If you’re ready to start a business, you’ll have a lot of choices when it comes to the type of store you want to start. You can start a business that runs out of your home, or if you prefer, you can start an online business.

And the choice you make matters. Although both of these types of businesses are viable, they are distinctly different and will each require different skills and mindsets. Let’s take a look at the pros and cons of each business model to help you decide which type of business is best for you.

The Pros and Cons of Starting a Home-Based Business

A home-based business appeals to many people because it gives the owners a hands on working experience that’s hard to duplicate with an online business. But there are also some risks involved in this type of business.

If you sell a service, such as plumbing, electrical, pet sitting, baking, accounting, or any other skill that people will pay you to perform, a home-based business might be right for you. In addition, if you want to operate a business that requires you to stay local, such as a vending machine business or house cleaning service, a home-based business is the right choice for you.

Let’s start with the pros of owning a home-based business:

·         Depending on the type of business you run, you may be able to work when it’s convenient for you. For example, if you run a tax preparation business, you would have to meet with or have phone conversations with clients during regular business hours, but you could perform the accounting tasks in the middle of the night if that’s convenient for you.

·         There is no commute. I realize that this has been touted as a benefit of working from home for years, but I just want to reiterate how cool it is. You wake up in the morning, get a cup of coffee and maybe read the news, and then, after you’ve woken up slowly and in line with your body’s rhythms, you start work. In my opinion, there is simply no other way to start the day. I’m telling you—it’s magic.

·         You’ll cut your expenses. When you work from home, you’ll instantly save on gas, clothing, and the cost of eating out for lunch every day. While none of these expenses are large individually, they can quickly add up when you lump them together. Now, multiply that by 52 weeks and you’ll understand this important benefit of working from home. A recent study shows that most people save around $2,524 a year when working from home.

·         You’ll have time for life. When you work for someone else, you miss out on a lot of life’s experiences. That’s because you practically have to beg to take off the afternoon to see your son’s little league game, give up a lot of pay to spend a 3 day weekend at your daughter’s college graduation, or have the luxury of taking the day off to do something else that’s important to you. But when you work for yourself, you can arrange your work and meetings around the things that enhance your life. Isn’t that what life is all about?

·         You’ll have a sense of peace that difficult to describe. Finally, there is a certain kind of peace that comes from running a business out of your home. Don’t get me wrong, you’ll work just as hard as other business owners, but by doing it from the comfort and familiarity of your own home, you’ll gain a sense of peace and contentment that is difficult to match. Trust me, once you experience this feeling, you’ll know exactly what I’m talking about.

Do all of those benefits make you want to go out and start a small business right now? Before you take the leap, let’s take a look at some of the cons of working from home.

·         If you’re not motivated, you will probably fail. Because you won’t have someone standing over you and making sure you get your work done, you have to have a great work ethic and be motivated enough to get the job done. If you don’t have this important entrepreneurial trait, chances are that you’ll go out of business within the first year.

·         You won’t have much human interaction. When working from home, you won’t have co-workers to interact with every day, and that might be difficult for some people. Chances are that you’ll get to spend some time with clients, but that’s not the same as having a “buddy” in the next cubicle.

·         You’ll have to set boundaries in order to get your work done. If you have a family or roommates, they likely won’t understand your need for uninterrupted concentration when running your business from home. That means you’ll have to set some work time boundaries and stick to them. There is typically a short period of time when just staring a home-based business where feelings are hurt and relationships can suffer because of this. But if you explain things from the start, it will make the transition less stressful for everyone.

The Pros and Cons of Running an Online Business

If you prefer to sell products or a service that you deliver online, an online business may be the right choice for you. In an age where the majority of people make purchases online, this can be a smart move for a would-be entrepreneur. For example, you can offer freelance services, such as writing, graphic design, website design or any number of other services to the vast world via the internet. In addition, you can start an online clothing store, book store, baby store, or boxed subscription service. The possibilities are literally endless, but just as with a home-based business, there are pros and cons to this type of business.

Let’s start by looking at the pros of an online business.

·         Freedom. There is no other way to put it. You interact with people via technology, you don’t have client meetings to attend and if you want to spend all day in your pajamas, you can. If you are content spending all day alone on your computer, this might be the perfect type of business for you.

·         The startup costs are minimal. In fact, in tomorrow’s post, I’m going to provide a massive list of free tools that you can use to start a business for free. You heard that right, done correctly, you won’t have to spend a penny to start an online business.

·         Your marketing options are endless. When you run a local, home-based business, you’ll be limited on how you can market your business, but if you run an online store, you’ll have a vast selection of inexpensive ways to market your business. You will only be limited by your imagination.

Sound perfect? Not so fast—there are a few cons to running an online business:

·         You’ll have a lot of competition. There is a lot of hype about how easy it is to set up an online store and become instantly wealthy. Unfortunately, it’s not that easy. But many people believe it is, so you will have a lot of competition in your field.

·         You’ll have to be smarter and faster to make it. Because there is so much competition, you’ll need to have an edge to stand out in the crowd. Your business idea must be different from other peoples but still appeal to the masses in order to become a success.

·         It’s easy to become complacent. If you’ve read anything about running an online business, you’ve probably read about how easy it is because it’s a set and go type of passive business. But that’s just not true, and those people who become complacent and expect to earn a fortune while they sleep will have a huge wake up call when their business tanks. Running an online store is just like any other business—you have to work hard to make it a success.

Well, that’s it for my post today. Tomorrow, I’ll talk about some great free tools you can use to start your business. Check back with me then.

And if you have any thoughts or questions about running a home-based business or an online store, please talk to me in the comment section below.