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Before You Start A Home Business

Part 1: Is A Home Business Right For You?

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Before You Start A Home Business

Home Business

© Alex DeClerk

Operating a home business can give you the best of both worlds. Like all small business owners, you enjoy the satisfaction of being your own boss and being the person who makes the decisions.

But if you run your business out of your home, you also enjoy the benefits of being able to work flexible hours, of not having to commute, and certain tax advantages. In theory, you can run a successful business out of your home and have the flexibility to be there for your family, spending more time with your children or arranging your work schedule around your family's needs.

No wonder so many Canadians are attracted to starting a home business. But is it right for you?

Starting any business requires planning and soul-searching, but there are particular aspects of your business' operations that need to be considered carefully before you start a home business. This article assumes that you already know what you want to do and how you're going to do it; it provides guidelines for deciding whether to run your business out of your home or not.

Legalities - Like any other business person, you need to set up your business legally. You will have to choose a form of business (such as a sole proprietorship, partnership or corporation), and register your business name, if your business has a name other than your own. (You can find links to articles outlining the forms of business and business registration procedures in my Starting A Small Business Library.)

You may also need a business license, depending on the type of business you're running. And you have to run your business according to provincial and federal laws, which means you may need to register for Workers' Compensation insurance with your province, or collect GST/HST and/or PST.

But you have to do all of these things no matter where your business is located, so let's look at factors specific to home-based businesses that you need to consider before you turn a room of your home into an office and start selling your products or services.

Location - You know how important a consideration location is to real estate (both commercial and residential). The location of your home-based business is extremely important, too. You may not even be able to start the home-based business you want to start where you are now, because of issues such as space and zoning. Before you start a home-based business you need to consider the suitability of your neighbourhood and house.

Zoning - Is your neighbourhood zoned for home-based businesses? If it's not, you're just asking for trouble down the road when the city catches up with you or a neighbour complains. Many municipalities don't allow home-based businesses at all, and others place severe restrictions upon exactly what kind of business is allowed to operate out of a family dwelling in a residential neighbourhood. Check the zoning bylaws with your municipality.

Neighbourhood suitability - How will your proposed home-based business fit into your neighbourhood? Most residential neighbours are not going to be very happy if you have noisy machinery running all day long, large trucks starting up early in the morning, or customers parking their vehicles all over the place. If your proposed home-based business involves manufacturing, or trucks or other vehicles arriving at or leaving your property on a regular basis, you should not be operating in a residential area. Unhappy neighbours can be bad for business in all kinds of ways.

Neighbourhood location - Will your neighbourhood's location work for or against your home-based business? If you're delivering a product or service, it probably won't matter if you're located 15 km out of town down an obscure country road (except for the extra travel cost you incur). But if your home-based business involves people coming to you, then they need to be able to find it and get there easily. In many cases, you won't be able to put up any signage for your home-based business, although in others you will be able to have a small, unobtrusive sign by or on your door.

Your property's location and appearance - You don't have to live in a manor with a manicured landscape fit for a magazine to run a home-based business, but your property does have to be attractive enough that it won't scare off prospective customers or clients. Old cars cluttering the yard, knee-high grass, and dilapidated buildings with peeling paint are all turn-offs that can lose you business. A poorly maintained house and property gives people the impression you don't look after things - so why would you look after them? If you're going to run a business out of your home, your home has to look neat and respectable - at all times!

Your house's suitability - I'm always amazed at the number of people who try to run their home-based businesses out of their kitchens. If the only space in your home you can devote to your business is the kitchen or a corner of your basement, don't, unless your business is virtual and no one is ever, ever going to see your premises. People who visit your home-based business will expect it to look (and operate) like a "real" business. They expect to be able to do things such as sit down and sign papers in a business-like environment. Any home-based business will need to have an entire room set aside as an office space.

Some home-based businesses will need even more space. For instance, if you consult with clients, you'll need an actual consulting room separate from your office. If your home-based business involves creating arts or crafts, or manufacturing, you'll need a suitable studio or shop. If you're in this position, and you don't have these already, it may be easier and cheaper to find suitable quarters for your home-based business elsewhere then try to renovate your home to accommodate your business plans.

One of the main differences between operating a home-based business and a business "off-site" is that you lose that automatic separation between your business and your home life. Before you start a home-based business, you need to think about how well your work style and your family will fit into your home-based business plans. Click to continue on to the next page...

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