Is It Time to Leave Home?

April 13, 2006

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There are a variety of reasons why, at some point, it may be no longer desirable or feasible to run your business from your home. Some reasons relate to business growth, or its lack of growth. Others may have no direct relation to the business's performance.

Business is "too good." Maybe this is your dream, maybe not: your home business is so successful that your home just can't cope. Possibly the business has reached the point where you have to hire employees, buy more or larger equipment, maintain more extensive inventories, or deal with a steady stream of customers coming into your home. None of these seem to fit in with your idea of a desirable home environment. Further, the comings and goings of employees and customers might push your neighbors' simmering displeasure with your home business over the boiling point. If any of these have occurred, it may be time for you to relocate your business into a nonresidential setting.

You need to hire employees or independent contractors. Some home business operators originally went into business for themselves because they wanted to work alone. To such owners, the idea of having employees or independent contractors reporting to them is a hassle to be avoided. If this describes your feelings, you would have these alternatives to consider if your business grows to where you would need to hire people:

Scale back operations so that you don't need anyone else in the business. This may be much easier said than done. Your existing customers or clients may not stay loyal to you if you refuse some of their business. Also, without a steady stream of new customers, your sales, and your profitability, may drop.
Sell the company. Selling a home-based business can be difficult. The new owner will have to deal with the disruption and cost of moving the business from your house. Further, the new owner may be concerned that existing clients may drift away once you are gone. Although your business may not be easy to sell, the fact that it is growing — now needing employees — may cause a potential owner to take a chance on prospects for additional growth.
Liquidate the business. If you won't operate your business with employees, can't scale it down, and are unable to sell it as a going concern, you may decide to shut down and sell off any valuable business property. But, unless your business property is in high demand, you shouldn't expect to get much for what you sell.
Bring in a co-owner. If you like what you're doing, but you don't want to deal with the additional work associated with having employees, you might want to consider bringing in a co-owner. If you can find someone that you can trust and get along with (family members may be good choices), you might be able to divide responsibilities so that the new co-owner would deal with all matters relating to employees, and you would deal with other aspects of the business. Since this would mean bringing employees and your co-owner into your house during business hours, you might also want to consider moving into a new, nonresidential location.

The market has dried up for particular service or product. If you determine that there is no longer a demand for your products or services, it's probably time to fold your tent. But this doesn't mean that you can't start up a profitable new home business. Many successful home business operators tried several businesses before they found one that they could run at a profit. If nothing else, much of the business equipment (desks, computers, telephone systems) that you have from an old business may be usable in the new one.

Your business has not grown according to plan. It's possible that you won't achieve an acceptable level of profitability even though there is a market for your product or service. Maybe you can't get needed financing, find the competition stiffer than you envisioned, or realize that the business is demanding too much of your time and energy. Unless you can realistically expect circumstances to change, this may be a cue to look for different opportunities.

There's little personal satisfaction in your business. Many employees become business owners — at least in part — to attain greater job satisfaction. Sometimes, however, financial success doesn't generate the expected personal satisfaction. The business may demand too much time, the work may lose its challenge, or the isolation resulting from working alone may be overwhelming. If you were unhappy as an employee, but even more so as the owner of a home business, it's time to reconsider working out of your home.