Managing a household is no easy feat. Whether you live alone or with your family, the responsibilities pile up. The chores won’t complete themselves without your intervention. Then there are the bills, which can feel unmanageable even if you control your consumption of utilities and home services.
These tasks alone are already difficult to tackle. Yet the idea of starting a home-based business remains more appealing than going to work every day. At least, in a home-based business, you are your own boss. It won’t force you to wake up at dawn and get ready by seven. You can start working without taking a shower because no one will see you anyway.
Money-wise, a home-based business also beats a 9-to-5 job and an office-based business. The most obvious perk is not having to commute or drive every day. You can also experience lower overhead costs since you won’t be renting or buying a commercial space. As such, your business can benefit from the utilities your home is already equipped with. Operating your business simply becomes another task to do at home.
But that’s also where the issue emerges. When you run a business at home, its operating costs will reflect on your personal bills. It’s not like you’re using another source of water and energy, after all. What’s more, the insurance premiums you pay periodically don’t benefit your business in any way.
That’s said, here’s how your household management changes because of a home-based business:
Your Home Security May Require Boosting
If you run a home-based retail store, your neighbors will eventually pick up on the news, even if your neighborhood isn’t part of your customer base. Your home security may be compromised as a result. Even if you live in a fairly private and secure area, the knowledge that you might be keeping a huge amount of cash at home still lingers in the community. Your products may be subject to intrigue too, especially if they’re an electronic gadget or anything else expensive.
Your homeowner’s insurance won’t help you if someone steals your sales money or stocks. This is a fact many home-based business owners aren’t aware of. Most homeowner’s insurance policies contain business-related exclusions and limitations. Therefore, if your business computer gets stolen, your insurer won’t cover the loss, because the stolen item isn’t personal property, but a business one.
If you build a separate structure for your business, like a detached shed or shop building, your insurance won’t cover that either. Basically, anything used for business purposes isn’t covered by your homeowner’s insurance.
Hence, you should boost your home’s security to minimize the risks of crime in your home-based business. Invest in a high-quality alarm system for your business, and have it insured separately.
Your Insurance Premiums May Increase
Since dedicated home-based business insurance isn’t available, most home-based entrepreneurs just buy an endorsement for a modest additional premium. This is called a homeowner’s policy endorsement. It increases the limit the insurers set for the lost business property at home. The typical limit is just $2,500, which means that if you lost business assets worth $3,000, only $2,500 will be returned to you. By buying an endorsement, you can double or triple that limit.
You can also buy an in-home business policy, which is the middle ground between a homeowner’s insurance and commercial insurance. It already includes general liability coverage. If that’s not enough, you can get a business owner’s policy (BOP) instead. It includes commercial property, business income, and general liability coverage.
Buying any of that additional coverage will increase your premiums. But since the business will be paying for the new policies, your personal savings won’t get a dent.
You Might Face More Risks
Many entrepreneurs assume that a home-based business is far less risky than a traditional business. But in truth, it can also face the same risks and threats as any business. And since you’re running it from home, the rest of your household can be subject to those risks, too.
Aside from boosting the security of your home, you should also develop a risk management plan. This will allow your business to continue operating in case something happens in your home or family that can disrupt it. For example, if one of your family members gets COVID-19, they may carry the virus to your home office. This can affect the safety of your products if you’re a retail business. But with a robust risk management plan, you can keep the virus from affecting your products and operations.
All in all, running a home-based business will add to your long list of household responsibilities. But it’s still a rewarding endeavor. It can teach you greater discipline and time management skills. Besides, being an entrepreneur isn’t meant to be easy, so don’t expect your home-based career to be comfortable 24/7.
