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Home Business 1
Home Business 1

The Advantages and Disadvantages of a Home-Based Business

If you’ve ever held a regular job, chances are you’ve yearned for the chance to work at home at some point. Long, unproductive meetings, annoying coworkers and various other corporate realities can drive even the most determined employee mad. And if you could become your own boss while dodging the office, that would seem even better.

However, as with any other career decision, there are advantages and disadvantages to consider. Here are a few to keep in mind as you make your decision.



Be Your Own Boss

As with any other self-employment endeavor, a home-based business will allow you to be your own boss. This can be a liberating experience. Instead of someone else setting your hours, you can work as little or often as you like at hours of your choice.

Reduced Overhead

Buying or renting commercial real estate is expensive. Let’s take Los Angeles, for example. As of January 2014, the average rent per square foot was $24.90 per year, or about $2.08 per month. So, if you decided to rent 1,000 square feet of office space, which is about the size of the average location in a strip mall, you’d be looking at around $2,075 per month.

While your utility bills will rise if you work from home, your mortgage or rent won’t. And you won’t have to worry about gas prices shooting up every time the wind blows. In the end, you could save thousands of dollars per month by going this route.

No Commute

The average drive to work takes about 26 minutes and presumably takes about the same going the other way. That’s 52 minutes down the drain every day. Assuming 50 work weeks per year, that comes out to approximately 217 hours, or about nine full days, driving to and from work each year. You can eliminate this by operating a home-based business.


Loss of Steady Income and Benefits
Like any business owner, your income will be uncertain. While contracts can help mitigate this risk, you’ll still lose the security of a steady paycheck. You’ll also have to buy your own health insurance, establish your own retirement plan and so on, instead of relying on an employer to provide these benefits.


If anyone else is home during the day, you may face distractions. The kids might not understand you need to focus on work or your spouse may think you can complete chores during the day. You’ll need to find a quiet area where you won’t be distracted by others who cannot grasp you’re really working!


On the opposite end of the spectrum is isolation. While this may be great from a productivity standpoint, you won’t enjoy being alone all day if you’re an extrovert. That said, you could work from a coffee shop every now and then or join online groups to break the loneliness.

The Bottom Line

Operating a home-based business will allow you to be your own boss while limiting overhead expenses and eliminating the need to commute. However, you’ll lose steady income and benefits, and face possible distractions or isolation. Weigh these factors before turning in your resignation notice to ensure you make the best decision possible.

Article written by: Clay Wyatt - Clay Wyatt holds a degree in Economics and five years of financial work experience. He has a passion for helping others make rational financial decisions.

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