Is It Time for Your Business to Move Home?

Are you homeward bound? The Wall Street Journal reported this week that many entrepreneurs, hit hard by this economic nightmare we’re desperately trying to wake up from, are leaving their offices and storefronts and headed home, taking their businesses with them.

Obviously, this is not a decision to be made lightly. Before you start packing you need to figure out whether you can actually run your current business out of your home — and if you’re even allowed to. Home-based businesses are regulated at the local level (city, town, or county) so before you open up shop at home, check your zoning regulations. These zoning laws can be byzantine so make sure you know what you’re up against. In most cases, home-based businesses don’t attract much attention, so you might be able to run your business without anyone being the wiser, unless a neighbor has a problem.

That may sound like the fodder for a television drama, but several years ago I met a home-based business owner who was “turned in” to local authorizes by a neighbor who was angry that the man “couldn’t control his dog’s bathroom habits.” One of the entrepreneurs quoted in the Journal actually bought a house and got the approval from her local zoning board to run her business out of her new home, only to have the town overrule the zoning board when a community group protested the decision.

Not all businesses are suited to be run out of a home. If you’re a solo entrepreneur, it’s likely you’ll do just fine working from your house. On the other hand, neighbors generally start complaining when home-based businesses have employees who clog the streets with their cars. Many service businesses also thrive in a home environment. It’s tougher for retail entrepreneurs who often encounter problems when streams of customers start pouring into the neighborhood. In some cases, potential customers might question your “legitimacy” and the quality of the products you’re selling. And again, in some cities and towns the regulations don’t let you run businesses where delivery trucks have to pick up (or deliver) lots of packages.

Of course, retailers can take their storefront to the Web. This can instantly save you thousands in overhead costs. (Again, check those tricky zoning regulations before you do this.) But you need a well-thought-out retail Web strategy; it’s not enough to just take your products off the shelves and put them on a Web page.

Another important factor to consider is, well, you. Working at home is not the same as working from an office. Though there are many who happily work at or from home every day, personally I think it’s harder. I tried it many years ago as a freelancer and hated having no one to talk to. And even today, every so often I’ll take a work-at-home day and am amazed at how much I don’t accomplish. The other day one of my partners said, after working at home, “I had an ADD day.” That’s the problem with working at home. You have to be really good at avoiding the personal distractions that are fighting with your attempts to concentrate on the work at hand. If you’re disciplined (unlike me) you can make it work.

If the cost of rent is the driving factor behind your move, try talking to your landlord before you close your doors and head home. They know times are tough and may be willing to negotiate your existing lease. Or explore the idea of sharing space (and perhaps staff, further cutting expenses) with another retailer. Even a move to another part of town might be more preferable than heading home.

If, after weighing all your options, you decide your home is the best place to run your business, make sure to update your insurance coverage. In most cases your homeowner’s coverage will not cover your business and you will need to buy a new or supplemental policy.

I don’t mean to be discouraging. Moving your business home could be a smart move for your company. Many businesses and entrepreneurs (millions really) thrive there. One entrepreneur was so determined to operate his business out of his home that, according to the Journal, he searched for a town and a neighborhood where he could hang a business sign outside his house and moved there. After reading that, my first inclination was to say NIMBY (“not in my backyard”). But my second was to remember my mother grew up in an apartment in Brooklyn that was located on top of my grandpa’s candy store.

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