One of the many benefits of a home business is the low, low cost of operation. Plus, I also enjoy uncomplicated business relationships.
I've long enjoyed the benefits of a home business. One of my favorite benefits is the low cost of operation. The startup costs for my home business were low; I just needed a computer and an Internet connection. My current home business takes a little more to run than a computer and an Internet connection, but the costs are still low.
One of the benefits of being a solopreneur is that you normally just need to pay for the things that you need for your home office. You don't have to worry about retirement plans and health benefits. There is no reason to be concerned about payroll taxes and overhead costs.
Recently, PEX Card conducted a business expense survey. This is a table illustrating the costs of running a SMB in 2013:
As you can see, even the smallest of companies still spent $363,000 in 2013. One of the benefits of a home business with a solopreneur at the helm is that costs are much, much less. I did have costs related to my home business in 2013, but they were relatively small. My costs totaled $14,271.74. My highest costs were:
- Health insurance, since we get it through my home business; my husband isn't eligible for benefits as a “part-time” university instructor, even though he has more than a full class load — four on-campus classes + an online class — and spends more time helping students than actual professors. (Yes, I know. Bitter much?)
- PayPal fees; even with FreshBooks saving me money, I still paid more than $1,500 in PayPal fees in 2013.
- Pay for my virtual assistant. Yes, even though I have a home business and am a solopreneur, I have a virtual assistant. It makes my life easier.
I have other costs, such as renewing my business license with the state (only $15 because Utah is friendly to small business that way), paying for Skype, Internet costs, and travel to attend conferences. These are all business expenses that lower my home business income, and that manage to help keep us out of the next tax bracket up.
I can't imagine the need for some of the other expenses related to SMBs, like property insurance, costlier advertising, and higher office supply costs. The costs related to having your own office space or other facility would also be high.
Of course, one of the other benefits of a home business is that you can expand it if you want. My buddy Steve and his wife started a home business, and it expanded into an operation that involves a separate facility and employees. You can always get bigger if you want.
While I sometimes think of expanding my own home business, I consider some of the pitfalls that come with expansion. It's not just the costs. I don't like managing people and I think of the way that running a business like that would impact my lifestyle. Being a solopreneur allows for a lot of freedom with my lifestyle; running a bigger business would require more time and effort, and I wouldn't have the same level of flexibility.
Yes, I know that I could entrust some of the tasks involved with running a large business to others, and having a small business offsite didn't stop Steve from going on a vacation to Italy with his wife. Business owners manage to enjoy themselves all the time. But I just can't get there.
I look at the scale up in cost, as well as the increased complication to my life, and I just say no. It's not that important for me to expand, and there are just too many benefits of a home business that stays a small home business for me to give up.
In the end, that's what you have to consider. Before you expand, consider the costs (the PEX Card survey found that the number one cause of concern to SMBs is expenses eating into profits). And remember that there are costs beyond the financial. I like my lifestyle now. Too much expansion would cramp my style, and probably change the way I do things. For now, I'm comfortable.