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Home Based Biz

About Home Business

1 Working from or at home is the fastest growing small business sector in Australia

Home based businesses are growing by 16 percent a year and it is estimated that between 750,000 and 1,000,000 Australians use their home in some capacity to earn an income.

Among the main attractions are independence and flexibility, not to mention low overheads.

And it seems like everyone wants to do it – from architects to engineers, bridal planners to pet minders, graphic artists to web designers.

Women in particular have fuelled the boom in home businesses as they seize the opportunity to be in close proximity to their children as they grow.

Barriers to growth for typical home businesses

  •     GST compliance difficulties
  •     Government restrictions
  •     Lack of time
  •     Self-imposed
  •     Insurance
  •     Lack of demand
  •     Lack of skilled staff
  •     Lack of finance
  •     Health/stress
  •     Family arrangements

2 Home Based

Working at home can hardly be called a new phenomenon. For centuries, in nearly every culture, people worked out of their homes. It has only been in the last century or so that society moved from an almost totally self-employed, at home work force to a highly industrialised force, involving both specialisation and centralisation.

Within the past decade, however, a significant and increasing number of people have chosen to earn their livelihoods working at home. Let’s examine this trend that appears to be gaining sufficient momentum to warrant being termed a social movement.

As society became more of an urban, industrial society, earning money from home became an uncommon way to earn a living. Home business ventures were usually limited to people making supplemental money from hobbies such as woodworking or needlecrafts or earning some extra money in one’s spare time by doing side jobs such as ironing, alterations, baby sitting, or house painting. Working from home was no longer looked on as a legitimate way of earning a living.

3 Rebirth of Home Business

Traditionally these home businesses were the woman who took in sewing or ironing, the man who made wooden toys and furniture in his spare time, the baby-sitters, quiltmakers and craftspeople who supplied all their neighbours with handmade gifts.

Currently, home based businesses encompass much, much more. Changes have occurred in our society and in the way people think of home businesses that have broadly expanded the types of businesses that are now run from home. The massive growth of computers in businesses, the emphasis in our economy on services and information, and the rising costs of office space, fuel and corporate overhead have all contributed to the change.

However, the single most important aspect that has increased the range of home businesses is change in attitude.

The spectrum of home business people is ever broadening. Through alternate work site programs, many corporations now have employees who telecommute, working at least part of the time on computer terminals in their homes. Entrepreneurs are running tutoring services, maid services, and a wide range of secretarial services from their homes. Shopping and wardrobe consultants, caterers, writers, accountants, and real estate agents are all working from home. Even professionals such as business consultants, lawyers, engineers and psychologists are working from home. In fact, the demographics of the people involved in working at home seem to be as divergent as the demographics found in the population at large.

4 Factors Affecting Growth of Home Businesses

  •     Changes in employment structure
  •     Advances in technology
  •     Earlier retirement
  •     Increasing economic pressure
  •     Improving lifestyle

5 Advantages of a Home Based Business

  •     Flexible workhours
  •     Savings in travel time to and from work
  •     Reduced financial risks. This runs a lower risk than starting from commercial premises
  •     Convenience and comfort. Many home based operators claim they are more productive working from home.
  •     Can have childminding-costs reduced.

6 Disadvantages of a Home Based Business

  •     Disputes with neighbours
  •     Home distractions. Interruptions that can result in work not being completed.
  •     Lack of privacy. You do not want business visitors passing through living areas. If possible there should be separate access for business visitors.
  •     Isolation. If you live alone, working from home can be lonely. One may feel isolated.
  •     Limited exposure for the business. Retailing is not really suitable for a home based business. Some businesses require high traffic.
  •     Strained personal life. Personal relationships can become strained if one is too involved with the business. This can lead to family tension and loss of friends.

7 Process of Setting Up

Step 1

  •     Prepare feasibility of idea. Develop a financial model of possible scenarios for the success or otherwise of the business.
  •     After having ascertained the viability of the venture, the preparation of a Business Plan will focus the mind on all contingencies and processes in operating the business.

Step 2

  •     Register business name
  •     Select legal structure
  •     Check local Council approvals or requirements and lodge Development Application if required.
  •     Obtain any licences, permits or permits required from Government.
  •     Obtain ABN from the Australian Tax Office.

Step 3

  •     Set up and equip workroom.
  •     Obtain stationery
  •     Ensure adequate computer facilities
  •     Arrange insurances
  •     Develop alliances with advisors.

Step 4

  •     Source products or services.

Step 5

  •     Prepare feasibility of idea. Develop a financial model of possible scenarios for the success or otherwise of the business.
  •     After having ascertained the viability of the venture, the preparation of a Business Plan will focus the mind on all contingencies and processes in operating the business.

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New businesses become customers of other businesses thereby generating economic growth.