“I’m at work all the time,” says Beth Rountree, owner of Beth Rountree Design in Austin, Texas, a home-based graphic design business specializing in print media. “I had my daughter in 2000 and was on maternity leave when I got my first client, then it ballooned into a business,” she says. “Having the flexibility to stop and be with my family for dinner is huge for me,” she adds.
More than half of all U.S. businesses are home-based, according to the U.S. Small Business Administration (SBA). For some people, the dream of working from home stems from a desire to be a stay-at-home parent, others want the opportunity to pursue what they love, and then there are those who just want to avoid an unnecessary commute. Although the reasons behind it are many, operating a business from home is a rewarding, yet challenging, balancing act that many people are choosing to pursue across a broad spectrum of industries. Here’s a look at five popular choices, followed by a word of caution about fraudulent work-at-home schemes.
1. Service Businesses
For John and Laura Roberts, owners of Burnt Ends BBQ in Portland, Oregon, their part-time venture started from a hobby. “Our business grew out of our experience competing in professional barbeque contests,” John Roberts says. “People started asking us if we catered, and now we have an office set up within the home,” he says.
Rountree and Roberts give a peek at what its like to say, “I’ll be home for business,” in the service sector, which accounts for more than half—52 percent—of all home based-businesses in the United States, according to a report for the U.S. Small Business Administration Office of Advocacy.
“A big advantage for me,” says Rountree, “is being home for my family and being able to be active with my kids.” But there can be drawbacks, too, she acknowledges. “The downside is that I have to wear so many hats,” she says. “Also, you never know when you’re going to get paid. That’s a tough pill to swallow. You go on vacation—you don’t get paid.”
The Roberts couple adds, “One of the challenges is that we are fitting it around our other work schedules.” In addition to the demands of running the catering business, including marketing efforts such as creating brochures, placing local advertisements, and updating their web presence, they are still maintaining other full-time jobs outside of the home.
A distant second to the service industry, representing 16 percent of home-based businesses, is construction. Though only one-third of carpenters are self-employed, an overwhelming 93 percent of them are home-based. Similarly, of all the general contractors in the country, approximately one in four are home-based businesses, according to the Bureau of Labor Statistics. For more on working out of one’s home in the construction industry, the SBA provides information and resources, including relevant details about issues such as energy efficiency, federal contracting, and hazardous materials.
3. Web Stores
Retail trade accounts for another 14 percent of home businesses and Web-based storefronts have become even more popular among the work-at-home crowd in recent years. In Do-It-Yourself Web Stores for Dummies, author Joel Elad says, “Your ultimate goal as a web store owner is to purchase your inventory via wholesale channels.” For product sourcing, he lists a few websites to get started: Worldwidebrands.com, Whatdoisell.com, and Liquidation.com.
4. Finance, Insurance and Real Estate
Finance, insurance, and real estate make up five percent of home-based businesses. These require licensing by various national and state agencies based on educational requirements and exams. About one in ten professionals in this sector works from home, with the highest percentage found in real estate. The National Association of Realtors (NAR) lists many types of real estate businesses including residential, commercial and industrial brokerage, farm and land brokerage, and appraisal.
Transportation ranks fifth place for home-based businesses, comprising four percent. A popular new concept in this category is non-emergency medical transportation, helping those who need assistance, such as people who use a cane, walker or wheelchair. Check with the local department of health-and-human services for specific requirements, which vary state by state..
You can also check out our earlier article on the too-good-to-be-true nature of many work-at-home schemes.
Keeping it legal: Zoning laws
Most if not all cities in the U.S. have zoning laws in place regarding which businesses can be run from home. “In terms of zoning, the potential issues for home businesses include: exterior signage, parking, noise, pollution, fire and hazardous substances, employees working in the home, client visits, deliveries and shipping, water runoff and drainage,” say James Stephenson and Rich Mintzer in the Ultimate Homebased Business Handbook. Check with city officials to learn what local laws are in place governing home based businesses in your location.
There are home office tax deductions available for home-based businesses in every industry. To learn more about them, visit the Internal Revenue Service (IRS) web page on home office deductions. “Generally, deductions for a home office are based on the percentage of your home devoted to business use,” the IRS says.
(Home-based) Buyer Beware
There are many models for home businesses and buying a legitimate work-at-home franchise is an option gaining momentum, but an ounce of prevention against fraud is a must. The SBA counsels prospective entrepreneurs to investigate any franchise opportunity by asking previous and current investors about their experiences and having an attorney review the offer. Get all the facts about the franchise, including a written substantiation of any income projections or profit claims, which the Federal Trade Commission (FTC) requires that any franchisor must provide upon request.
So, if that work from home medical transcription job or online Mystery Shopper opportunity sounds to good to be true, it very likely is. Doing your due diligence is the only way to know for sure. A good place to start one’s search is the FTC’s Scam Watch site, which explains how to avoid bogus business opportunities and offers key clues for spotting fraud, such as claims of exorbitant or guaranteed pay as well as promises of ideal work situations. It also lists the most popular work-at-home schemes in its top 10 online scams.
To determine if a home-based business franchise is a legitimate opportunity: investigate, investigate, investigate. Start with a reliable source such as the Better Business Bureau or FranchiseDirect, which is a BBB-accredited company that provides a directory of legitimate franchises for sale, including a home-based category. Only then will you begin to know if you’re ready to say, “I’ll be home for business.”