Running a business out of your home sounds like a dream come true. Imagine setting your own schedule, writing your own destiny, and holding your career goals and family goals in the same place. Home-based business ownership can be one of the most rewarding ventures in life, but it comes with risks like any business venture.
Knowledge is power when it comes to running your business with as little risk as possible. Here are eight common risks of home-based entrepreneurship.
1. Cyberattacks
You’ve likely seen news reports of the latest big data breach costing corporations millions in revenue. What you might not know is that small companies are just as vulnerable to cyberattacks.
Home-based entrepreneurship requires a more secure Internet connection and browsing habits than your usual web surfing.
If you’re taking orders directly from customers, you must use antivirus software to keep their data safe. You should update your antivirus protection often, use strong passwords across your network, and ensure your website uses the latest SSL certificate technology.
As a company owner, it’s your responsibility to keep customer and vendor information safe. Do your best to make your network attractive to hackers and thieves.
2. Privacy concerns
Working from home comes hand-in-hand with privacy issues. When running your business out of your home, all of your eggs are in one basket, making it more critical than ever to protect your privacy. For example, you can beef up your Internet safety by using a virtual private network for web surfing. (VPN).
This type of technology hides your IP address, making it difficult for hackers to determine your location. It also adds an extra layer of encryption to your Internet connection.
Your internet address isn’t the only address to worry about. When you work out of your home, you have to protect your physical address as well. You can use a virtual business address from providers like iPostal1 to conceal your home address. A virtual business address will intercept business mail on your behalf so that you don’t have to give out your home address to vendors or customers. You can also use it to register your LLC or your Google My Business listing.
As icing on the cake, most virtual business address providers have a smartphone app so that you can keep track of company correspondence from anywhere with the tap of a button.
3. Legal battles
Do you ever invite clients to your home as part of your entrepreneurship? If so, then you need to consider the potential lawsuit risk. It’s a tough pill to swallow, but clients are not friends, and you need to protect yourself and your business.
For example, what happens if a client trips and falls on your front porch steps during the winter? That could turn into a lawsuit against you. Because your home is your business, it could ruin your assets too. You might invest in business insurance, as most homeowner’s insurance doesn’t cover business activity.
You should also be careful not to be too overzealous in what you claim your company can do on your website. Many people do so in an attempt to become more attractive to Google’s ranking algorithm. However, if you can’t deliver on your promises, disgruntled customers might take you to court over it.
4. Illness or injury
Have you considered what might happen to your business’s viability if you become sick or injured?
As a solopreneur, all of your income potential depends on your ability to work each day. Take precautions such as paying for a disability insurance policy. This type of coverage will help tide you over during a recovery process.
If you have employees working for your home-based company, then you should find that your state’s required worker’s compensation coverage protects you when employees get hurt on the job.
Consult an attorney or an insurance representative if you’re worried about keeping all of your coverage ducks in a row.
5. Reputational risk
As a home-based entrepreneur, your business lives and dies by your reputation. Pay attention to any negative press or social media posts about your company. Respond immediately and professionally if you have any unsatisfied customers who review you publicly.
You should also take precautions against data breaches. Even if your customer satisfaction rate is excellent, it’s hard to regain the trust lost from exposed consumer data. Work hard to keep your security systems up to date so that you don’t become known as the company that exposed its customers’ credit card numbers to hackers.
Lastly, vet your employees thoroughly and treat them well, so they don’t have reason to speak negatively about your business.
6. Business interruption
Prepare ahead of time to prevent business interruption issues from causing havoc to your home-based entrepreneurship experience. Accidents and natural disasters have the potential to stop the regular operation of your company.
Do you have a plan for what you might do if your area becomes a victim of a natural disaster?
You should create a disaster recovery plan for your business. This type of plan describes how you’ll continue operating in the event of a long-term power outage or natural disaster. It helps to have the steps laid out so that you can follow them while feeling stressed by the situation.
Consider taking out a business interruption insurance policy to help cover expenses during times when your business can’t operate normally.
7. Zoning issues
Don’t let zoning issues ruin your company before it even gets off the ground. Are there local laws, filings, or fees you must pay to operate your type of home business? If so, then take care of them now before they potentially cause problems.
Pay attention to parking space availability if you have employees and customers visiting your house each day. Is it legal in your area to have customers park on your neighborhood’s private streets? If you have an HOA, you should consult with them to ensure you aren’t stepping on any toes.
8. Property damage
Did you know that your homeowner’s policy might not pay you if a flood, fire, or other natural disaster causes damage to your company’s property? Most personal policies won’t include coverage for property damage affecting your home-based business activities.
Talk to your insurance agent to make sure you have the proper business insurance in place. Use a waterproof and fireproof safe to store important company documents.
Wrap up
No one said that starting a home-based company would be easy or risk-free, but it’s a worthwhile investment if you believe in your business’s ability to succeed.
