Home-Based Businesses Increasing

Posted by: John Tozzi on January 25, 2010

More people are working from home, and more of them are working for themselves, according to Census data released today. The chart below compares the growth in the number of self-employed people working exclusively from home to growth in total home-based workers and the total number of people employed.

home_based.bmp

The number of self-employed who work exclusively from home increased from 3.47 million in 1999 to 4.34 million in 2005 (the latest available from the Census). The total population of working from home at least some of the time increased from 9.48 million to 11.33 million in the same period.

Also notable: the home-based workforce is well-educated and earns significant income. In 2005, 46.5% had at least a bachelor’s degree (compared to 27.2% of the total population over 25) and had median family income of $63,648 (compared to the national median of $46,242 that year). The biggest share (28%) of home-based businesses were in professional services — lawyers, accountants, programmers, consultants, and the like.

This data reinforces the trend that more and more home-based businesses are serious enterprises. We wrote about this last year, when Steve King of Emergent Research published a report on “homepreneurs.”

“The myth is around people working from home don’t make money, and that these things are part-time, hobbies,” King told me this morning. “There’s a big chunk of these people who are serious as opposed to hobbies.”

King also notes that the Census survey asks people specifically about whether they work from home, rather than whether they have a “home-based” business or job. So people who work out of the home — consulting on site, or home-improvement contractors, landscapers, etc., — are not counted. King’s research suggests that there are about 6.6 million “serious” home-based businesses that provide at least half of their owners’ household income.

The technologies that enable more people to work at home have advanced significantly since 2005, so the number of home-based entrepreneurs is most likely even greater today. Explore the Census data tables here.

Reader Comments

Kevin Chern

January 25, 2010 02:33 PM

I think that home-based businesses are on the rise for a few reasons: (1) layoffs forcing people to create their own jobs, (2) lower cost of overhead (no office rent, fewer employees, etc.). and (3) advances in technology. In the legal industry, many attorneys are turning to virtual law offices and online marketing to cut overhead costs and communicate with clients over the web. This works well for paper-heavy professions where written communication is standard.

Kevin Chern
President, Total Attorneys

PremierInterns.com

January 25, 2010 07:53 PM

I would imagine that the number one determining factor to the rise of home-based businesses is because of layoffs. With the abundance of resources out there on the web, it would make more sense to start your own business and create the ideal work environment you would thrive in. Some of these employers know that the economy is bad so they either take advantage of their employees or pay them less than what they deserve. That was the determining factor why I started PremierInterns.com. I wanted to control over my life and what I did day in and day out. I would hope more people decide to become entrepreneurs. It can only lead to bigger and better things. Besides, how else can you innovate of your restricted by the confines of a company.

PremierInterns.com

totalwellness

January 26, 2010 12:40 AM

With the economy as bad as it is it's no wonder that there has been a 25.3 increase in folks working from home. This could actually be a great way to revive our economy. Know what the wealthy know The Residual Secret is the key to success.

Susan Martin

January 26, 2010 02:05 PM

I agree with Kevin, that these are the major reasons for more people working at home, but I wonder what we might be able to learn if we could get census data faster? 5 years is a long time...

http://www.business-sanity.com/blog

Kenny Atcheson

January 26, 2010 02:39 PM

Expect the number of homepreneurs to continue to increase in 2010 with former "brick and mortar" business owners joining at a rapid rate. They realize the risks and costs for expensive lease space, inventory, and employees is too much. As we move forward I expect to see more businesses make the transition because of the continued development of easy-to-use online tools for searching, buying, and marketing products and services. The need for honest, savvy, internet marketing coaches continues to grow as a result. With so many people claiming to be experts look for sites like http://www.HowToTakeCharge.com/category/training to get a taste of free home business and online marketing training before you pay for anything.

LeverageLIfe.GreatCareerPlan.com

January 26, 2010 04:49 PM

America was founded by business revolutionaries and Super-preneurs who started their business from their homes. I love operating an "at home business", and I love running my teams from home. There's no money like money earned for yourself, plus having an at home business frees up your time, expenses, and your opportunity to grow your personal development, education; not to mention grown family ties and unity. America's recovery will not be as fast as we all would hope, but booms and explosions in wealth for many starting their @home business is a trend. One of America's greatest philosophers, Benjamin Franklin, once said, "If I had 4 hours to chop down a tree, I would spend 3 hours of that time sharpening my axe, and only one hour to chop down that tree." Recovery and success takes change and time all of which is being utilized in our country today.

Success is desired from everyone, yet not everyone has the discipline needed for success. The at home business is going to create this discipline, understanding and mindset for many in the world today. Success is much bigger than finances earned from past endeavors or gained institutional business education. Granted finances make everything else better!!! In one of my at home businesses, many uneducated and unwealthy individuals starting up are doing very well. Many have told me their Attitude, outlook on life, and their new learning positive philosophies have really improved their quality of living. After all, Learning = Lot's of Earning...These are people from all walks of life though; they are achieving a new level of success they never thought would happen, and this level of success is being achieved in half the amount of hours they were putting in at their old J.O.B., in the rat race, making others rich. No one I have recruited has much sales or marketing experience either.

The upside of at home businesses for America, is the hardworking leadership these hard times are going to create. Look how the country bounced back after the 1920's and 30's. The Forbes top 10 of it's 400 list changed annually throughout the early 1900's, all because of the entrepreneurs harvested from those hard times.

There will be more millionaires made over the next two decades than ever before, primarily those who operate an at home business and build teams nationwide. If you question this you need to study works by Paul Zane Pilzer, two time presidential economic advisor, author, and much more.

The at home business ensures and requires growth, so people will whole heartedly expand their horizons to give themselves the greatest gift we give ourselves, Personal Development. American's in their @ Home Business, learning to grow consistency and persistence will do our economy good when it comes to future business opportunities created and the jobs created to follow.

Kenny Atcheson thanks for the juice and the site, great stuff. Good Luck to the rest of you, Dig Deep!

Carol Gillen

January 26, 2010 06:40 PM

Another booming source of homepreneurs are young mothers who are trying to balance it all. They're looking to be home with the children, still maintain their career, and contribute financially to the family income. Working from home can be a great solution during this phase of a family's development. Fewer mom's are able to stay at home with young children as most families need 2 paychecks.
This is an especially good fit when dad's job carries the health benefits for the family. Otherwise, access to health benefits for homepreneurs is very limited if not nonexistent. Access to health benefits is a very serious drawback and a cause for concern as this trend continues. Beware of the entrepreneurial spirit. The independence is undoubtedly enticing, but it can make you blind to the negatives.

Laurie Neumann

January 27, 2010 04:47 PM

I find this interesting, but not surprising. With the way things have gone with the economy, people are looking for alternatives. They would rather depend on their own entrepreneurial skills rather than wait on a company to lay them off.

They are also find there is so much freedom and flexibility in a home based business, plus being able to do something they really enjoy.

http://www.christianhomebusinessconnection.com

Karen Newcombe

January 28, 2010 03:29 PM

While the recession may have pushed some people into working at home, the trend was already there. The last time I was an employee, we even closed down the office and sent everyone to work at home - most of our people were consultants who were on the road 4-5 days per week anyway. We had three staffers in an expensive downtown highrise that clients rarely visited, and we did nothing there that couldn't be done online. We bought everyone a laptop and a printer and dispersed. It worked great and we saved $4000 a month in rent.

I transitioned to working on my own in 2004 as a freelance business writer and marketing consultant, and working at home is ideal for me. Some folks are bothered by the isolation, but a webcam and a Skype account can solve that instantly. I am online with a colleague in videochat for about 4 hours per day, so it's like someone is in the room with me, and we each have someone to bounce ideas off off. Skype and iChat are also great for meeting with clients in other states, so I don't actually have much in the way of geographic limitations.

This is a full time way of life for me, providing 100% of my income. I love it.

Paul Magnuson

January 28, 2010 07:19 PM

Despite many of the comments, the current recession and unemployment are not responsible for the statistics in the article. It is based on 2005 Census data - the middle of the last boom in a "full employment" cycle.
I have operated an apartment advertising (printed free magazines and website) business since 2002. It has always been in my home, originally I worked another job during the start up year. During the second year it more than quadrupled in size and became full time. However, I did not want to give up my 15 foot commute. Three of my four markets are over 100 miles away. So, most customer communication is over the phone or email.
We are currently franchising new markets under a business plan that assumes the sales territory franchisee will be a home based business.
Paul@APARTMENTConNeXTion.com
http://www.apartmentconnextion.com

Will

February 1, 2010 10:50 PM

This can be really effective as long as employers and employees recognize the differences when working at home. For me, the biggest has been separating work life from home life, which can be tough when you have the 15-foot commute mentioned above. I have a specific space carved out for work and don't go in there when I mean to be off the clock. A little planning and preparation can make this method of working very effective.

http://www.LeadingCreatives.com

Mark D Worthen PsyD

February 2, 2010 11:12 PM

I've been working from home for over three years. I make as much money as I did with salaried employment, working half the hours as before.

Thank you for debunking the myth that home business entrepreneurs aren't making it. We are.

http://number1homebusiness.net

RRJ

February 9, 2010 10:16 AM

Hi Guys,
Yesterday i was reading news on one website that now almost 27% of IT people are working from home, also there are many BPO n govt companies giving data entry, medical transcription jobs which gives good opportunity to work from home in any part of world, my cousin's neighbor is just doing medical transcription jobs, this way she can take care of her child as well as do the work.

I think in next few years, most of the companies will try to outsource work to freelancers as it saves lots of cost for them, best of luck.

Thanks,
RRJ
http://www.1moneymania.in/

roger turntine

February 25, 2010 07:53 PM

I would Like to simply salute all of the home based business owners and future home business owners for taking up the slack for an economy gone wrong.
I wish you all success!
sincerely,
Roger Turntine
www.tntproducts.info
www.allabouthomebasedbusiness.blogspot.com

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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