There's no place like home | Lower overhead, accessible technology and higher returns make home-based businesses work
Photo/Tim Greenway
Christy Hemenway started Gold Star Honeybees in her Bath home
Photo/Matt Smolinsky
Ducktrap River of Maine began as a home-based business in the late 1970s, but today employs about 100 people and posts $20 million in sales, says Don Cynewski, the company's general manager
Photo/Tim Greenway
Linda Varrell left a career in banking to start a public relations firm in her basement that has seen a 12% to 15% revenue increase this year
When Christy Hemenway glanced through her house recently, she saw towers of buckets stacked in her kitchen, the top ones filled with sticky honeycombs dripping honey through strainers into buckets below. To pass through her office and much of her living room, the professional beekeeper had to gingerly step around heaps of equipment that covered the floor.
“I have had days where every room, even the bathroom, has stuff in it,” she says. “Easily half of my house is dedicated to this.” She pauses. “It’s really a mess, covering everything,” she says, gazing at the honey situation in the kitchen.
Since 2007, Hemenway has been running a beekeeping and relocation service, and selling specially designed beehives from her home in Bath. She says she remains at home because she’s not yet ready to pay for the high overhead costs associated with relocating her business, Gold Star Honeybees, off site. Plus her needs are unique enough that it’s hard to find a suitable spot.
“I need a space where I can drill holes in plastic buckets, a space I can mess up,” she points out. “I haven’t found a space that would work.”
So she endures the stickiness. She is one of a growing number of Maine entrepreneurs who find the advantages of working from home — lower overhead, flexible hours and, for startups, easier entry into the market — outweigh the disadvantages.
Residing among clutter is often one of the sacrifices of having a home-based business. Mary Hauprich, who sells stovetop fire-suppression blankets with her husband and son out of their Isleboro home, says in past years, every room has been packed with products for their business, called FryerFighters.
“We turned the master bedroom into a manufacturing area,” Hauprich says. Shutting the door at night became essential. “That’s the way to stay sane,” she explains. “Shut the door and say the work is done.”
These homebody business owners, or homepreneurs as they’re commonly called, have many practical incentives for staying at home. But Hemenway and Hauprich also warn that it can be hard to put boundaries between work and personal life, and all too easy to live a hermit-like existence as they toil away in their houses.
“When you live in the middle of the business, you’re faced every single second with what hasn’t been done yet. I can literally get up on way to the bathroom and see what I have for e-mails,” Hemenway says, (which is not always bad; you do get the work done.) But she concedes, “I think that I would have a slightly more balanced life if I had to go somewhere else to go to work. I would exercise more; I would socialize more; I would do things that were more normal, not just work, work, work.”
Being inundated with stuff, and living and breathing your business day and night, might be relatively small drawbacks compared to the many benefits of running a business from home. The biggest perk is that it’s cheap. And as technology progresses and the unsteady economy lurches up and down, more entrepreneurs are choosing to locate their startups in their home study or, as the case may be, the kitchen, living room, garage, basement, front porch or all of the above.
The big impact of small home business
Almost half — 49% — of all businesses in the United States are home-based, according to a 2002 U.S. Census report on small businesses. This percentage rises for American Indians, women and blacks. Businessweek Magazine reports that 6.6 million home-based enterprises generate at least half of their owners’ household income and employ one in 10 private-sector workers. While home-based businesses on average have lower sales and profits than their office-based counterparts, they also gain a higher return — 35% — on their gross revenues compared to 21% for non-home-based businesses, due to the lower operating costs, according to a 2006 U.S. Small Business Administration report.
Another 2004 SBA report found that 90% of home-based businesses have only one employee — the owner, while slightly more than 7% reported fewer than five employees, and just over 1% of the firms employed more than five workers. The report describes homes as “do-it-yourself business incubators, which collectively provide startups with an entry point into the business world.”
Closer to home, so to speak, professors James McConnon and Todd Gabe at the University of Maine have for the last several years been keeping close track of Maine microbusinesses, which employ fewer than five people. Based on 2007 data, they counted a total of 142,984 microenterprises that employed 183,138 people across the state, making up 22.3% of Maine’s employment. Of those businesses, 24,484 hired more than one employee. Although McConnon does not know how many of these microbusinesses are home-based, he suspects that Maine does not fall far from national numbers and that about half are run out of people’s homes.
The economic effect of these small businesses is significant. The University of Maine economists have calculated that the microenterprise economy in Maine contributes an estimated $7.8 billion (13.2%) to gross state product and generates an estimated total economic impact of $12.9 billion.
Meanwhile, the numbers of microbusinesses in Maine increased by 9.3% in just four years between 2003 and 2007.
“It is a growing sector of our economy,” McConnon says. “[Home-based businesses] have been growing steadily since the 1990s, since the start of telecommuting and advent of computers [and other electronic communicating devices]. And with the recent recession and the increased focus on local buying and local demand for local products, we’ve got forces at work that will support the growth of home-based businesses for the next five to 10 years.”
He also points out that with the aging population, more people are looking for balance in their lifestyles and choosing to work from home. And certainly in Maine’s rural areas, where jobs remain scarce following the decline of traditional industries, people are desperate for self-employment opportunities.
Women entrepreneurs, too, are often apt to start a business from home, according to Wendy Rose from Maine Centers for Women, Work and Community in Augusta. Rose says women entrepreneurs often have to juggle the demands of family and work, which is easier to do when everything’s in the same place. And she notes that women often tend to be financially prudent and risk averse, so prefer the lower expense of working from their house.
“As a result, their businesses tend to be more successful over time,” Rose says.
McConnon says the microbusinesses in Maine are varied — ranging from cabinetmakers to artists and educational consultants — but that many specialty-food and small-scale agricultural businesses are also starting up.
“They are being recognized more as legitimate businesses than hobby businesses than in the past,” he says.
Little successes lead to large successes
Although it’s easy to consider a home-based business somewhat quaint, with jam jars stacked on the kitchen counter or honeybees buzzing around, these small-scale firms can explode into big success.
One such story is Ducktrap River of Maine, which sells smoked fish. Des Fitzgerald founded the company in the late 1970s in Lincolnville on a creek that flowed into the Ducktrap River. Originally, Fitzgerald wanted to have a fish farm, but wasn’t able to protect his plump trout from ravenous raccoons, otters, owls and skunks.
So Fitzgerald gave up on growing trout and began smoking it instead in a tiny self-made smoker on his property. Don Cynewski, general manager of the Belfast-based firm, says Fitzgerald happened onto the industry at the right time. “He was very fortunate; he started the smoking operation at the same time salmon farming started coming into its own as an industry. His was one of the early entries into the smoked-salmon field,” Cynewski explains.
Ducktrap built a new facility in Belfast in 1991, and then doubled that space in 1998, the same year Fitzgerald sold 80% of the company to Atlantic Salmon of Maine.
Today Ducktrap is run out of a 45,000-square-foot facility in Belfast, employs about 100 people and pulls in $20 million in sales per year, according to Cynewski.
Also mixed in with the specialty-food businesses and child-care services that make up much of Maine’s home-based businesses are many professional companies that take advantage of mobile computing and remote technologies.
Linda Varrell left her 25-year banking career and her job as head of marketing at Northeast Bank in 2006 to start a communications company from her Yarmouth home. She bought office furniture and a laptop, hired an attorney and an accountant, and “really became legit,” as she puts it.
“Having been a banker, I knew a lot of people in the marketplace,” she says. “I grew through word of mouth.”
Varrell’s business, Broadreach Public Relations, doubled its revenues from 2008 to 2009. In the last 18 months, she’s hired two full-time workers, including former Portland Press Herald editor Eric Blom. This year, she says she’s grown her revenues between 12% and 15%.
Before deciding to convert her 1,100-square-foot basement into an office last year, Varrell drew up a cost-savings comparison. To have her husband convert and paint the basement and buy new furniture, she’d pay about $5,000. But staying at home would save her $18,000 a year, she estimates, because she doesn’t pay rent, parking fees or plowing and landscaping costs, and shares power, oil and Internet bills with her home.
It came to this: “Do I pay for [my employees’] health care or do we have offices? That was the deciding factor to stay here,” she says. Her team will reassess next year whether they should move. “Right now, it works,” she says.
The only drawback that Varrell can see to running Broadreach out of her basement is the chronic dog hair in the office. “We have two golden retrievers and they’re here all the time,” she says, with a big laugh.
Rebecca Goldfine, a writer based in Dresden, can be reached at editorial@mainebiz.biz.
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