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A home-based business is an enterprise in which all or most of the work is performed at or from the owner-operator's private residence.[1] Home-based business is one of the fastest growing sectors in the NSW economy, making up about two-thirds of the State's small businesses.[2] Some characteristics of home-based businesses are that there is a higher proportion of women who own and operate their business from or at home, owners are usually aged between 30 to 50 years, and most are self-employed. Many micro-business owners choose to operate their business from home as it provides them with many advantages. However, it is important to note that there are also various drawbacks from operating in your own home.

One of the primary benefits of working from home is the ability to reduce, or entirely eliminate overheads such as rental expenses. Particularly for start-up ventures funded by the owner, this is a significant advantage, as the initial capital will be limited. Many individuals also find that working from home allows them to spend more time with their family and attending to household commitments with ease. They are able to work flexibly, setting their work hours around responsibilities such as school drop offs and preparing dinner etc. For some, there is the added comfort and convenience of working from home, avoiding having to travel to and from work, as well as the hustle and bustle of getting around.

However, there are some drawbacks to a home-based business. Working from home may hinder you from being productive, as there may be many distractions around the home, or due to its comfort and lack of professional feel. Further, with flexible work hours, owners may procrastinate commencing work, with the belief that if can be done later.  Being able to get work done will require discipline and self-motivation. It also requires you to manage your time efficiently and not put things off for later. Working from home also may create loneliness or isolation. As many business owners are self-employed, their contact with others is limited, unless their business involves client contact. Further, working from home may sometimes project the image of a less than professional business. Some customers may be somewhat more sceptical and reserved of a business owner's ability to meet their needs and wants if the business is operated from home.

It is important to ensure that your business, although operated from home, is still presented in a professional manner. Setting up a comfortable office area allows gives you a separate space for work, which aids in the professional presentation, the management of files and documents, as well as separating yourself from the home environment. Sticking to regular work hours and dressing professionally helps you keep to a routine as well as conveying a professional image.

[1] Entrepreneurship and Small Business. Michael Schaper and Thierry Volery

[2] Smallbiz.nsw.gov.au (Source: ABS Characteristics of Small Business 8127.0 - June, 2004, and 2001 Census Data).