Building a successful home-based business - includes resources for the home-based business owner

Black Enterprise, Sept, 1997 by Wendy M. Beech

Setting up shop at home is not as difficult as you may think. Here are three are at business start-ups for the new American workplace

WHEN CYNTHIA BROWER STARTED

Atlantic Optical Framewear (which imports and exports ethnic eyewear) four years ago, finding a location was the least of her worries. "I always wanted to do something home-based because you have the advantage of being able to work any hours that you want and your office is always at your disposal." grower, who imports ethnic eyeglass frames from South America, Asia and Africa, operates her business out of a spare bedroom of her Owings Mills, Maryland, home.

It turns out that Brower is not home alone.

When it comes to starting a business, millions of would-be entrepreneurs are finding that there's no place like home, and are converting dens, bedrooms, basements and attics into offices. According to IDC/LINK, a New York-based market research firm, there are 20 million home-based businesses nationwide in areas ranging from computer consulting and cleaning to medical billing and meeting planning. Growing at an annual rate of 7%-8%, the number of home-based businesses is expected to reach 27.8 million by the year 2001. There are few statistics to show the number of African Americans working at home. However, according to a recent study by Fidelity Investments, the nation's largest mutual fund company and one of the leading providers of financial services, 37% of all home-based businesses are operated by women. As for income, in 1996, 56% of all home-based businesses earned net revenues of less than $50,000, 24% earned $50,000-$99,000, and 20% made more than $100,000.

Self-employment expert Paul Edwards says there are many reasons for choosing to work at home. "A certain proportion, particularly men, work at home because there are tremendous cost savings," says Edwards, who has co-authored several self-employment books, including Working From Home and The Best Home Businesses for the '90s. "For another large segment, it's the idea of having more control over your life and being able to spend more time with your family." For the person looking to balance career and family, a work-at-home environment can create the best of both worlds.

Start-up costs for a home business vary according to the type of operation, but some can be launched for as little as $500. Brower started her company with about $3,000, which included expenses for office equipment, supplies and 12 weeks of training and certification with the Exporters Incubator, an international trade training program created by the International Association for Business Organizations (INAFBO).

The first step to starting a home-based business is deciding what type of operation to run. But before you print your business cards, check your local zoning laws to see which types of businesses are permitted in your neighborhood. Some zoning ordinances exclude home businesses entirely. But the majority place restrictions on these operations, limiting on-street parking, the number of employees, signage and the amount of vehicular traffic. Also check homeowner associations, co-op boards and condominium complexes, which may enforce their own work-at-home restrictions.

Businesses that may be red-flagged include commercial ventures or businesses that require outside storage of supplies, create extreme noise and produce flagrant odors. Those operating without a required license or permit also can be zapped. Many home enterprises such as day care and catering services require certificates of operation. Check with your municipal, county or state office to see if you will need this document. Fees vary according to state and type of operation, but range from $25-$100.

While there are many advantages to setting up shop at home, there are some drawbacks, particularly if the lines of separation between your work environment and home life are not clearly drawn. Setting up a completely separate area for your home office is important because it will qualify you for a home office deduction around tax time. When selecting an area, consider using a spare bedroom (the basement or an enclosed porch or sunroom also is ideal). Forgo working from the kitchen table or family room. As your business becomes more successful, you may need to add personnel or expand your office, so project your space needs for at least five years. Also, determine if your business requires you to bring clients to your home. If so, plan a distraction-free area in your office to meet and talk with customers. You may also want to consider renting office space for your meetings. Brower advises those operating home-based import/export trading companies to rent space when servicing clients. "It behooves you to bring your clients or suppliers to what is traditionally viewed as a business setting," says Brower. "You bring your Korean manufacturer into your home and talk to him across the dining room table."

The home is a relaxed environment, so work-at-home entrepreneurs must be self-disciplined. It can be very easy to get distracted by Oprah and Montel, so be sure to exercise your "self-management muscle." And if you have children, hire a baby-sitter during office hours or schedule outings for the kids so they do not interfere with the business.