When not to work out of the home - Entrepreneur's Notebook - Column

Nation's Business, July, 1994 by Gail A. Smith

In October 1992, I left a small firm that developed interactive training software and, with two partners, started a company that operated out of our homes in the Dallas area. Once a week, two of us would lug our own desktop computer equipment to a third partner's home to work on the interactive multimedia training programs we were designing. Within the first 30 days, I knew our company, Inmedia Inc., would fail if we continued operating that way.

In a modern rags-to-riches story, someone checks out of the corporate world to start the world's next great company out of a garage or basement. It worked for Apple Computer Inc. and others, but Inmedia is an example of how it doesn't work for everyone. Our company designs interactive multimedia programs that aid companies in training and marketing. For example, we recently designed a selfpaced interactive program for Caterpillar Inc. that teaches the company's dealers and distributors about a new line of truck engines. A user can call up the training program from a personal computer in an office or at home. Comfort and economy were prime considerations in our decision to operate out of our homes. It was my third try at working where I lived; the first two attempts came between other Jobs In corporate sales and sales management.

In launching Inmedia, I discovered five reasons why staying at home would have led to failure:

The Need To "Team." Each partner had different strengths; we needed to work together on every project. Our success was based on a combination of our ideas. Separate home offices didn't provide easy access to one another.

An Ambitious Business Plan. Capturing market share that was there for the taking--but only for a short time-- meant pursuing new business at top speed. We had to hit our early sales targets to move forward. Working apart most of the time slowed us down.

Client Expectations. Customers get frustrated when they can't get quick answers. Working from home and not having access to a partner when needed made for longer response time.

Focus. It's easy to get distracted at home, to visit a neighbor, do laundry, or start dinner early. I had no time for that. Start-ups can't afford to take their eyes off the ball, even for a few minutes.

Personal Issues. Home has always been my haven. I work long, intense days, but I escape to where I can pull back and approach work the next day with a fresh attitude. It's tough to get away when you know the business is down the hall. For me, that would have led to burnout. In addition, I would have eventually had to alter our home to meet work requirements. But that would have been at least as expensive as renting an office, and work would have further dominated my home life.

My partners adjusted to working at home better than I did, but all three of us soon concluded that we needed office space to perform our best. We moved into the new quarters just 90 days after we started the company.

It wasn't fancy space. We sacrificed some comfort for operational savings and exchanged office luxuries for productivity. We discovered that the companies we serve don't need to see a luxurious office; a well-integrated, creative team operating with minimum overhead meets their requirements for quality and price.

Inmedia finished its first year in the black, and 1994 revenues should reach $1.5 million. Today, two founding principals and seven employees work in the same space that used to house the three original partners.

Yes, it's getting crowded, so we are moving walls and expanding. We might even add a kitchen. But we remain conservative about the bottom line.

Too many entrepreneurs feel forced by financial concerns to work out of their homes even when the nature of their business, their organizational styles, or their personal working habits might suggest that they do otherwise.

Locate a company where it can succeed; you may find that home is not where the business is.

Gail A Smith is a principal at Inmedia Inc., a Dallas-based company that develops interactive multimedia training and marketing programs using CD-ROM and CD-Interactive. She prepared this account with Nation's Business Contributing Editor Charles A. Jaffe.

Readers with special insights on meeting the challenges of starting and running a business are invited to contribute to Entrepreneur's Notebook. Write to: Editor, Nation's Business, 1615 H Street, N.W., Washington, D.C. 20062-2000.