Bad Reasons to Start a Home-Based Business
Sometimes, self-employment can look appealing simply because you're so unhappy where you are. The solution may lie in addressing the reason behind your unhappiness. It might not be your job or your boss as much as finding yourself in an industry that doesn't fit your natural talents. Before you jump ship to a home-based business, look at your reasons. If they sound like the following, you might want to reconsider your strategy.
You Hate Your Boss
Almost everyone gets frustrated with the boss at some point. Try to take a step back from the situation: If you like your work, believe in the company you work for, and enjoy and respect your coworkers, then opening up your own business may not be the answer.
You Want to Get Rich
It's time for a reality check: Yes, sometimes, home-based businesses start small and grow big, and sometimes another company will come in and buy you out. But in the vast majority of cases, home-based businesses have the potential to earn a reasonable, but not millionaire-level income; getting rich quickly is not something you can rely on.
According to the U.S. Small Business Administration (SBA), only 3.5percent of home-based businesses show gross receipts of more than $100,000 a year, and less than 1 percent have gross receipts of $500,000 or more. The vast majority — 96 percent, in fact — report gross receipts of less than $50,000 a year, and 77 percent have gross receipts of less than $25,000 a year.
You Want to Cut Childcare Expenses
Dream on. Seriously. It's very, very difficult to combine taking care of children with running a successful full-time home-based business. Both children and businesses need your full attention; spending the day trying to satisfy both at the same time is a quick route to frustration. If you need to save on childcare, plan on working part-time hours or in shifts opposite your spouse.
You Have a Better Mousetrap
Leaving your day job because you have one idea for an invention is not the road to financial freedom. Sure, you have a better mousetrap — but what happens after everyone's bought it? Until you have a steady stream of products, it might be best to market that invention while you're still enjoying a steady paycheck.
You're Tired of Red Tape
You may reduce the bureaucracy with a home-based business, but you won't avoid it: There are still plenty of rules and regulations to follow. The biggest will be the tax issues that arrive courtesy of the Internal Revenue Service (IRS) or Canada Revenue Agency (CRA). Then there are local zoning regulations, professional standards, business licensing laws, and national legislation that deals with everything from employee relations to access for persons with disabilities.
Don't be tempted to try reducing red tape or taxes by going “under-ground” — accepting cash payments that can be hidden from the company's books, for example. Not only is it illegal to hide revenue this way, but it will void insurance coverage and leave you wide open for major liability suits if something goes wrong.
You Want More Leisure Time
A home-based business may give you more control over your time, but it won't necessarily give you more leisure time. In fact, self-employment often leads to serious burnout, because the office is always nearby, and there's always work that needs to be done.
