Is running a business out of your home a good idea?

For many budding entrepreneurs, running a business out of their home sounds like the cheapest and simplest option.

However, before you decide what is right for you, it is important to fully understand the pros and cons of a home-based business.

The advantages of running a business from home

No daily commute to work means increased comfort, reduced weekly expenses and cuts down on the wear-and-tear to your vehicle.

You can also take more control over your daily schedule. If you have children or a busy household, working from home allows you to schedule around school, soccer practice, laundry and more. You can easily switch between business tasks and chores, keeping your home and work life in equilibrium.

Running a business from home also greatly decreases overhead costs. If you own your home, your new office is essentially free. While you might need to upgrade your internet service or contract with a backup provider, overhead will generally be minimal. This makes it easier to cover your startup costs.

The disadvantages of running a business from home

Perhaps the greatest disadvantage of running a business from home is the difficulty of separating work from your personal life. You may find work bleeding over into family time more often than you are comfortable with, and family members may disrupt your work because you are easily accessible. This can create stress within the home.

Clients may also see your business as less professional. You need to make certain you know your clientele well enough to determine if they will be comfortable working with you in your house or you may need to conduct all your meetings away from your home.

While the costs are lower than having a commercial space, you will see an increase in your bills. You will use more electricity and water, and any dedicated business electronics or machines will place a greater demand on utilities.

Finally, you may need to change your homeowner’s insurance policy, as most policies do not cover business use of a home. Contact an experienced insurance broker to see what coverage you will need.