare bedroom, garage, basement or sometimes even a bathroom. That's how companies as diverse as Apple Computer, Baskin-Robbins ice cream, Electronic Data Systems, Hallmark cards, the Lillian Vernon catalog, and Purex began. Of course, the internet makes operating a virtual company from home more feasible and popular than ever.

If you want to hang your shingle at home, either permanently or temporarily, here are some things you must consider:

First, is it legal to hang your shingle or sign at home? This is one of the many possible restrictions on your being permitted to make your home a working castle. Whether and how flexibly you can operate a business from your home is covered in local zoning ordinances and also by the covenants, codes and restrictions (CC&Rs) of homeowner and condo associations.

How are you going to separate your home and your workplace? While the demanding hours required to start any business affect an entrepreneur's family, when you bring the workplace into the home, your family's needs must be taken into account even more.

How are you going to establish and maintain a professional image? This is especially important if your address is on Cow Path Lane, your dog loves to bark, or your teenager loves to play his drums in the room next to your home office.

Most cities and many counties have zoning ordinances that limit, to one degree or another, whether you can operate a business from home. While many communities have modernized their zoning ordinances to recognize that a computer-based business isn't like a noisy auto body repair shop, an odorous hair salon or a 6 a.m. gathering point for a construction or cleaning crew, many communities ban certain kinds of businesses and prescribe limitations that may handicap some businesses. Here are some common activities communities don't like and may restrict within their zoning code:

Increased vehicular traffic, both moving and parked on the street

Prominent signs

Employees not related to you who are working in your home

Use of the home more for business than as a residence (determined by the percentage of space used for the business)

Selling retail goods to the public--sometimes communities limit this to specific hours

Storing dangerous amounts or kinds of materials inside or outside your home

So if you're planning to launch your business from home, the first thing to do is to check out what commercial activity your city or county allows in your neighborhood. This is becoming easier to do, as many communities are making their codes available on their websites. You just need to know what the zoning classification is for your home (that is, R-1, R-2, R-3, etc.), which is easily found at your city or county zoning office.

While many people blithely ignore zoning, a complaining neighbor can put a real kink in your business plan, as you may find yourself with a cease and desist order and have to suddenly move or close down. So find out what you're allowed to do, and get along with your neighbors. With their support, you may be able to get a waiver of restrictions, called a variance or conditional-use permit.

Since almost 9 out of 10 people who operate a home business have a family, keeping personal and workspaces separate is critical to peaceful domestic relations. So location, location, location is the first thing to think about when you're planning where your home office will be. If you can have your office in a separate structure, like a garage or a guesthouse in the backyard, you probably need to think no further.

But since the typical home based business is located inside a home, you need to consider noise and family traffic patterns when deciding where to put your office. Of course, if you're locating your business at home so you can care for your children, you may choose to compromise privacy for a vantage point that will enable you to see or hear what your children are doing while you work.

If you have customers coming to your home, locating your office where it can have a separate entrance or be close to an entrance to your home can save you time and trouble. If business visitors must walk through your home to get to your office, it's important to keep personal areas of your home neat and uncluttered by personal items, such as laundry and children's toys. About half of home offices are located in a spare bedroom, which hopefully has a relatively soundproof door.

The negative connotation implied by referring to home based businesses as a "cottage industry" is disappearing. Still, presenting a professional image can be a challenge if your 4-year-old answers your phone or your clients are confronted with piles of laundry on the way through the house to your office. Here are some things you can do to let people know you're serious about your business:

Home Based Business - Entrepreneur Small Business Encyclopedia
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