Home Business Boom

by Rob Spiegel

Is a home business boom coming? Rob Spiegel thinks so. Here's why.

There is a coming home-business boom. You may not read much about it, since home business activity takes place quietly, but it's coming nonetheless. All of the elements are there to support this quiet boom. Layoffs are increasing. Home-equity gains of the past few years provide the modest capital needed for a home-based launch. And people are getting tired of reporting to offices where salaries are frozen and advancement opportunity is narrowing as people hold tight to their current jobs.

The biggest recent factor to fuel this boom came on September 11. There are certain to be millions across the nation now who shudder as they commute to a tall office building. The attack has also dramatically increased our desire to stay close to family. Parents of young children are probably growing disenchanted with the life of daycare and office buildings in the new world that abruptly appeared on September 11. Since job alternatives are scarce during this downturn, you can expect people to start visiting business opportunity fairs seeking home-based enterprise opportunities.

Two or three years ago I spent a few months working with a leading business opportunity and franchise show, living the gypsy life while giving seminars on how to shop for franchises. This was during the late-1990's boom years of early eCommerce and high employment. It was a great time to start a business. Yet attendance at these shows was down across the country. Who needs the risk and trouble of a business launch when you can raise your earnings simply by jumping from good-paying job to better-paying job. And with the stock market sky-rocketing, you could accumulate wealth simply by shifting your nest egg from one fast-flying stock to another.

With fewer choices in the job market and no opportunity in the stock market, people will naturally start to consider a business launch. Just 15 years ago, that meant renting office space or a storefront. Not any more. A home-based business is perfectly respectable now. It's even coveted. The home business is accurately perceived as offering more personal freedom than the out-of-home launch that comes with the strings of large capital investment and staff management.

We can thank the last major down cycle for taking the stigma out of home enterprises. The early-to-mid 1980's saw corporations laying off while collar workers for the first time. In earlier down cycles, white collar workers were immune to layoffs as companies trimmed blue-collar manufacturing jobs. The laid-off white collar workers became consultants and worked from home. Suddenly the home enterprise was legitimate. Running a company from your spare bedroom no longer meant you spent your day holding Mary Kay and Tupperware parties.  Many are now seeking to Work from Home, with no commute.

The Internet increased the allure of the home-based start-up. Most shoestring e-biz companies begin in the home, whether the company trades in products or services. For a small Net-based business, there is little reason to rent offices. Besides, statistics from the Small Business Administration (SBA) strongly suggest your odds for success are greater if you launch from home.

The SBA has found that 52 to 55 percent of all businesses are no longer active after five years. For those companies launched and grown in the home, the failure rate is 45 to 48 percent after five years. Placing your business in your home gives you a slightly better than even chance for survival. The improved odds most likely have to do with the lower overhead of a home-based business.

With a soft economy and a growing number of laid-off workers who will naturally consider a business start-up when they discover their job prospects are dim, this is not the best time to launch a new enterprise. But I can tell you from personal experience, the decision to launch a business is not usually rational or logical. A home business start-up boom is likely in process right now. It's not because of opportunity; it's because of desire.