BusinessWeek reports that more than half of all U.S. businesses are based at home.
These companies often are dismissed as quaint hobbyist ventures, but new research suggests that’s a mistake. An estimated 6.6 million home-based enterprises provide at least half of their owners’ household income.
Together these “homepreneurs” employ one in 10 private-sector workers, and by many measures they’re just as competitive as their counterparts in commercial spaces.
You can trace the rise of home-based businesses to the early days of telecommuting in the 1980s and the mass adoption of the Internet in the 1990s. Cloud computing, online collaboration, and smartphones have accelerated the trend, and recent research clarifies the economic significance of companies like Labuda’s. “We’re seeing more and more home-based businesses that are real businesses,” says Steve King, who coauthored the new report with his wife, Carolyn Ockels.
43% of home-based businesses that provide at least half of the owners’ household income are, on the whole, smaller than non-home-based companies. Only about 35% have revenue above $125,000, compared to 75% for non-home based businesses.
But they measure up to other small companies on key aspects of doing business, including access to capital, benefits to workers, marketing, and innovation. On average they have two employees, including the owners, and together they employ more than 13 million people–more, King notes, than venture-backed companies.
A few trends are driving the growth of sophisticated home businesses. First, technology has made it easier to start and run a business from anywhere. But just as important, there has been a change of consciousness in the business world to recognize home-based enterprises as legitimate.
Photo by public-domain-photos.com.