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Bad Habit 1: Doing Everything from Home

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The Business Benefits of Working at Home

You often hear about as a disruptive technology — one that breaks the mold and revolutionizes its industry. The same could be said of the thousands of home-based tech businesses fueling the US economy.

A new home-based business starts every 12 seconds. By the time you finish reading this paragraph, a new entrepreneur will have decided to launch a company from home.

When small-business owners decide to go out on their own, they're effectively saying they don't need a boss or a traditional office environment. They're ready to make their own way.

The 2012 U.S. Census found that home-based work in computer, engineering, and science occupations shot up 69 percent from 2000 to 2010.

These micro-entrepreneurs are rewriting the way IT works — to everyone's benefit. The Harvard Business Review reports that working from home can raise productivity by 13.5 percent. That means that for every five days you're working from home, you're putting in equivalent of 5.7 in-office worker days.

Naturally, market disruptions like this aren't without risk. As a business owner, you're literally taking risk into your home. You need to take steps to protect your company and separate home life from work life.

Home-Business Risk: Balancing Work, Work, & More Work

(@wesbos ), a full-stack developer, has been working from home for years. He learned on the fly and figured out the best way to run a home-based business. He can summarize his learnings in one word: discipline.

No, he's not talking about the hazards of daydreaming and losing focus on your work. As a developer, Bos has to be focused. Running a business comes with numerous worries that can take your attention away from coding. When your attention drifts, mistakes happen. When mistakes happen, clients might bring a professional liability lawsuit.

Bos learned to divide his time between coding and clerical work. To make a sharp division between the two, he recommends a "timeboxing " technique:

  • Allocate a fixed time period for each planned task.
  • Improve productivity by reducing time dedicated to nonessential work.

"I block off time for things like taxes and receipts and all the work that comes along with being a freelancer, but I don't let that cut into my actual coding time," Bos says. "I have to remember, at the end of the day, I'm getting paid for coding. That's what my business is built upon. If you start making busywork your actual job, your business isn't going to succeed."

"If you make busywork your job, your business won't succeed." -Wes Bos, full-stack developer

By scheduling separate time for clerical and business tasks, Bos ensures that he can work uninterrupted on development projects. That allows him to deliver the highest quality of work to his clients in the most efficient way.

Timeboxing: Dedicate a fixed period of time to planned tasks. This prevents busywork from creeping into development and tech time.

Insurance-Related Home-Based Business Risks

In addition to letting clerical work take up too much time, many home-based businesses don't insure themselves properly. That's because they often mistakenly believe that their homeowner's insurance will cover any work they do from home.

In fact, the opposite is true. Your homeowner's coverage typically excludes business property and won't offer coverage for lawsuits if someone is injured on your property while visiting for business purposes.

For this reason, home-based businesses may look for coverage through a small business insurance policy called a Business Owners' Policy (BOP), which includes…

A BOP is an affordable insurance bundle designed for small, low-risk operations — like a home-based tech business.

The Bottom Line

Starting a business from home can offer big productivity gains that help you add value for your clients. At the same time, running a business means you'll have more secondary tasks and risks that can get you off track.

Successful freelance developers and IT consultants learn to compartmentalize client work and separate it from business development and bookkeeping. And be mindful that personal insurance policies like homeowners insurance generally don't offer adequate financial protection for home business risks.

Next: Bad Habit 2: Being a Lone Wolf

70% of businesses raise prices or cut hiring when sued