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Home-Based Business vs. Brick and Mortar Business

Home-Based Business vs. Brick and Mortar Business

Running a business is a dream for entrepreneurial hopefuls and can offer unlimited earning potential while allowing business owners to do something they’re passionate about and experienced in. There are seemingly endless opportunities when it comes to starting and operating a business, and those who seek to get out of the daily 9-5 grind working for someone else and being capped with profit ceilings may find being a business owner a much more attractive option. 

But there are plenty of options to consider when starting a business, including whether to operate it in a brick-and-mortar shop or as an at-home business. Both have their perks and potential drawbacks, and we’ll discuss each in this article to help you determine which route is best to take when starting your own business. 

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What Is a Home Based Business?

Simply put, an at-home business is run predominantly from the business owner’s home. There is no physical location for the business’s operations aside from the owner’s residence. In order to be considered an “at-home” business, the operations must take place in the same dwelling where the business owner lives. 

While many online businesses are best suited as home-based businesses, more and more professionals that would traditionally work in a commercial office space are choosing to set up shop at home, including travel agents, mortgage brokers, attorneys, and e-commerce retail owners, among others. 

Pros And Cons Of a Home-Based Business

Pros

More time at home with family – Perhaps one of the biggest advantages – especially for parents – is the ability to be home with their families. More time spent with loved ones is a great reason to set up a home-based business, particularly when considering the 8+ hours typically spent in an office and the long commutes that many people have to endure getting to and from work. And if there are small children in the picture, being more available to care for them comes with its obvious advantages. 

No commute – Speaking of commuting, that’s virtually non-existent when operating a business from home. Aside from the odd trip that may need to be made to support the business – such as to the post office, lawyer’s office, or vendor’s office – most of the work takes place at home, thereby eliminating the need to travel to and from work every day. 

Low overhead – There are plenty of costs associated with operating a business, but perhaps one of the biggest ones is paying for commercial space. Leases can be very expensive and often come with extra expenses like leasehold improvements, especially in certain areas of the city. But with a home-based business, these overhead expenses can be drastically reduced, saving a ton of money at the end of the day. 

More flexible schedule – Depending on the nature of your business, you may be able to work a schedule according to your tastes and needs instead of always having to be present physically in a store or office. 

Tax benefits – Operating a home-based business can be a great way to save come tax time. If you’re eligible, you may be able to deduct a portion of your home’s expenses against your business income, thereby reducing the amount of income tax that would need to be paid. These can include things such as your mortgage interest, utilities, property taxes, and repair and maintenance fees. You’ll want to get more information about this from your tax professional or accountant.

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Cons

Separate workspace needed – Many people run their businesses from their dining room tables, but this arrangement can get old pretty quickly. In most cases, it’s best to have a separate area designated to run the business so that it doesn’t interfere with daily family life. As such, a separate area to run the business may be warranted, which can be an issue if space doesn’t permit for such a setup.

Emotionally and mentally taxing – While some people thrive on being away from people for most of the day to get their work done, some people may find that the isolation of working at home has a negative impact on their emotional well-being. Further, some people may feel as if their home-based business interferes with their family life, despite the fact that they’re still physically present.

Lacks professionalism – If your business is the type that involves a lot of in-person dealings with clients, then an at-home business may not be the best in terms of portraying a professional persona. Unless your home offers you the luxury of having a separate entrance for your designated office space, home-based businesses don’t really seem too professional. Plus, your home may not be able to offer the type of parking space that your business might need.

No foot traffic – Unless your home is located on a very busy street close to commercial businesses, it may be more difficult for you to attract foot traffic off the street. Instead, having a physical location can provide you with more business simply from exposure. Plus, you won’t be able to physically advertise your business from your place of operation other than to your neighbours, which you can do with a physical office space located in a high-traffic area.

You may not be allowed – Depending on the type of business you’re running, you might not even be permitted to run it from home if it does not comply with local zoning regulations and by-laws. Most cities have regulations when it comes to at-home businesses, and some areas may have rules that could make it very difficult – if not impossible – for you to run your business from home. And if you live in a condo or are currently renting, the condo board or landlord might have strict rules that completely outlaw home-based businesses.

More competition online – Since you’re relying on other forms of advertisement due to lack of street exposure, you’ll need to depend a lot more on the internet for your marketing efforts. And as you may already know, the internet is a massive sea of business websites, so getting your name out there in this fashion can be a real challenge.

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Why Would a Home-Based Business Choose To Have a Storefront? 

As already mentioned, it can be very hard to get exposure as a home-based business as opposed to having a traditional brick-and-mortar storefront that gets a lot of eyes on it every day. As such, many at-home business operators may choose to have a storefront to get their name out there. Here are just some reasons why a storefront – if permitted – may be a wise idea:

  • Brand awareness – Exposure plays a big role in why businesses have storefronts.
  • Establishing trust – Businesses are better able to establish and build trust among clients if they appear more professional, and having a physical storefront can do that.
  • Having a showroom – If your business sells physical products, having a showroom that clients can visit in person can be helpful.
  • Providing in-person customer service – There’s no substituting face-to-face contact when it comes to dealing with clients and having a storefront can offer that advantage both for you and your customers.

Pros and Cons of Brick-and-Mortar Businesses

Like a home-based business, brick-and-mortar businesses come with their own set of benefits and drawbacks:

Pros 

  • Room to expand if the business picks up
  • A professional front that provides more credibility
  • A dedicated workspace that doesn’t interfere with family life 
  • Room for employees that comes with fewer privacy concerns 

Cons

  • Many expenses to cover related to paying rent, buying office furniture and equipment, maintaining insurance, covering marketing, and designing the store
  • Commuting to and from work can be expensive in cost, time, and stress
  • No home-office tax breaks to take advantage of

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Financing Your Home-Based Business

Starting a business is very exciting and can potentially be a way for you to finally break free of the limits and restrictions that are placed on you when you work for someone else. But there are plenty of decisions to be made when you start your own company, including where you’ll be operating and how you plan to finance your business. If you’re interested in learning more about your small business financing options, we can help match you with a lender who understands your needs.



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Posted by in Business
Lisa has been working as a freelance writer for more than a decade, creating unique content that helps to educate Canadian consumers. She specializes in personal finance, mortgages, and real estate. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. She enjoys sharing her knowledge and experience in real estate and personal finance with others. In her spare time, Lisa enjoys trying funky new recipes, spendin...

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