The Potential Downside to Starting a Home Based Business

Author: Angela Wu

Home businesses are an increasingly popular option for people seeking a way to earn an income in a way that better fits their lifestyle. The benefits of starting a home business are often highly praised -- some of these benefits include:

* The flexibility to schedule your day in whatever way is appropriate for both you and your business.

* The independence to make the decisions you think are best for your business.

* The comfort of dressing how you want and working how you want, provided you aren't meeting with clients.

* The tax breaks potentially available to home businesses.

* The opportunity to build the income you want, rather than being paid what an employer thinks you're worth.

Starting a business from home, however, does have its drawbacks. It can be a wonderful opportunity but it's certainly not for everyone! Consider the following:

* Time. Although you have the flexibility to schedule your day to a certain degree, the amount of time required to start and build a home business is significant. A comment that sums it up nicely is, "I get to choose any 20 hours a day that I want to work!"

* All business involves risk. You may be a wild success ... or you may work endless hours, invest a lot of money, and end up with a failed business. There is also the risk that you may grow too quickly and be unable to properly manage your growth. This can lead to unhappy customers and the eventual demise of your business.

* Financing may be difficult. Due to the risk associated with a home business, some lending institutions may refuse your loan application or may provide with you inadequate funds or a higher interest rate. You may have to consider using funds from your "day job" to help finance your startup business, personal savings, or perhaps loans from friends or family (which may create problems of its own).

* No benefits. Because you will be self-employed, you are responsible for funding and managing health and dental benefits.

* You have to do everything yourself. Most people start as the sole "employee" of their fledgling business. As such, you're not just the product designer & developer, but also the marketer, administrative assistant, cleaning staff, customer service rep, and possibly other roles as well.

* Getting customers. When working from home, you don't really have a "storefront" -- and zoning regulations may prevent you from displaying a sign in your yard. Even if you could, the flow of traffic through a residential area is not likely to be very high and thus it may be harder to attract new customers. It's your responsibility as a business owner to find out where your prospects gather, how they like to be contacted (direct mail, niche magazines, etc), and whether you're up to the task.

* Assumptions about your "free time". Unfortunately, many people believe that "working from home" doesn't really amount to "work" -- and sometimes friends and family may "drop in" or call for a chat while you're working. Some people find it very difficult to turn away "guests", even though they're clearly trying to work.

* Isolation. Working in an office environment provides you with plenty of opportunity to socialize. In the home, however, you are far more likely to be limited to the phone and to email -- and some home businesses have even little need for that. It can make one feel "cut off" from the rest of the world and lead to loneliness.

* Lack of support. One common observation from home business owners is their spouse or other family members get impatient with their efforts -- there may be a misconception that you're doing nothing but sitting around the house, particularly when the business is in the startup phase and hasn't yet started to produce profits.

* Difficulty separating business and personal matters. Since you're at home, you may be expected to do household chores, watch the children, drive relatives around, etc. Family and friends may not entirely understand that you are operating a business and need the time to attend to business matters.

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About the author :
Angela Wu

Angela is the author of "So You Want to Work from Home!", an informative report packed with useful tips and resources on how to begin a work-at-home career.

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