The Pitfalls of Owning a Home-Based Business - dummies

The Pitfalls of Owning a Home-Based Business

By Consumer Dummies

Starting a home‐based business isn’t the solution to every problem for every person. Although many home‐based businesses are successful and the people who started them are happy with the results, more than a few home‐based businesses end up causing far more headaches than their owners anticipated. Some home‐based business owners even go bankrupt as a direct result of the failure of their businesses. Starting your own business is hard work, and there are no guarantees for its success.

So the next time you’re lying on your sofa, dreaming of starting your own home‐based business, don’t forget to consider some of the potential pitfalls:

  • The business is in your home. Depending on your domestic situation, working in your own home — a home filled with any number of distractions, including busy children, whining spouses or significant others, televisions, loaded refrigerators, and more — can be a difficult proposition at best.

  • You’re the boss. Yes, being the boss has its drawbacks, too. When you’re the boss, you’re the one who has to motivate yourself to work hard every day — no one’s standing over your shoulder (except maybe your cat) watching your every move. For some people, focusing on work is very difficult when they are put in the position of being the boss.

  • Health insurance may be unavailable or unaffordable. If you’ve ever been without health insurance for a period of time, or if you’ve been underinsured and had to make large medical or dental payments, you know just how important affordable health insurance is to your health and financial well-being.

    According to a recent study, 62.1 percent of all bankruptcies are medical related, and 92 percent of these debtors had medical debts of more than $5,000. Unfortunately, when you work for yourself, finding good health insurance isn’t a given. In fact, it can sometimes be downright difficult, depending on where you live and work.

    The Affordable Care Act (Obamacare) may provide some relief, if not in the form of subsidized health insurance, then at least in showing you your options in the marketplace — if you haven’t already, check out your options.

  • A home‐based business is (usually) a very small business. As a small business, you’re likely more exposed to the ups and downs of fickle customers than larger businesses are. And a customer’s decision not to pay could be devastating to you and your business.

  • You may fail or not like it. No one can guarantee that your business is going to be a success or that you’re going to like the business you start. Failure may cost you dearly, including financial ruin (no small number of business owners have had to declare bankruptcy when their businesses failed), destruction of personal relationships, and worse. However, not all small businesses close because of financial problems. The Small Business Administration has found that at the time of closing, one out of three businesses is financially sound.

Regardless of these potential pitfalls, starting a home‐based business remains the avenue of choice for an increasing number of people. Are you ready to join them?