The pros and cons of running a business from home

Geraint Evans discusses the ramifications of starting a company in a domestic setting and the options available for expanding.

With half of the UK spending at least one day a week out of the office, the idea of working from home has become an increasingly accepted part of life. Working from home is now often a lifestyle choice that people use at various stages in their life – when they have children, when they decide to move to the countryside, or even move abroad.

It’s not just owners and managers either – more and more people working within bigger businesses are based, at least in part, from home. This increasingly flexible approach has also contributed to a rise in people feeling they can start a business from home – and by 2011 there were almost 6 million home-based businesses in the UK.

The pros and cons

The benefits from starting a business at home are numerous and clear – perhaps most obvious is the cost saving. Office space overheads are a big cost burden for a new business – particularly in the early stages, when revenue and cash flow can be so challenging to predict and manage. Working from home should also, in theory, allow business owners to get more out of their day by avoiding the commute – though this can vary as many feel they achieve greater productivity in a more formal working environment.

It is also important to acknowledge that many people running a small business aren’t chiefly motivated by cutting costs – for many it is simply a lifestyle choice and they have no intention of employing staff or making more than a comfortable living. For these people, running a business from home is often the best option. However, for those entrepreneurs operating from home to ‘bootstrap’ their business it can be crucial to keep a close eye on when doing so might start to hold them back.

One factor that can hold a home office business back is being isolated, and with personal relationships so important this can’t be underestimated. There is also the logistical challenge of bringing on new staff, as the best talent will have high expectations of their work environment. For those wishing to remain based at home, building a social media presence and taking part in online discussions with like-minded entrepreneurs can help with this – although it can never fully replace face-to-face contact. For that reason, networking is just as important – if not even more so – for anyone running a business from home.

Working from home also means the boundaries between work and play become less clear, which can negate the benefits of greater control over work-life balance. Maintaining a strict routine and separate contact details should help with this.

Image is an important consideration too, as it undoubtedly plays a role when developing relationships with potential clients, suppliers, or even employees – think about what your business premises says about your business. It’s understandable, for instance, when one-man bands and people based in far-flung areas worry that clients and prospects see them as remote and removed from the ‘real’ world of business. That may well be untrue, but as a new business looking to build credibility, perception is everything and you only have one chance to make a first impression.

Moving from the bedroom into an office

For those businesses that are looking to take that next step, moving into more professional surroundings is often naturally one of the first moves. The key options for business premises are typically:

1. Virtual offices. These allow a company to take up a prestigious business address, receptionist and PA services without the cost of a physical office space. We find that a lot of small businesses and start-ups elect for this option because they are not yet ready to move out of the home office or because, for various reasons, they want to stay at home or at an out-of-town business park.

2. Shared workspace or ‘co-working’. The use of shared workspace among freelancers and startups has been booming recently – and it’s not hard to appreciate why. A product of the world’s increasingly flexible attitude to work, shared workspace encourages collaboration, offers the intangible ‘buzz’ many seek out in their local coffee shop, and represents a smaller investment than more permanent office space options.

3. Serviced offices. If you’re business is ready to grow and you want a professional workspace without the commitment of a long lease, then a serviced office is your best option – particularly if you are keen to cut out admin time spent calculating overhead costs and paying dozens of different bills. The best providers will be able to offer flexibility over terms that gives your business room to expand or contract, bringing on new staff or cutting back when necessary without fuss.

4. Leasing, building or buying premises. As a start-up, these will be the least relevant options to begin with due to the considerable investment required and minimal flexibility. But, when the business reaches the right stage further down the line, taking out a long-term lease or even buying your own premises can be the right option for some.

To give your company the best chance of surviving and thriving it is important to take advantage of the more flexible options and give your business room to ebb and flow – particularly in the early stages when performance is difficult to predict. Above all, make sure your premises reflects where your business currently stands, where you want it to go and how you want it to be perceived.

See also: What you need to know about working from home

The working from home experience

SmallBusiness.co.uk hears from four business owner-managers from different sectors about their experience with homeworking.

Owner Manager 1: Tabitha Potts

Founder of online eco store Mimimyne, Tabitha set up her business from home primarily as a way of balancing her childcare commitments.

Working from home has helped enormously with the recession. Although people are spending less on discretionary purchases, I don’t have to worry about having overheads. If it weren’t for advances made in technology, my business wouldn’t exist.

The biggest problem as a mum working from home is the isolation. But I do use networks and talk to other ‘mumpreneurs’ and have formed online friendships.

The costs have been fairly minimal. I don’t have business meetings, so I don’t need anything like contents insurance. Instead, I use video conferencing.

Owner Manager 2: Mark Houlding

The founder of PR company Rostrum Communications, decided to work from home for half the week to avoid a long commute

When I founded the business, I started as a home worker with nothing more than a kitchen table, laptop and phone. As the business grew we matured and got an office. So in some ways I feel as if I’ve come right back full circle.

It can really help when you’re working on a big project to be left on your own. We set up a virtual network with our IT provider, so it’s no different from sitting in my office.

I feel I’ve got the best of both worlds. As a creative company it’s important to be in the office checking things and bouncing ideas off each other, so I wouldn’t want to go completely virtual. If I worked at home all week, I’d feel very distant from the company.

Owner Manager 3: Jasper Westaway

The founder of software start-up Onedrum, employs seven people and decided to make home working part of the company’s business model.

Expectations have evolved rapidly; it’s taken for granted now that you can work from home and be effective. People do worry that you won’t be able to keep track of your employees, but for us that isn’t a problem. We’ve been careful to hire the right people and we measure our output so we know exactly what’s being done.

I don’t think there are many practicalities to consider. Things like insurance can just be bought on the internet. You do need to approach having an office with a degree of professionalism, however. Having good equipment and a good chair is really important.

The only thing I’m conscious of when working from home is hosting meetings, which can be difficult when you want to present in a professional-looking environment. But there are plenty of conference rooms that you can hire to achieve that effect.

Owner Manager 4: Mark Rogowski

The founder of online cake shop Plwmp, felt that setting up his company at home was a way to minimise costs

We wanted to see how the market was before investing a lot of our time and money. We don’t have a landlord to deal with or a shop to kit out and in the current climate that has put us in a much better position than we would be if we had decided to open a shop.

Because I work with my wife, it doesn’t get too lonely. But I sometimes think more contact with our customers would be nice.

In terms of technology, all we needed was an internet connection and phone. As e-commerce and selling online has grown so much in the last couple of years, it’s meant we have a larger customer base. And that in turn has made home working a much more viable option.

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