At first it might seem as if it would be "free" to have your business operate out of your home.
However, this supposition is not as clear-cut as it first appears.
Consider the following issues: •Your homeowner's insurance may not cover a business.
You may have to get a separate insurance policy to cover the loss of business assets in your home or to cover the interruption in your business if something catastrophic happens, such as a burst water pipe.
This is an added expense you will have to factor into your decision.
•The zoning of your neighborhood may be residential only and may not allow a business to operate.
Check with your local zoning office to find out whether it's even possible for you to operate out of your home.
Zoning officials will most likely ask how many clients you expect to have in the house and what type of and how much parking you have available.
You may have to pay extra fees or property taxes to the municipality to operate a business out of your home.
•You will be subsidizing the operating costs of your business.
This will definitely help to save money in the start-up phase of your business, but it may allow you to operate a business that wouldn't survive without that subsidy.
All businesses that are built on successful and sustainable models can pay all of their expenses and provide a return to the owners.
Your business, if it is to be successful and have value that can be transferred to a buyer, must eventually be able to operate from leased or purchased premises.
Not paying any premises expenses may lull you into thinking that your business is successful when it is truly not.
If you work from home in the start-up period but plan to move to a separate location in the future, make sure you have tracked that cost in your cash-flow projections.
Am I suggesting that you have to move your business out of your home eventually? Of course not.
You may decide that the convenience and the financial savings outweigh the other considerations.
However, it's important that you assess your business to make sure it could survive if you had to rent space.
However, this supposition is not as clear-cut as it first appears.
Consider the following issues: •Your homeowner's insurance may not cover a business.
You may have to get a separate insurance policy to cover the loss of business assets in your home or to cover the interruption in your business if something catastrophic happens, such as a burst water pipe.
This is an added expense you will have to factor into your decision.
•The zoning of your neighborhood may be residential only and may not allow a business to operate.
Check with your local zoning office to find out whether it's even possible for you to operate out of your home.
Zoning officials will most likely ask how many clients you expect to have in the house and what type of and how much parking you have available.
You may have to pay extra fees or property taxes to the municipality to operate a business out of your home.
•You will be subsidizing the operating costs of your business.
This will definitely help to save money in the start-up phase of your business, but it may allow you to operate a business that wouldn't survive without that subsidy.
All businesses that are built on successful and sustainable models can pay all of their expenses and provide a return to the owners.
Your business, if it is to be successful and have value that can be transferred to a buyer, must eventually be able to operate from leased or purchased premises.
Not paying any premises expenses may lull you into thinking that your business is successful when it is truly not.
If you work from home in the start-up period but plan to move to a separate location in the future, make sure you have tracked that cost in your cash-flow projections.
Am I suggesting that you have to move your business out of your home eventually? Of course not.
You may decide that the convenience and the financial savings outweigh the other considerations.
However, it's important that you assess your business to make sure it could survive if you had to rent space.