Management - Starting A Home-Based Business

A Guide To Success While Working From Home

Work From HomeThere are certainly plenty of advantages to starting a home-based business – if you know what you're doing. "You can get your work to fit your life," says Mindy Lilyquist, founder and creative director for Epiphany Marketing Management.

But, be warned, there are many aspects of running a distributorship from home that you might not think about. Here's what the experts say every new or prospective work-from-home businessperson should contemplate.

Carefully Consider the Cons
Before you decide to go all-in with a home-based business, Lilyquist suggests you remember this reality: The situation likely won't be the fairytale that it's often made out to be. "It's sometimes romanticized into the fix-all for people who are tired of corporate America or who have been laid off," she says. "But people tend to underestimate how much they need to spend on their home business. If you've got kids at home, plan on getting less sleep, because you're going to do your work at night."

But even if you don't have kids – or if you have kids who are old enough to be in school most of the day – Lilyquist says there are other considerations. "There are added expenses because, working from home, you're going to be increasing your utility bills. And there are no employee benefits when you're working on your own," she says. "Also, a home business is not segmented. You're going to be the tax accountant, the CEO, the chief marketing officer – you have to do it all."

If you've made your peace with these items, Lilyquist says there's one more important thing to keep in mind. "People tend to forget there are a lot fewer social opportunities," she says. "Some people feel it's going to be nice to escape the office with all the distractions, but eventually they feel a little isolated."

Ponder the Legal Issues
There are legal considerations for work-from-home individuals, too – zoning issues, for one. "Are they allowed to work from home?" asks Barbara Weltman, author of The Complete Idiot's Guide to Starting a Home-Based Business. "There are issues not only as to whether the town or city says you can – which is probably OK if you're not having employees or other people in your home – but what can be problematic is if you live in a residence subject to homeowner association rules. They may bar it, and neighbors can be funny about that. If you have a spat about something, they can create problems for you."

Another potential issue is insurance. "Don't assume that your homeowner's insurance covers your business activities, because it likely does not," Weltman says. "For example, if you have samples and inventory, they may not be covered if you have a fire in your home. It's the same with liability. If you have people coming into your home for business, they may not be covered if they're injured on your premises."

So what's a remedy for that? "You can get a separate business policy," Weltman says. "Years ago, insurance companies didn't like to issue policies for home-based businesses, but now they do routinely, so that's not an issue, and that might be the way to go if you have a substantial amount of inventory that you want to protect. The other option is to put a rider on your homeowner's insurance policy, and you can talk to your insurance agency about that."

Avoid Distractions
Those who've worked in structured 9-to-5 environments may be surprised at how easily distracted they become when they begin to work from home, experts say. "My first-time management tip is turning off the TV," Lilyquist says. "You think it's oftentimes just background noise, but it's really distracting."

And that's only the beginning. "I also recommend an Internet babysitter filter. If you tend to start surfing the Internet often, you're in big trouble. There are a lot of tools online that are free or affordable. One of my favorites is a free tool called Rescue Time ( You can put blocks on certain sites if you can't quite handle yourself," she says.

Dawn Noble, professional organizer and author of How to Start a Home-based Professional Organizing Business, says the distractions multiply when there are other people in the house – especially kids. "You really have to create a specific environment. If it's inside a room, then the outside of that door of that room needs to have a sign on it that says, ‘Do not disturb,'" she says. "What's great to have is a sign that says, ‘Working until 4:30,' or ‘I'll be available after 4 p.m.,' so when the kids come home from school, they won't have to knock and say, ‘When are you going to be able to do this with me?'"

The key, Noble says, is to find and maintain a space in the house that's for work, and work only.

Get Organized
Noble strongly recommends hiring a professional organizer upon the establishment of your home-based business. "Most people start a business in the field that they're already in, but they've never set up their own business," she says. "If you don't know how to set up an office or get yourself organized, you're going to be doing a lot of busywork and get inundated with papers. Almost every home-based client that I've ever worked with did not know how to make their own filing system."

Noble suggests getting that set up right away – within the first three to six months of business. "It's well worth the four- to eight-hour consultation with a professional, because once you get a system established, it's pretty easy to maintain," she says. "And even if you're not maintaining it, at least when you do get to filing, there's a system set up."

Specify a Time for Every Task
Noble believes that a big part of getting and staying organized includes setting aside a certain day and time for every business-related task. "When my business was brand-new, I took care of all of the financial stuff on Friday morning. Whether it was a bill, my payables – anything to do with finances, it was all done then," she says. "Once you identify tasks and when you're going to do them and you can put it in a bucket, per se, then when something comes into your e-mail, you just put it in that bucket, and you don't have to think about it until Friday."

Noble also recommends giving yourself a reward for the completion of each scheduled task – especially if it's something that you really don't like to do. "I used to set a schedule for myself that, as soon as I got done with all the finances, I got to play a round of golf. That was my treat," she says.

Take Advantage of Tax Deductions
One of the perks of working from home is all of the potential tax deductions that come with it. However, Noble advises against trying to sift through all of these deductions on your own.

"It's tricky because the laws on that change so frequently," she says. "My one recommendation is to find an accountant who works specifically with home-based business clients."

Noble says it's crucial to find an accountant who specializes in home-based businesses to get the most deductions possible. "If they don't know the specifics about home-based businesses, you're not going to get as many of the advantages," she says.