A Home-Based Business: Definition, Benefits, Pitfalls, and Myths

Did you know that almost half of US small businesses are home-based? Running a business from home can bring people a healthy work–life balance. Why starting a business from home is so popular, and what benefits can they give you? Are there any challenges that you can face? We've prepared an exhaustive post to help you understand all the necessary information on this topic.

Definition of a home-based business

What is a home-based business? The definition is very straightforward.

A home-based business is any commercial activity run from home. 

When organizing a company independently, many people decide to do it from home. If you choose a home-based business, you can:

  • save on office rent
  • stop wasting time in traffic jams
  • make a profit
home-based business benefits

These are apparent benefits of starting your own company. Let's see what the numbers tell us about home-based businesses and discover the reasons for their popularity.

What do statistics say?

Home-based businesses have become a significant part of the economy. 

home-based business statistics
Source: https://cdn.advocacy.sba.gov/wp-content/uploads/2020/06/04144224/2020-Small-Business-Economic-Profile-US.pdf

If half of these businesses are home-based, almost 16 million businesses are operating from home across the country. If you decide to start one, you won't be alone.

The most popular industries to run a company from home are the information and service industries, with companies offering services ranging from professional consulting to scientific and technical assistance. One reason for this is that remote service provision in these industries doesn't require maintaining a warehouse of goods, as retail requires. It's much easier to provide information services via the internet than to sell goods.

The number of business applications filed increased by 27 percent in the US over 2020. The Guardian says that the coronavirus pandemic has created conditions for corporate workers to start their own businesses from home. Starting a business from home requires less funding than from the office. It is often paid for with personal or family savings. Besides, half of the businesses operated from home have no employees. The possibility of launching a business quickly with little spending tempts people to start entrepreneurship.

The other reason why people start home-based businesses is that technology allows for managing most business processes remotely. There are dozens of tools and software products to help business owners manage accounting and schedules, communicate with customers from all over the world, and use digital marketing to promote their services. Let's summarize why running a business from home is so popular.

why home-based business is so popular

It seems anyone can run a business from home and make good money. But is it so simple? Next, we look at the pros and cons of running a home business.

Home-based business pros and cons

Being an independent entrepreneur sounds solid, but working more than eight hours a day isn't so tempting. A home-based business has its own strengths and weaknesses. Let's consider them.

Self-discipline and self-management 

Being your own boss and controlling your schedule allows you to dedicate more time to hobbies and influence your productivity. If you work from home and prefer to get out of bed later, you can manage how to provide your services and get enough sleep. This is a clear benefit for self-organized people. But self-management can be a burden for disorganized people since not everyone can strictly follow a schedule. If you're self-employed, you'll need to learn how to plan your workday.

Having family around 

Family people will be thrilled to devote more time to their loved ones and help with household chores. But while a home business allows people to navigate between the house and work tasks, having a family at home can be a barrier to run the business effectively. It may take some peace and quiet to focus on business tasks. And if you speak with your clients through video communication, no one should bother you during conversations.

Doing business solo 

Running a business on your own lays all the responsibility on you. You can grow your business at your own pace. When you're interested in your own success, it makes you considerate. But what if, as a solo player, you lose your guard and start to make wrong decisions? Who will give you honest feedback? Being a jack of all trades is not always beneficial. You may miss out on opportunities and suffer losses.

Doing business from home may not be for everyone. On the other hand, any difficulties can be resolved, and the flaws can be turned into advantages. Let's sum up the pros and cons of home-based businesses.




More time for people you care for

Hard to stick to a schedule 


Ability to balance house and work tasks

Noise and chaos at home


Ability to build your business at your own pace

Risk of losing focus 


Home-based business benefits 

People decide to start their own companies at home to get certain benefits. Some want more freedom in professional and personal life. Others are eager to implement their own commercial ideas. A home-based business gives a chance to have a comfortable life. Here are a few more benefits a home-based business provides.

No commute 

Do you know the feeling of tiredness when you get to the office after taking crowded public transport? Or perhaps you get up early to avoid traffic jams. If you run a home-based business, there's no need to suffer from a commute every day. It's much more enjoyable to take a stroll around your neighborhood before work. When working from the comfort of your home, you can easily find some time for your favorite morning activities as sports, meditation, hobbies, or just healthy sleep.

No dress code or office politics

Another thing that can make your life more comfortable is no need to wear business attire. Many people just love to finish tasks in their PJs. Besides, it saves money on buying office clothes. Being a remote worker, you can also successfully avoid office politics.

Time for being parents 

Running a company from your own premises can be beneficial for young parents. An infant requires a lot of attention, and as you're at home during the workday, you can take care of your child and work while your child is sleeping. You can dedicate four to five hours a day to business-related affairs and still get attention to your baby. It's a better alternative to leaving your child with a nanny or your parents.

Savings on taxes and additional items

Another great benefit of a home-based business is savings on rent, gas, clothes, and other things. If you don't need to go to the office every day, related expenses disappear. Besides, you can cut costs with tax deductions. You can deduct your home office space, vehicle use for business purposes, internet, phone bills, etc.

If you want to launch your own home-based business, you can find helpful tips and best practices to do it smoothly on our blog.

Home-based business challenges 

Being a home-based businessman gives many benefits, from personal freedom to a decent profit. Still, running a business from home has its own challenges. What difficulties should you prepare for before creating a home-based company, and how can you overcome them? Let's see.

Challenge #1 Restrictive local and federal laws and zoning regulations

Carefully choose your type of home-based business, as you can face several restrictions when trying to launch one. If you live in a purely residential neighborhood, local laws might forbid you to meet clients in your home office. Residential areas often don't allow small businesses to shield residents from additional traffic, so you may have to meet your clients in public spaces, a rented office, or online. You may also be prohibited from using outdoor advertising or parking a vehicle with ads on it.

Restrictive regulations are tricky and can pose challenges for home-based entrepreneurs. Even if your city allows your type of commercial activity, it still can be prohibited by your homeowner's association. You may need to convince the association to make an exception and let you conduct business from home.

Challenge #2 Online communication challenges 

Online interaction has become part of our lives. We text our friends and family and make video calls on a daily basis. Although online communication is beneficial for personal needs, speaking to your clients online can be difficult.

The biggest obstacle to effective online communication is a terrible internet connection. Sometimes you won't be able to make a deal or hold a consultation because of technical problems on the internet provider's side. You'll have to reschedule your meeting and may lose money.

Another challenge can be associated with mutual understanding. It's harder to understand people's emotions when video quality is poor or the video glitches. If your clients don't have web cameras, you'll have trouble understanding their true intentions only from their tone of voice. Sometimes we need face-to-face communication to give people what they want.

Challenge #3 Juggling family and business obligations

Getting more free time with your children is absolutely a privilege. And a home-based business allows people to do it. Still, no one is free from household chores and family obligations. Office workers also have their daily home duties. But they're not at home most of the day. The challenge for home-based businessmen is that your family tends to treat you as a not-so-busy person. They'll expect you to prepare dinner, help kids with their homework, or do anything else on the assumption that you're home. So you can find yourself trapped juggling family and business obligations.

Challenge #4 Risk of burnout 

When building a business from home, you risk experiencing burnout. Many home businessmen complain about working overtime. The challenge is to take a break and rest even if some tasks aren't accomplished. But since the results depend on their efforts, home business owners usually want to work more than wage workers. It's hard to shut the laptop and not torture yourself with should-be-working guilt because there's so much work to be done!

Here are some pieces of advice for you to overcome these challenges:

  • Beat the fear. When dealing with legal restrictions and taxes, relying only on yourself when starting a business from home can cause anxiety and uncertainty. But fear holds back development, and if you let them run your life, you may never know what success you could have achieved. What's worse: Trying to do something and maybe failing or doing nothing? 
  • Learn to rest. Choose a part of a day when you can do your favorite activities to switch your brain from work tasks.
  • Ask for help. If you can get support or guidance, take it. Getting assistance with home and business matters can free up some energy to achieve your goals faster.
  • Choose a technology provider carefully. A home-based business requires a set of technology to run its operations. You can find dozens of software on the market to cover needs. It's important not to waste time testing software and choose software that makes your work efficient and easy to set up.

Looking for a reliable technology provider for your home-based business? Learn how ExpertBox improves your online communication with clients

Home-based business myths 

Home-based companies are popular in the US. There are tons of success stories where a company was started from home and then scaled and became sustainable. Still, people talk about common myths about home-based businesses. We want to dispel them for you.

It’s harder to work from home than in a traditional office 

Many people believe the everyday life and work confines are blurred when you work remotely and from your house. People have trouble postponing work tasks until tomorrow when their work is easily reached in the next room. The danger of getting burned out is serious in such conditions. On the other hand, you can set the rule of going for a walk after finishing your tasks, so the urge to start the next one disappears when you get back. Working from home can be no different from working in the office if you stick to a daily routine and establish work-from-home rules: for example, not working in pajamas and stopping work at 7 pm.

People don’t take home-based businesses seriously

The stereotype that home businesses cannot be considered serious began to go away with the advent of internet technology. Nowadays, many successful companies don’t have a headquarters and all employees work remotely. In fact, many people don’t care where you work from as long as you care about the quality of your services. If you act professionally, no one will notice that you have a bookshelf with family photos and not an office wall with certificates in the background. 

You’ll feel isolated when running a business by yourself

When you don't meet with people for small talk, it can feel like you're falling out of social life. However, it's possible to maintain communication with friends and former colleagues at a distance. We're able to try this by ourselves during the lockdowns in 2020. Video communication and social media have helped unify many people around the world. So whether you'll be lonely working from home is up to you.

It takes a lot of time to make a profit 

Many people are afraid of being left without income for the first few months, so they decide not to start their own businesses at all. You may not make money quickly. But with the right strategy and day-to-day efforts, you have every chance of earning enough within six months or a year. Plus, no one is asking you to quit your current job for good and start building a business. You can work part-time and grow your business. You’ll need to sweat at first, but you’ll pave the way to your own financial independence.

Face-to-face meetings are better than online communication

Some argue that physical contact helps people conclude successful deals and influence customers and that the power of persuasion works better in person than through video communication. But we can perfectly see a person's facial expressions in the video and understand their message as if we were in the same room. Face-to-face communication is effective. But this doesn't mean that by communicating online, we won't meet customers' needs.

Discover how to set up your workplace to hold top-notch video meetings with software and equipment tips.

Examples of home-based business ideas

We've already discussed why home-based businesses are so popular, found out their pros and cons, and learned about the difficulties of operating a business from home. Now let's find out what types of home businesses exist and look at a couple of examples.

There are a lot of variants of home-based businesses to choose from. You can launch retail from home and sell goods, or you can offer services.

Service companies

A great idea for becoming a home-based entrepreneur is to provide services using your own resources. You can launch a delivery service or an airport shuttle service for car owners, or you can offer equipment or goods transportation. You might offer house or car repair services or take care of a house.


You can run business affairs 100% remotely. If you have graphic design skills or programming knowledge or create marketing content, you can sell your skills without stepping away from your computer. Any intellectual activity can be monetized via the internet. Even blogging provides passive income opportunities and helps attract customers.


Anyone who has expertise can be a solo consultant and make a profit from their knowledge. Are you an expert in accounting, marketing, or nutrition? Maybe you're an excellent lawyer, coach, or teacher. If your answer is yes to any of these, you can start a home business with ease. By providing your expertise as a service, you can help others achieve their goals effectively and build a profitable home business.

Success stories 

Being a home-based solopreneur is a great way to fulfill yourself. You can do things you really love and make a profit. Here are some success stories to keep up the enthusiasm of those looking to start a home-based business.

Career coaching business 

Mogul Chix is a media, publishing, and professional development company founded by Adrienne Graham in 1998. Adrienne started her business as a small informal network for women of color. Mogul Chix became a huge company that provides different career and small business content for many people. Adrienne makes her business arrangements from home. In a Gaebler interview, she shares that a home-based business's significant benefits are saving money on an office setup and using your hours efficiently.

Public relations services 

Silver Strategy, a PR company from Washington, D.C., was started by Tara Chantal Silver. She worked for another public relations firm before starting her own business from home. Tara gives advice to new business owners, helping them not to fear and follow their dreams. It can take some time to get comfortable doing business on your own, but you'll get your dream job after all.

Wrapping up

Being a home-based business owner means running your business from your house. Home-based businesses are common in the US. Running a business from home allows people to bring their ideas to life, find a work–life balance, and earn a profit. Besides bringing self-management, operational, and legal challenges, a home-based business gives professional growth and independent income opportunities.

Want more insights about small business opportunities? Subscribe to our newsletter.

  • If you run your company from home, you’ll appreciate the benefits:

    • No commute
    • No dress code and office politics
    • Time for being parents
    • Saving on tax deduction
  • There are a lot of variants of home-based businesses to choose from. You can launch retail from home and sell goods, or you can offer services. You can launch a delivery service or an airport shuttle service for car owners, or you can offer equipment or goods transportation. You might offer house or car repair services or take care of a house. Anyone who has expertise can be a solo consultant and make a profit from their knowledge. By providing your expertise as a service, you can help others achieve their goals effectively and build a profitable home business.

Share Share this article
Comments 0
to leave a comment
Share Share this article

Subscribe via email and know it all first!

Recommended articles

This website uses cookies to ensure you get the best experience on our website.

Learn more