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Avoid the Risks When Running a Home Based Business

If you’re running a business from home on your own, you’re not alone and you’re in good company.  You may be surprised to learn that small to medium enterprises (SMEs) make up a massive 99.9% of all private sector business here in the UK and a whopping 60% of these are sole traders.  That’s 3.3 million sole traders here in the UK – making up such an important part of the UK economy as a whole.  While running your own business from home has its advantages (no additional overheads, flexible dress code and good work-life balance to name but a few), there are also risks to be considered so today we’re taking a look at some of the threats to home based business operators so that you can stay ahead of the game.

UNDERESTIMATION OF COST – so many home-based business owners make mistakes when calculating the cost of starting up.  While rent and utility charges will be a known factor, there are other expenses that need to be planned for, these include:

·        Health and employment insurance

·        Self-employment taxes

·        Business services (outsourcing tasks such as marketing, website development, SEO services, etc.).

When pricing your services or products, don’t forget that you need to cover more than just your salary – you need to take into account additional expenses that are faced when you work for yourself such as travel expenses, insurance, taxes, outsourcing costs.

IGNORING RULES – some residential areas and properties have laws about how the property can be used and may ban certain operations that cause nuisance, restrict the number of customers allowed or prohibit the use of business signage.  Talk to your local authority’s planning department to make sure that running your business from home is a viable proposition legally.  Make sure you have the necessary permits to operate a business from home.  If you live in a rented home, then talk to your landlord and check your tenancy agreement to make sure you’re not breaching the contract. 

DATA BREACHES – when we think of cyber-attacks, it’s usually the big name stores and service providers whose data breaches make headline news.  However, 62% of cyber-attacks are against small to medium sized businesses as they are less likely to have the necessary resources to ensure security of data.  Make it more difficult for unscrupulous criminals to access and steal your data by using complex passwords and two-factor authentication on all business accounts.  You’ll need to update your antivirus software on a regular basis and keep your operating systems and software up to date too.  When it comes to paperwork – keep all paper copies of data that contain personally identifiable information in a locked filing cabinet and shred the documents you no longer need.

UNDER INSURING – this is rampant among home business owners who may assume that their homeowner’s insurance covers their business operations.   While some policies may offer limited coverage for business property, most would deny liability claims associated with business activity – this means that you could be liable if a business delivery person slips on the way into your property, or if a business laptop is destroyed as a result of an accident.  Make sure you have a business owner’s insurance policy which will combine general liability and business property protection in a single package.