Employment Opportunities at Home
THE INFORMATION AGE, TYPES OF HOME-BASED WORKERS, ENTREPRENEURS, INDEPENDENT CONTRACTORS
James Mathison owns and operates his own landscaping business. Denise Lyons is a computer programmer who works at home four days a week and in the office one. Jeff Riley gives piano and voice lessons in the basement of his home. Chrystal Holumbo is a freelance writer and editor. After work and on weekends, Pamela Chang cleans several doctor and dentist offices.
What do all these people have in common? They are part of the growing number of Americans who work from home. Although their reasons for doing so are diverse, they are all enthusiastic about the benefits of home-based employment. For James Mathison, the most important advantage of owning his own business is he can be his own boss and set his own hours and goals. Working primarily at home allows Denise Lyons to reduce her commuting time from ten hours a week to just two. Jeff Riley is able to keep a flexible work schedule so he can care for his two young children and spend more time with his family. Chrystal Holumbo enjoys the convenience of working in her own home. Pamela Chang likes being able to earn extra income by "moonlighting" at her second job.
The many and varied advantages of working from home have helped it to become a rapidly growing trend. A study conducted in 2005 by the technology research firm Gartner, Inc., states that 82.5 million Americans currently work from home at least once a week. They predict that that number will increase to 100 million by 2008. Although home-based workers currently represent a minority of the nation's workforce, their numbers have been rising dramatically in recent years. It is estimated that 25 percent of U.S. households operate some type of home business. And nearly four out of ten (39 percent) of workers who do not telecommute say they would like to have the opportunity to do so in the future.
THE INFORMATION AGE
Why is working from home becoming so popular? The main reason is the drastic change in the type of work that people do. In the past, the average American earned money by working in agriculture or manufacturing. In today's Information Age, the majority of Americans are involved in work that creates, processes, and moves information. Historically, this work has been done in offices.
Over the past few decades, however, the traditional office has evolved. The standard company model has changed to maximize efficiency. Companies realize that in today's fast-paced environment, they no longer can afford to have a bulky chain of command and complicated bureaucratic structure. To remain competitive in the rapidly changing Information Age, many companies have found they must develop their information systems while simultaneously reducing red tape. By relying increasingly on computers, modems, fax machines, video-conferencing, and other innovative tools, companies are able to achieve their goals while saving time, money, and energy.
Sandy Dutkowsky is a freelance writer and educator.
The advent of this technology means it is no longer always necessary for all employees to work in centralized offices. The availability of inexpensive computers and other business equipment has enabled many workers to set up offices in their own homes. Through the use of high-speed Internet access, e-mail, and fax machines, home-based workers can communicate quickly and easily with coworkers and clients.
However, not all employees can work from home. The availability of home-based job opportunities is limited by the type of work a person does. Truck or bus drivers, retail sales clerks, and traditional factory production workers, for example, all have to be at their respective worksites in order to do their jobs. Therefore, these types of workers do not have a future in home-based employment.
TYPES OF HOME-BASED WORKERS
The employment situations of individuals who work from home vary greatly. Some are home-based corporate employees, called "telecommuters." Others hold down regular office jobs while moonlighting at home in their off hours to supplement their incomes. Still others are entrepreneurs embarking on their own business journeys. For some professionals, such as computer consultants, accountants, editors, writers, and graphic designers, creating a home office simply makes the most economic sense. Although these individuals have different educational backgrounds and possess a diverse range of skills, they share one important trait: they live in an age in which technology and the economic climate have made home-based employment both feasible and often more advantageous than working in a traditional office.
Currently, the average American worker is a commuter who travels by car, bus, or train to get to work. As the nation's population has grown and people are living further outside of urban centers (where housing is less expensive), more and more people are using their cars, instead of public transportation, to commute to work. As a result, the country's roads have become increasingly congested. Exhaust from millions of vehicles also has had a negative effect on the air quality in many cities and towns. Most recently, the rising price of gasoline has made the average worker's commute very expensive.
Today's difficult economic picture is not only taking its toll on America's workers, it is also having an impact on the companies that employ them. Competition from foreign companies causes many companies to look for ways to cut costs and overhead without sacrificing worker productivity. Corporate America and government agencies have looked at all of these problems and decided that the answer lies, in part, with technology. Armed with a computer and an Internet connection, a commuter can transform easily into a telecommuter, working at home while maintaining contact with the office and cutting costs.
Telecommuting has benefits for government, companies, workers, and the environment. Seeking to cut down on pollution, the federal government passed the Clean Air Act in 1990. One amendment of this act requires large companies in many major cities to reduce the number of vehicle miles their employees travel each day. Allowing a portion of the workforce to telecommute helps employers meet these requirements.
Telecommuting also has relieved some of the financial burdens many corporations face. When some of its employees work at home, a company can spend less money on office space and related expenses. The average corporation has invested approximately 30 percent of its total worth in real estate and buildings to house its workers while they work. By allowing workers to stay at home, companies are reducing the amount of money they have to spend. This helps to significantly reduce overhead costs.
Additionally, according to the CIGNA Corporation, companies with employees who telecommute report one to two days fewer of missed work per employee. Telecommuters tend to call in sick less frequently, have fewer childcare emergencies, and miss fewer days for doctor's appointments than their colleagues who report to a work site. Therefore, telecommuting, by reducing the amount of time workers are absent from the job, increases productivity and profits for corporations.
Workers also benefit from telecommuting. A home-based work environment is often more comfortable, less stressful, and freer from distractions than a standard office. Because telecommuters do not have to contend with the frustrations of rush-hour traffic, they are able to start the work day fresh and focused. Telecommuters also do not have to spend as much money as commuters on parking fees, eating out, and buying work clothes. Also, since they do not have to spend time getting to and from work, telecommuters have more time to spend with family or on leisure activities, which makes them happier overall and more loyal to their employers.
Working at a home on a computer, a telecommuter can perform many tasks that previously had to be done at the office. In a matter of seconds, workers can transmit files using high-speed Internet connections, or they can send documents by fax. Workers can maintain close working relationships with individuals in their company offices through e-mail and telephone calls.
Although telecommuting makes sense on many levels, some companies have been slow to embrace this strategy as a viable option for their employees. Employers may fear that placing workers at home with limited supervision will lead to reduced productivity. However, recent studies have shown telecommuters actually are more productive than office-based workers because they are happier and more focused. In a survey of commuters conducted by Netilla Networks and Infosecurity Europe at New York's Penn Station and London's Liverpool Street Station ("Flexible Working Survey 2004"), and reported at CNN.com in March 2004, most respondents believed that setting up shop, that is, workspace, at "the kitchen table" would improve their lives by making work less stressful and allowing better relationships with loved ones. A survey conducted by Cornell University's International Workplace found that the workers' beliefs were true. People who work from home are between 10 percent and 30 percent more productive than those who work at a job site.
Some industry observers believe telecommuting will be the primary corporate model in the years ahead. In the late 1990s, the specialized staffing firm Robert Half International reported that 87 percent of 150 corporate executives polled anticipated an increase in telecommuting in the future. As technology becomes less costly, companies are able to furnish their employees with more advanced equipment, making it increasingly common for employees to "meet" and work together using video teleconferencing instead of meeting physically, face to face. According to Business Week ("There's No Workforce Like Home," May 3, 2006), more than 100,000 customer-service representatives are already working from their homes; estimates are that 300,000 will be doing this by 2010.
There are downsides to working from home as well, however. Due to the accessibility of communication tools, an estimated seventeen million Americans work from their homes at least once a month, in addition to putting in their required office or workplace hours, and most do not get additional pay for their at-home work hours. Many of these workers regularly bring their work home with them from the office at the end of the day and continue to work once they are home. The majority who do this say that it is the only way to keep up with their normal workload. According to the Bureau of Labor Statistics, 75 percent of employees who continue to work once they get home do not get paid for their efforts. Of the 10.2 million workers who bring work home with them, 22 percent report working more than eight hours per week at home; the average is seven hours per week.
Home-based work is not the exclusive domain of telecommuters. A number of Americans are moonlighting, which means they work at one job all day, and then work at another one later in the day. The reasons that Americans moonlight vary. The majority do it because they find that their weekly paycheck, although it may be steady and reliable, just doesn't stretch as far as it did years ago. The rising costs of homes, cars, education, and living expenses often prove too much for today's families, even those with dual incomes. Therefore, moonlighting allows them to earn extra income and pay off debt. Others work two jobs because they are trying to gain new experiences in order to make a career change. Others simply enjoy working at their second jobs. According to the U.S. Department of Labor approximately eight million workers—or one in seventeen Americans—consider themselves moonlighters.
In the early years of the twenty-first century, many Americans are finding that a guaranteed paycheck, good benefits, and job security are things of the past. As companies downsize, outsource work to foreign countries, and look for other ways to cut costs, many workers, often those with years of experience, find themselves unemployed. Whereas many seek new jobs in traditional work settings, others see their newfound freedom as an opportunity to use their skills and experience to start their own businesses.
Of course, not all those embarking on self-employment are doing so as a result of losing their jobs. Many people simply see the possibility of being their own boss as a more direct and desirable road to success and prosperity. These individuals often use their skills and client contacts as a springboard to launch their own companies. A large number of people who are retiring and yet still want to remain productive afterwards are starting their own businesses. Whatever the reason for starting a business, those who do it in a thoughtful, organized manner will have the greatest chance for success.
There are many types of home-based self-employment, but in general they can be divided into two main categories: entrepreneurs, who run small businesses from home, and independent contractors, who do work on assignment at home for various companies and organizations.
Many people find that starting and running their own home-based business is a very rewarding and profitable experience. It is not necessarily easy, however. Home-based workers often find that visitors, household chores, television, and Web surfing can easily distract them and therefore must be avoided during work hours. Entrepreneurs need to be determined, goal-oriented, and focused. They also must enjoy their chosen business and be willing to spend long hours working at it. Many successful entrepreneurs have turned a favorite hobby, something previously thought of as an activity done just for fun, into the inspiration for and basis of a home-based business. A famous example of a person taking a hobby and turning it into a hugely successful business is the Mrs. Fields cookie company. In 1977, Debbi Fields was a young mother who decided to turn her love of baking cookies at her home into a business. By 1990 the company began offering franchises of its Mrs. Fields flagship brand, and by 2006, there were nearly 390 locations in the United States, with more than eighty locations worldwide.
Types of Entrepreneurs
Entrepreneurs, like businesses, can be divided into two types: those who provide services and those who provide products.
In today's fast-paced world, many people are willing to pay others for services that will save one of their most valuable resources: time. Many entrepreneurs find a niche providing services to busy professionals who have little free time in which to take care of daily or weekly tasks, such as dog walking or housecleaning. Other entrepreneurs offer services people may not have the qualifications or skills to do themselves, such as preparing tax returns or cutting hair. There are several ways to develop the skills needed for service-oriented businesses, including taking adult education classes, contacting trade associations, and practicing on friends and relatives. Almost any service can become the basis for a home-based business. For example, some entrepreneurs plan weddings, prepare resumes, or create Web sites.
Skilled workers, especially those who have been in their fields for a number of years, can go into business as consultants. They usually have expertise in one area, such as computers or advertising. As experts in their fields, these workers are hired to assist businesses and organizations in troubleshooting problems, developing solutions, and meeting goals. Experienced consultants can earn more than $100 an hour for their services, but building up a clientele willing to pay for their expertise can take a lot of time and energy.
Other entrepreneurs choose to manufacture products, such as gourmet cookies or children's clothing. However, the cost to manufacture, package, and advertise products can be quite high. In addition, it may take years to break into some markets. People starting this type of home-based business should become familiar with the many federal and state regulations that govern such operations. For example, food manufacturers who work out of their homes must have a local food regulator inspect and certify their kitchens as clean and sanitary. In certain instances, small business owners work from home on a computer while their employees do much of the labor associated with their product in a factory setting elsewhere.
One popular type of product-oriented home-based business is making and selling craft items such as greeting cards or candles. Such a business generally is not expensive to launch because large numbers of craftspeople already possess their own tools. As a result, the production of the product can be done in the worker's home, by the worker. Many craftspeople who wish to begin a home-based business start out by moonlighting, producing products during evenings and on weekends while holding down full-time jobs. They often visit craft shows and shops to get a sense of the market and to determine trends, and then return to the shows as vendors selling their own wares. They also use the Internet as a venue for selling their products.
Another type of home-based business that is growing in popularity uses the Internet as a "store front." The most widely known example of this is the sale of items through online auction sites, such as eBay, Amazon.com, and Yahoo! Auctions. Entrepreneurs can buy and sell antiques, vehicles, jewelry, art, or clothing. In 2003 online retailing grew 51 percent to become a $114 billion industry, with a significant portion of this coming from online auction sites. To be successful in this form of home-based business, individuals must keep their prices competitive with the wider market and ship products to buyers quickly.
Becoming an Entrepreneur
For those who are interested in starting their own home-based businesses, there are many instructional books and articles online, at local libraries, or bookstores. The tips that follow can help a potential entrepreneur get started.
Research and Planning
Research is an essential part of starting a successful home-based business. It is very important to thoroughly investigate competitors in the particular market. For information on the competition, as well as about the market, look in the local Yellow Pages, visit the library, search the Internet, and interview prospective clients.
Government and other nonprofit agencies, including the U.S. Small Business Association, can be contacted for advice. These agencies can point the way to small business loan programs. Government grants may be available for some types of ventures. Working at home has become a common topic of discussion on message boards and in chat rooms on the Internet. Such forums can serve as a helpful resource for new entrepreneurs as long as they do not consume too much time that should go into building the business.
An essential aspect of starting any new business is the creation of a business plan. According to the U.S. Small Business Association, the business plan, "precisely defines your business, identifies your goals, and serves as your firm's resume." A typical business plan should include a detailed picture of the company's aspirations, an outline of marketing strategies, and a close estimate of expenses and projected revenue for the first few years of operation. Once the business plan is in place, it can be used to decide whether or not the business is on track and what changes should be made to increase revenue.
Before starting any business, it is always important to explore its legal aspects. Many communities require business owners to obtain licenses. It is also important to determine whether the business is a sole proprietorship, corporation, or partnership because the tax liabilities will be different in each case. The Internal Revenue Service (IRS) frequently alters the regulations for self-employment deductions. Depending on which category a business falls into, it is possible to deduct a variety of business-related costs when filing taxes. These deductions could include such things as travel expenses, a portion of rent or mortgage, or the cost of additional telephone lines. An accountant can help the business adhere to the law as well as benefit from any allowable deductions. At all times, it is essential to maintain detailed records of expenses and to keep business expenses separate from personal expenses.
Figuring out how to pay for business and personal expenses as the business gets underway is also an important part of the start-up research process. Since it often takes a new business six months or more to get off the ground, entrepreneurs should plan to have enough savings set aside for living expenses during the startup period.
Among the monthly expenses entrepreneurs may incur is the cost of health care insurance. According to the U.S. Census Bureau, 60 percent of Americans receive their health insurance coverage through their jobs. Persons who are self-employed do not enjoy the benefit of having an employer pay for their health insurance. Therefore, entrepreneurs have to find ways to provide their own health insurance coverage. As health care costs continue to rise, in order to avoid huge medical expenses, it is very important to have insurance that will cover basic visits to the doctor as well as expensive surgeries. Persons who are seeking health insurance coverage can buy it from private insurance providers. Additionally, some states offer health insurance programs to small business owners at a reduced rate. For example, New York State has a health insurance program called "Healthy New York," which sells quality health insurance packages to sole proprietors and small business owners at lower rates than if it was purchased through a private insurance company.
Each year, computers and other business tools become more powerful and less expensive. For some entrepreneurs, such as desktop publishers and Web site designers, a computer is necessary for producing their goods or services. For all entrepreneurs, a computer can aid in the promotion and maintenance of their business. For example, the computer can be used to help design and produce promotional brochures, keep track of income and expenses, and monitor inventory. The Internet provides the ability to send files instantly to clients located thousands of miles away. An up-to-date computer is essential for most entrepreneurs and can be a worthwhile investment.
People who want to start their own home business must be highly motivated. Many entrepreneurs find it helpful to establish a strict daily routine, including planning regular working hours and dressing as if they actually were going to a traditional place of work instead of simply to their home office. By creating mental boundaries between work and home, they lessen the chances of succumbing to distractions and help ensure greater productivity. Author Neal Zimmerman, in American Way Magazine, also recommends establishing an at-home workplace that is "an environment that you feel good about, that's a personal reflection of you. You'll spend a lot of time there earning the money that pays for everything else. You should not only be comfortable, but you should enjoy being there."
Just as successful job hunters do, entrepreneurs must network. Instead of looking for an employer, however, entrepreneurs are looking for potential clients. Networking involves talking about and promoting the business with everyone, including friends, relatives, associates, and strangers. Marketing tools may include brochures, business cards, or Web sites. Samples of work (or product) should be available for prospective clients to review. Depending on the target market to be reached, some inexpensive ways of promoting a new business include posting flyers on bulletin boards located inside grocery stores or on college campuses, advertising in weekly newspapers, or placing an announcement on an Internet bulletin board service such as http://www.craigslist.org, which offers local listings in all fifty states and more than thirty countries around the world.
Independent contractors—also called "freelancers"—agree to work for a company or individual on a project-by-project basis. Many independent contractors work in the arts, including writers, photographers, and artists. Other freelancers include building contractors, computer consultants, and medical transcriptionists. Almost any kind of work can be done on a contract basis, if the worker has the tools and resources available.
Freelance work can be rewarding for several reasons. The pay can be lucrative and the work is very independent. Freelancers can pick and choose the jobs that interest them the most or pay the highest rates. Freelancing is ideal for people who cannot (or choose not to) work standard office hours. Freelancing does have drawbacks, however. The biggest one is that freelance work does not generally guarantee a steady income. Freelancers may have periods of little or no work, especially when beginning such a career. In addition, many companies have long billing cycles, and freelancers may not be paid for several months after submitting their invoices. Some freelancers supplement their income by taking odd jobs or working part time.
OTHER TYPES OF HOME-BASED WORKERS
Some kinds of home-based employment do not fall within the categories outlined above. Independent sales representatives, for example, sell a company's goods but are not salaried employees. They usually earn a commission on the products they sell. A famous example of this type of home-based business is Mary Kay Cosmetics. In 1963 Mary Kay Ash invested her life savings in starting a small cosmetics company that would organize women to sell makeup to their friends and associates. By 2005 Mary Kay Cosmetics had 1.6 million independent sales representatives selling Mary Kay brand products worth more than $2 billion. Some other well-known companies that offer opportunities to independent sales representatives include Avon and Tupperware. Although some sales representatives still sell their goods door to door, an increasing number also use e-mail, phones, and Web sites to reach potential customers.
Another type of home-based business is inn keeping. The business owner transforms a home, or part of a home, into a small inn, and provides visitors with a quaint, home-like setting and breakfast for the price of an overnight stay. This type of business venture can be very expensive, requiring the investment of a great deal of capital. There are also legal considerations, because these accommodations must conform to state and local regulations.
Many people who want to start a home-based business scour newspapers, magazines, and the Internet for business opportunities—but they should do so with caution. Whereas some listings are for valid business offers, others are fraudulent. Some promise high payment for stuffing envelopes or assembling items at home. Others promote seminars that promise to offer the secrets of making large sums of money by buying and selling real estate or doing medical billing from home. The key to identifying these fraudulent schemes is to look for advertisements that offer high returns for little work and that charge a fee to get in on their business secrets. Avoid these types of opportunities. It is wise to remember the old adage: if it seems too good to be true, it probably is.
THE DISADVANTAGES OF WORKING AT HOME
Although home-based employment offers many advantages, it also has some drawbacks. Telecommuters who are employed by a company may feel isolated from their coworkers and left out of day-to-day office functions. In a survey conducted in 2004 by Netilla Networks and Infosecurity Europe, eight out of ten respondents said that even if they worked at home, they would still enjoy going into the office for the social life. Working on a team also can be more challenging for home-based workers. When team members are working at different locations and not able to meet face to face, brainstorming and problem solving can be more difficult than if all participants were in the same physical location.
There are also financial drawbacks for home-based workers who are self-employed. In addition to not receiving health insurance, these workers do not receive other benefits such as paid vacations, sick days, and retirement plans. In addition, they pay substantially more in taxes than they would if they were employed by a company.
However, the biggest challenge faced by those who work at home is finding a way to balance their work lives and personal lives. At-home workers can find themselves working all the time due to the rigors of starting up a business, the insecurity of freelance work, the need to earn additional wages to cover the cost of benefits usually supplied by an employer, or simply the proximity of the office. Those who have chosen to work at home as a means to spend more time with their families may find that they are working so much that the opposite is true. In order to avoid this problem, many home-based workers attempt to work a fixed schedule with little or no overtime.
THE FUTURE OF HOME-BASED EMPLOYMENT
In the early decades of the twenty-first century, the boundaries between the workplace and the home will probably continue to blur. The number of home-based workers has increased steadily in recent years and will continue to do so. Although many people find working at home to be an ideal situation, it is not the right choice for everyone. Working at home, especially for small business owners, requires a great deal of determination, dedication, and perseverance. However, the potential rewards for this hard work, both personally and financially, can be well worth the effort.
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