Credit Crunch Spurs Spare Room Business Start Ups
The current economic climate is acting as a spur for thousands of people to become their own boss and to run their own start up businesses from home, according to a report by Enterprise Nation and BT.
The 2008 Home Business Report (1.1Mb PDF) from last month’s Small Business Week 2008, highlights a 16% rise over the last year in the number of businesses being run from home. There are now more than 2.5 million home businesses, accounting for more than half (53%) of the 4.7 million small and medium sized enterprises in the UK.
Home based businesses are also bucking the trend when it comes to confidence in their prospects during the financial crisis. They are buoyantly optimistic about beating the adverse economic conditions, with 72% planning to win new customers over the next six months, two thirds (66%) planning to increase turnover and more than half (58%) developing new products and services.
The greatest concentration of home businesses in the UK is in London, the East of England and the South East. London also leads the way with the greatest number of home business start-ups over the last year, followed by Leicester, Nottingham, Bristol and Coventry.
The report also shows an increase in spare time start ups, with a third of people (33%) running a home business in their free time. This thriving 5pm-9am economy offers would be entrepreneurs a low-risk route to starting their own business.
The freedom to make their own decisions is the most popular reason (33%) why home based business people enjoy being their own boss, closely followed by the benefits of a better work/life balance (24%).
The use of technology is a critical factor in the start up and growth of home businesses – a view held by 82% of business owners, with more than half of them (52%) spending between £500 to £1,000 on Information Technology each year.
Home business owners view their spending on technology as a valuable return on investment as it helps to keep their costs low and their sales and productivity high.
Unsurprisingly 93% of home-based businesses use broadband. When it comes to web sites, home businesses see their window to the world as a tool that helps them to attract new customers (46 per cent) and market themselves better (39%). But it is also seen as the ultimate leveller. With a quality web site, a home business can compete on a truly global scale, making them look bigger than they are (43%).
Emma Jones, founder of Enterprise Nation, itself a home-based business, said
“More home business means more dynamism in the economy, less traffic on the roads and tighter social cohesion as parents stay home to run a business and the household.
This year’s report calls for action to encourage home businesses, including asking the government to look at the economic, environmental and social benefits of homeworking, asking Regional Development Agencies to include home business targets in Regional Economic Strategies, calling for changes to the planning system and on Local Authorities to invest in home business hubs and networking facilities and to give out clear information about planning permission and business rates.”