Pros and Cons of Running a Business From Home

Running a startup from home has become a popular option for entrepreneurs in the UK. The biggest advantage is the cost saving of a serviced office and commuting and it is no surprise that some of the edgiest and most successful startups to date have started from home or humble beginnings.  

We weigh up the pros and cons of running a startup from home, backed up by local data and statistics.

Advantages of Running a Business From Home

Cost Savings: The cost of commercial office space in the UK can be prohibitive, especially for startups with limited capital. Running a business from home eliminates the need for leasing expensive office space, resulting in significant cost savings. 

According to a survey conducted by the Office for National Statistics (ONS) in 2021, the average annual cost of renting office space in London was around £78 per square foot, making home-based startups an economically viable option.

Flexibility: Home-based startups offer entrepreneurs unparalleled flexibility. With the ability to set their own schedules, business owners can adapt to their most productive hours, fostering a better work-life balance. According to a report by the Centre for Economic Policy Research (CEPR), flexible working arrangements have become increasingly popular in the UK, with over 60% of employees indicating a desire for flexible work options.

Reduced Commuting Stress: Commuting can be a significant source of stress for employees and entrepreneurs alike. Running a startup from home eliminates the need for a daily commute, contributing to improved mental well-being. 

The ONS reported that in 2020, around 34% of the UK workforce worked from home, and this trend is likely to continue as businesses embrace remote work options.

Increased Productivity: Home-based entrepreneurs often report higher levels of productivity. The familiar and personalised environment of home can reduce distractions, allowing for focused work. A study by the Chartered Institute of Personnel and Development (CIPD) found that 45% of employees felt they were more productive when working from home, with reduced interruptions and a quieter work environment being cited as contributing factors.

Disadvantages of Running a Business From Home

Isolation: While working from home offers solitude for focused work, it can lead to feelings of isolation. The lack of face-to-face interaction with colleagues can impact team dynamics and hinder the exchange of ideas. According to a study by the Mental Health Foundation, over 20% of UK adults reported feeling lonely during the COVID-19 pandemic, emphasising the importance of social interaction for overall well-being.

Limited Professional Image: Operating a startup from home may compromise the professional image that comes with a dedicated office space. 

Distractions: While a home office can be a focused environment, it also presents potential distractions. Household chores, family responsibilities, and other personal obligations can compete for an entrepreneur’s attention. According to a survey by TotalJobs, 32% of remote workers in the UK reported struggling with distractions at home, impacting their overall productivity.

Limited Space for Expansion: As a startup grows, the limitations of a home-based setup may become apparent. Increased personnel, inventory, or equipment requirements could outstrip the capacity of a home office. This may necessitate a transition to commercial office space, potentially negating some of the initial cost savings.

Justine T from Dollar Hand running a startup from home in the UK offers a range of benefits, including cost savings, flexibility and reduced commuting stress. 

There is a strong business case to start working from home but later evolving into an office environment when you gain critical mass and popularity. There is also a good case for a hybrid model where you are based partly at home (or some of your staff are) and also partially in an office to reap the rewards and benefits of both locations.