Home Office or Traditional Office: Which Is Right for Your Small Business?

Are you thinking about starting your own small business? This exciting venture comes with a lot of big decisions, one of which will be where your business will live. Will you opt for a home office, where you can operate from the convenience of your own home? Or is your startup ready for a commercial lease and traditional business office? Check out the pros and cons of each solution for your small business!

Home Office

Working from home offers both convenience and lower overhead costs, making it a great option for small businesses on a budget! However, home offices often don’t have enough space for growth and employees, nor do they provide a professional space for meeting with clients. Here are the advantages and disadvantages to having a home-based business.

Pros

There’s No Commute

Considering the average one-way commute in America is nearly 27 minutes, working in a home office essentially gives you back an hour each day. Plus, you save money on gas, lessen your carbon footprint, and your car won’t build up mileage or wear-and-tear from your daily commute, leading to fewer repairs and a longer lifespan.

There Are Fewer Expenses

The cost of renting an office space can quickly add up. In addition to office space rent, you have to buy office furniture, supplies, and equipment. Your small business may or may not yet have the capital to account for these expenses.

You Can Take Advantage of Tax Benefits

You’ll want to check the IRS rules and regulations to make sure that you qualify, but working from home may allow you to deduct some of your home’s expenses against your business income. That could include a portion of your mortgage, utility bills, property taxes, and home maintenance fees.

You Might Be More Productive

76% of employees avoid the office when they need to get important work done. Studies show that when freed from typical office distractions, remote workers are more focused, have less idle time, and take fewer days off than office employees. Remote workers also tend to take longer breaks, which actually increases overall productivity.

You Can Multitask

There are all kinds of little chores you can check off during the day when you work from home that won’t lower your productivity. You can use quick breaks to start a load of laundry, unload the dishwasher, or throw dinner in a slow cooker. Accomplishing these small tasks won’t interrupt your workflow and can help free up evenings and weekends.

You Have More Control Over Your Schedule

Are you an early bird who’s up and raring to go at the crack of dawn? Simply roll out of bed and into your home office! Or perhaps you’re a night owl who prefers to complete tasks after having dinner or putting the kids to bed. Owning a home business allows you the flexibility of working not only when it’s convenient for your clients, but also when you’re at your most productive.

Cons

You Need to Get Licenses & Permits

Depending on where your home business is located and the nature of your business, there’s specific documentation you must obtain or risk being shut down by the government. You also need to make sure your HOA or landlord is okay with you running a business out of your home. Wading through these legal issues can be a headache, but nothing would be worse than starting a successful small business at home and suddenly being shut down because you missed some paperwork.

You Need to Find Space in Your Home

In order to stay focused and productive, it’s best to have a dedicated space for your home office—maybe a study, spare bedroom, or section of the basement—where you’re free from distractions. It can be difficult to carve out this space, especially if you have a smaller home or live with other people.

Communication Can Be More Difficult

The continued development of video conferencing software and business communication apps makes it easier to stay in touch from a distance, but there’s no replacing face-to-face communication. Without non-verbal cues, messages can get lost in translation over email or text. Plus, video calls usually aren’t as comfortable or collaborative as meeting in person. In fact, 61% of employees prefer to meet in-person because the meetings feel more natural and engaging.

There’s a Lack of Professionalism

While the acceptance of home-based businesses has certainly grown in recent years, a brick-and-mortar business still conveys a more professional business presence. If you need to have a meeting with clients, partners, or investors, hosting in your home or at a coffeehouse or restaurant doesn’t have the same professional feel of a traditional business office.

You Don’t Have Additional Storage Space

When confined to a home office, you may not have room for additional equipment or tons of inventory, so you may have to find alternative storage options. While there are workable solutions, traditional offices typically have additional storage space that’s closer and more convenient.

Loneliness Can Affect Productivity

If you’re an extrovert who enjoys social interaction, the long hours alone with home-based work might wear on you and impact your productivity and creativity. When you run a business from home, you may find you miss the opportunity to have a quick conversation or bounce an idea off of employees.

You Might Miss Out on Walk-In Traffic

For retail businesses in particular, working from home means you won’t get the business of potential customers who happen to walk by your store and decide to stop in. You’ll have to dedicate more time and resources to social media and online marketing to ensure your business is on customers’ radar.

Traditional Office

Whether you lease commercial office space or opt for a more middle-ground solution like a coworking environment, it can be beneficial to have an official office space for your business. Of course, traditional office spaces come with more expenses that your business might not be ready for yet. Keep these pros and cons in mind as you consider leasing an office space for your business.

Pros

There’s More Interaction for Your Team

No matter how far technology has progressed, it can’t replicate the benefits of face-to-face interaction. Talking in person provides clearer communication, increases creativity (think “happy accident” ideas that come about during workplace chats), and builds meaningful business relationships.

You Have Room to Grow

Ideally, your small business will be successful and continue to expand, which means you’ll eventually require more space for your growing inventory, equipment, and employees. It’s easier to grow in a traditional office (or move into a larger one) than it is to carve out more room in your home.

There Are Boundaries Between Work and Home

22% of remote workers say their biggest challenge is unplugging after work, and it’s not hard to see why. When there’s no physical separation between work and home, it’s difficult to ever feel like you’re truly “off the clock.” Having an office space helps create a clear division between work life and home life.

Your Small Business Appears More Professional

When you need to schedule a meeting with a potential investor or an important client, would you rather have it in your home or in an office or conference room within a professional workplace? The latter can provide your small business with a better first impression.

You Have More Space Available

If you run a home retail business, you’ll likely end up cluttering your home storage spaces—such as closets, guest rooms, attics, basements, and garages—with excess inventory as your small business grows. A commercial office space typically provides more space to store items and stay organized.

Cons

You Lose Valuable Time with Commutes

The average American spends about 152 hours driving to and from work each year, and 33% arrive at work already stressed from traffic or fear of arriving late.

It’s More Expensive than Working from Home

Not only is there the cost of your office lease, but you also must factor in the cost of supplies, furniture, and equipment to fill the office. Then, there’s bills for phone lines, WiFi, heating and air conditioning, security, and more. Those expenses add up quickly, and your small business may not yet be mature enough to take them all on.

You Can Get Locked into a Fixed lease

While some commercial leases are flexible, signing a rigid lease could lock you into a space that doesn’t suit your needs. Your business might grow more quickly than expected, and your business office may not have proper room to expand. On the flip side, you might not need as much space as you originally thought, but now find yourself stuck paying more rent than you have to.

There Are More Distractions

Workplace conversations, break room visits, and trips to lunch all sap productivity. 66% of employees believe they’d be more productive working remotely than in a traditional office space, and 76% said they experience fewer distractions when working outside of the office.

It’s Less Convenient

You can’t care for a sick child, schedule an appointment for home maintenance, or accept packages when you’re at the office. When working from home, these are minor blips on the radar that don’t take much time out of your day, and they don’t require you to take a half-day from the office or use up valuable PTO.

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