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Home is where the start-up is

New report charts increase in home enterprise - and what government should do to nurture it

Did you know that:

  • There are more than 2.1 million home-based businesses in the UK, out of a total of 4.5 million small and medium-sized enterprises?
  • Home-based businesses have a combined turnover of over £364 billion?
  • Over 60% of new businesses are started at home?

These are amongst the findings in a a new Home Business Report compiled by Enterprise Nation with support from BT.  And as headlines they show the value of home-based business to the economy.

The report uncovers growth in the number of home businesses - a 2.9% increase from 2005 to 2006.  1,400 new businesses are started from home each week.  The highest growth is coming from mums, young people and the over 50s - so home business, the report says, is a route to bringing people into employment who otherwise might not have contributed to the economy.

What kind of businesses are they?  According to the report, the fastest growing sectors for home businesses are in the business and professional services sector (such as accountants and website developers), onlinetrading (such as eBay-ers), personal services (such as home interior designers, hairdressers, party planners), food (products and caterers), and domestic energy (including people selling excess DIY ‘green’ power back into the national grid).

So while hi-tech is part of the picture, it's not the whole story.  However, people starting up businesses in more traditional fields are also becoming increasingly IT-savvy, and many have websites and use e-commerce platforms to punch above their weight.

Growing the home business

Amongst home business entrepreneurs surveyed by Enterprise Nation for the report, there is almost universal determination to grow the business.  But most do not see this as being about increasing the number of their employees. 63% said they would rather outsource projects and new work rather than increase headcount.

In many ways this ties in with the ethos of running a home business, where people are seeking both to reduce overheads and to have a way of life that provides a distinctive blending of home and work life, rather than wanting to recreate a large company on their doorstep.

Most home businesses, however, feel that there is a lack of business support available for them.  And as many business grants from local or regional agencies focus on creating employed jobs, government needs to look more broadly at ways to create wealth.

Why work from home?

According to the report, there are 3 main reasons why people choose to run a business from home:

  • Savings - starting out at home saves money in avoiding the cost of an extra office It also saves time. A new business owner can gain up to 20 extra days per year through giving up the daily commute. This is time that can be spent on growing the business, rather than sitting in traffic jams.
  • Technology – advances in technology mean that almost any trade can now be carried out at home. Business owners are developing their websites as a virtual window to the world and utilising software to manage projects, work with partners and develop new business.
  • The work/life blend – people are heading home to be close to family and friends. Starting and growing a business from home is enabling thousands of families to be together, work together and share the financial rewards. Research for BT shows that ‘Flexibility/working the hours I choose’ and ‘Better work/life balance’ were the two most popular factors when business owners chose to start from home, coming in at a higher ranking than ‘lower overhead costs.

And with the growth in home-based businesses amongst the over 50s, it would seem that there may be evidence of more mature workers wanting to realise their dream through running their own business, rather than working towards retirement making money for someone else.  And in the context of an ageing society, it would be interesting to know how many are planning to work beyond normal retirement age.

Home business 10 point action plan

The Home Business Report proposes a 10 point action plan that government should adopt to support and promote home business.  This involves:

  • gathering better data on the extent, needs and performance of home business

  • designing new government policies and programmes to support home based business, e.g. by looking at how business expansion grants are applied

  • introducing tax relief for for home business owners, recognising their social and environmental value

  • developing more local physical infrastructure to support home businesses, e.g. funding live/work developments and 'hub' facilities for home-based business.

There are similarities here to the recommendations in the report Under the Radar, produced by the Live/Work Network for the Commission for Rural Communities.  With this gathering weight of evidence, we will have to see how government and local agencies respond.


Valuing home based business

Much of the attention on working from home focuses on employees.  Switching from the office to working from home attracts attention as a dramatic change to working practices.

Yet two-thirds of the people working from home are self-employed or running a home-based business. A new study, The Home Business Report, puts the spotlight on home-based enterprise and their value to the economy and society. 

It sets out the facts, provides a regional breakdown, presents a variety of case studies, and then tells the government what it should be doing to support home enterprises.

You can download the report from the Enterprise nation website.




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