Benefits of a home based business

Home based businesses are becoming an increasingly popular form of business start-up within the Australian business community, with nearly one million people, according to the website, running a home based business.

There are a number of advantages that come with setting up business operations in the comfort of your own home, including flexibility, a reduction in start-up and over-head costs and tax advantages.


Choosing your own operating hours is a great advantage for those entrepreneurs who have other personal or work commitments they need to attend to. The strong presence of modern technology enables you to interact with your customers and suppliers regardless of the time and day of the week. This allows you to fit your home-based work around your other duties, allowing you to achieve the greatest level of productivity.

Reduction in start up and over head costs

By not having to sign a lease on an office space or spend funds on anything that comes with occupying a commercial premise, you can test out business ideas without a lot of overhead costs. This way, you can determine viability before investing a lot of money. However, regardless of the amount of research you undertake before launching your product or service to the market, success is not always guaranteed.

Lower start up and over head costs also allow you to redirect expenditure to other sales driven activities such as marketing and research & development.

Marketing is important for every business however, as your business has no store front, it becomes even more critical to the success of your business. Marketing not only helps develop your customer base but also assists in sustaining it. Setting up a company website, advertising your services/ products in the local newspaper or even just linking your personal social networking page to your business page are a couple of ways you can promote your business. These channels also offer clients a platform for providing any feedback they may have.

Research & development is another area that should receive some of your start-up funds. Research & development may involve initiatives such as competitor and customer analysis or innovation. For anyone wanting to grow and sustain their business, understanding the competitive and customer landscape is critical. Regular customer and competitor analysis can help you identify and exploit any opportunities that arise.

Innovation is also a great way to differentiate your product offering from the market. By offering a product that is different to the rest of the market or even just developing new business processes, it can help cut costs or even drive sales.

Tax advantages

By running a home based business you can take advantage of a number of occupancy and operational expense deductions, provided you meet the eligibility criteria. You can claim tax deductions for items such as rent and home-loan interest, utilities, telecommunications and insurance. Visit the ATO website and see also our article on Tax Tip #14 for more information.

Whilst there are many benefits that come with running a home-based business, business owners should also be weary of the risks and government requirements that need to be taken into consideration. Moreover, depending on the nature of your business, running your operations at home may not always be a suitable choice.

See our article Home based business - what you need to know for handy tips in avoiding common pitfalls faced by SME's.


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