Home Business Report

Home Business Report Compiled by Enterprise Nation Home Business Report October 2007 Enterprise Nation Introduction from Emma Jones The home has now become the UK’s most popular start-up location. More than 60% of businesses are started from home and over 1,400 new home businesses are launched each week. Starting and growing a business from home brings its benefits: the 60 second commute, increased productivity, reduced overheads, time left over for family and friends and being a part of the local community. Having the upside of these benefits does not in any way lead to a balancing downside of ambition. Ambitious business owners are making the most of outsourcing, sub-contracting and technology to increase their turnover, whilst keeping the business at home. People no longer have to make the choice of a successful business or a happy home life. Home business owners are having it all! Enterprise Nation is the UK’s fastest growing website for people starting and growing a business from home and we are the leading advocates and champions of home business. We believe that there are challenges that, if met head on, would propel the growth of this sector yet further. In this report we set out a 10 point action plan for Government and Enterprise Agencies in England, Scotland, Wales, and Northern Ireland. A plan that would see greater recognition – and support – afforded to a dynamic business community that is not only contributing to the economy but to the environment and society too. We also provide clear evidence that those regions supporting dedicated home business projects are growing their home business base at the fastest rate. The North West and West Midlands are the only two regions to be supporting significant home business projects and, according to Labour Force Survey and Enterprise Nation data, these are the two regions showing the most rapid growth in the number of self-employed working from home. They are catching up with the South East and London who take the top slots in the first year of this report. This all shows that regional support can make a positive difference and that the regions and nations grasping the opportunity to communicate with, and assist home businesses, are the areas that are truly prospering. I’d like to suggest that, if the observations and recommendations in this report are fully considered and acted upon, the UK’s home business sector, and our economy and society, will truly benefit. Emma Jones Founder, Enterprise Nation Home Business Report October 2007 Introduction from Philip Young In BT Regions, we work closely with government, regional development and enterprise agencies and other business organisations from the private, public and voluntary sectors, in order to foster economic enterprise and regeneration across the UK regions and nations. Through this work we are well aware that the nature of regional enterprise is changing. This report highlights how home-based businesses are fast becoming a key part of the UK’s economic future, both nationally and regionally. It’s clear that they have become a significant and growing part of the small business sector. We also see a bigger picture. We live in an era of climate change and transport congestion, with a challenging environment for agriculture and rural industry and a need for regeneration in many UK regions. And we see demographic trends that will not only require more people to work but also for longer. The encouragement of home-based businesses - and ‘smarter working’ more generally - could make significant positive impacts on many of these things. Our interest in home-based businesses is obvious. They survive and thrive on communications technology. Indeed I would argue that it is unlikely we’d have seen the growth we have if we had not had broadband Britain. Such businesses rely on online promotion and selling on the web, gaining advantage over larger companies through the speed and flexibility of email communication and other online media, and can work as virtual organisations of affiliated individuals. These same tools allow these businesses to look like larger ones, work flexibly from different locations and on the move, and collaborate as if they are a single unit. As keen champions of small business BT is pleased to sponsor Enterprise Nation in the production of this report. We believe that there is more that can be done to encourage and support homebased businesses and we welcome the opportunity to partner with other regional organisations to find ways to promote and foster this important part of our enterprise economy. Philip Young Director, BT Regions Home Business Report October 2007 Contents Setting the scene Report findings The home business landscape The home business‘ten point action plan’ Regional reviews West Midlands East Midlands North East North West South West South East East of England Yorkshire and The Humber Wales London Scotland Appendices Appendix I: Data sources Appendix II: About the author 6 8 11 14 15 16 17 18 19 20 21 22 23 24 26 27 6 Home Business Report October 2007 Setting the scene Report findings • There are more than 2.1 million home based businesses in the UK. This is out of a total of 4.5 million small and medium sized enterprises at the start of 2006, an increase of 2.9% on the start of 2005.1 • Home based businesses account for around 28% of employment (almost a third of the total workforce) and they have a combined turnover of in excess of £364 billion. 1 • Over 60% of new businesses are now started from home. This is equal to more than 1,400 new home businesses each week, more than any other type of business. 1 • The highest growth in home business is coming from mums, young people and the over 50s. Home business is a route to bring people into employment who might not otherwise have contributed to the economy. 2 • The fastest growing sectors for home businesses are in the business and professional services sector (such as accountants and website developers), online trading (such as eBay-ers), personal services (such as home interior designers, hairdressers, party planners), food (products and caterers), and domestic energy (including people selling excess DIY ‘green’ power back into the national grid). 3 • Having started up, home business owners are ambitious for growth. In a poll taken on Enterprise Nation, our home business website, 100% of respondents confirmed their plans to increase turnover in the next 12 months, 86% of respondents claimed they could achieve their growth targets by running the business from home and 63% confirmed that they would rather outsource projects and new work rather than employ full time personnel. 4 • Home business owners are IT savvy and making full use of the internet and software applications to manage their business and their life. In entries to the Enterprise Nation Home Business Award, 98% of entrants had a business website and 64% were utilising e-commerce platforms. In further research carried out for BT, 42% of home business owners confirmed they go online for business advice and 86% agreed that technology is more important to them as a home based business than in an office environment. 5,6 • As well as contributing to the economy, home business owners are friends of the environment. An increase in homeworking contributes to a reduction in Co2 emissions and could cut peak traffic by up to 10% within 5 years. 7 • Home business owners are contributing to society too, by being on hand for family and friends and spending time and money in the local area that is bringing daytime neighbourhoods to life. In a ‘work/life blur’ poll taken on the Enterprise Nation site, 87% of homeworking parents felt that their being at home was good for the children who are being trained as next generation entrepreneurs. 8 • Yet despite the positive contribution made by home business owners, to the economy, environment and society, there are only a few tailored business support programmes for this audience and there is a gap when it comes to availability of data to measure the size and impact of the home business community. 7 Home Business Report October 2007 • In this report we call for more research to be carried out at a national, regional and local level to secure a true picture of home business in the UK. • This need for research has also been recognised by the Department for Business, Enterprise & Regulatory Reform (DBERR), commenting on the release of SME statistics for 2006 that “there is no single source of estimates of the number of businesses in the UK. The main source for this publication is the Inter-Departmental Business Register, administered by the Office for National Statistics, which is used to provide the number of registered businesses in the UK. This publication includes estimates of very small businesses that do not appear on the IDBR. These are estimated by DBERR from the ONS Labour Force Survey and HM Revenue & Customs Survey of Personal Incomes. Since the estimates use survey data, the reliability of the SME statistics is lower for the smallest size class.” • The same information gap exists at a regional level and only one of the twelve Regional Development Agencies make reference to supporting home business in their Regional Economic Strategy. We therefore call upon enterprise agencies in England, Scotland, Wales and Northern Ireland to refer in key policy documents to their encouragement and support for home business. • According to data sources used for this report, the South East and London are the top performers when it comes to the number of resident home businesses. • Yet these regions are being challenged by the North West and West Midlands who are showing the fastest growth in home based self-employment. These are the only two regions to be currently supporting dedicated home business projects, suggesting that regional intervention and support can make a difference. • At a local level, there are pockets of support activity: the Microbiz Fair held for home businesses in Horsham, a new project to be launched in the Peak District to offer call handling and support for home businesses and a programme in Croydon to encourage people to turn a hobby into a business, from a home base. Profiles of home business activity in each of the regions are noted in the following pages. The team behind this annual report will continue to track activity across the English regions, Scotland, Wales and Northern Ireland, and follow the outcomes from these dedicated projects and also identify new home business programmes. 8 Home Business Report October 2007 The home business landscape The number of people starting and growing their business from home is on the increase. In fact, the home is now the UK’s most popular start-up location with more than 60% of business owners deciding to work and live under one roof. We look at who is starting home businesses, the factors influencing the growth of this modern way of working and what more can be done to encourage it yet further. Who? People of all ages, genders and social standing are turning their homes into a place of business, in every region of the UK. Particular growth is coming from: • The under 25s - who and are turning their vocational skills, combined with IT knowledge, into a way to earn a living. 9 • Mums – who are looking for a route to earn an income whilst being on hand for the family. 10 • The over 50s – who are leaving the ‘corporate world’ for the freedom of selfemployed portfolio working, based at home. 11 Why? There are three key reasons why people are choosing to start and grow their business from home: • Savings - starting out at home saves money in avoiding the cost of an extra office. It also saves time. A new business owner can gain up to 20 extra days per year through giving up the daily commute. Days that can be spent on growing the business, rather than sitting in traffic jams. • Technology – advances in technology mean that almost any trade can now be carried out at home. Business owners are developing their websites as a virtual window to the world and utilising software to manage projects, work with partners and develop new business. • The work/life blend – people are heading home to be close to family and friends. Starting and growing a business from home is enabling thousands of families to be together, work together and share the financial rewards. Research for BT shows that ‘Flexibility/working the hours I choose’ and ‘Better work/life balance’ were the two most popular factors when business owners chose to start from home, coming in at a higher ranking than ‘lower overhead costs.’ 6 What? According to Enterprise Nation polls and intelligence, these are the five sectors showing the greatest growth in home based business: • With more and more accountants, lawyers, graphic designers, website developers, marketing professionals and journalists leaving corporate employment to be their own boss at home, professional service businesses are on the increase. 9 Home Business Report October 2007 • With an impressive 58% growth in the number of mobile hairdressers operating in 2006, home based, personal service companies, such as complementary therapists, party planners and home improvement providers are growing fast. 10 • As consumer demand for local and organic food produce continues to outstrip supply, we are seeing a greater number of home businesses producing food products from home. Research from The Soil Association confirmed that organic food and drink sales in the UK nudged the £2 billion mark for the first time in 2006 and continues to grow at record rates. • More than 70,000 people in the UK are now making a full time living from eBay and thousands more are generating a level of income from trading online. 12 • Domestic energy is showing strong signs of growth and opportunities are emerging to start businesses at home that tap into people’s growing awareness of the environment, including generating power to sell back to the national grid. Many of these businesses may start as part time 5-9 ventures (that’s 5.00pm in the afternoon to 9.00am the next day) but there is no denying that home business owners are ambitious for their business, regardless of the stage it’s at. In Enterprise Nation polls, we asked our readers about their businesses and ambitions: The results were clear. • 100% of community members confirmed they plan to increase turnover in the next 12 months. • 86% believe they can achieve their growth targets by running the business from home. • 63% confirmed that they would rather outsource projects/new work rather than employ full time personnel. And the challenges they face are mainly communication based – wanting clarity on business rates and planning permission as well as some clear business support, networks and incentives that have been tailored for home based businesses and provided at all levels, from central government, development and enterprise agencies and local authorities. Why does this matter? An increase in the number of people starting and growing a business from home has a positive impact on the economy, the environment and society. To the Economy, it delivers: • Increasing numbers of business start-ups • Improved levels of productivity • Job creation in knowledge-intensive & professional services • Economic activity from previously under-represented groups (particularly mums/ housewives and people with disabilities) • Strengthened local economies as money is retained in the area 10 Home Business Report October 2007 To the Environment, it delivers: • Reduced traffic congestion: according to the RAC Foundation, homeworking could potentially cut peak traffic by up to 10% within 5 years. This would save 14.5 billion miles a year, equal to 17 million cars not taking a trip from Land’s End to John O’Groats. • Improved efficiency use of buildings To Society, it delivers: • Enlivened daytime neighbourhoods • Securing the next generation of entrepreneurs as children become involved in a home-based business • Better childcare at home with parents being around and not ‘at the office’. What more can be done? It is for these reasons that home enterprise should be further encouraged. We have come up with a ten point action plan to be considered at a national, regional and local level. Footnotes: National home business statistics are sourced from Department for Business, Enterprise & Regulatory Reform, SME statistics, August 2007 2 Enterprise Nation demographic research, Jan 2006 – Jan 2007 3 Enterprise Nation sector research and predictions, January 2007 4 Enterprise Nation website user poll, April 2007, of 1,612 respondents 5 Enterprise Nation Home Business Award entries, July to October 2007 6 The State of the Small Business Nation 2007, commissioned by BT 7 RAC Foundation, Motors to Modems Report, May 2000 8 Enterprise Nation website user poll, August 2007, of 1,007 respondents 9 Enterprise Insight research, YouGov research for EO London, May 2007, and City & Guilds ‘Generation Enterprise’ April 2005 10 Yellow Pages and London School of Economics, Kitchen Table Tycoons, September 2006 11 PRIME and ‘The New Old’ by Demos, September 2003 12 eBay trading figures, 2007 1 11 Home Business Report October 2007 The home business ‘ten point action plan’ This report shows that more could – and should – be done to help home business. So Enterprise Nation is proposing ten specific things that we believe government and agencies could do, to better support and foster home based businesses. Introduce statistics and indicators to help understand the home business environment: 1) Introduce a range of indicators at national, regional and local levels to measure the number and impact of home businesses. To make this happen, financial incentives might be offered to encourage home business owners to come forward and be counted (see below). 2) Create a cross-departmental government group dedicated to monitoring changes in the above indicators and influencing policy towards home based business. Design new governmental policies and programmes to help and support home based businesses: 3) Re-consider the criteria by which businesses are categorised and offered business expansion grants. Home business owners are ambitious for their business to grow but would rather sub-contract work, rather than hire new employees (on which basis grants currently tend to be available). Sub-contracting is still creating ‘wealth’ and should be recognised as such. 4) Enterprise agencies (such as Regional Development Agencies and equivalent) should explicitly refer to home based business in their Regional Economic Strategies (RESs) and similar plans, as well as developing programmes to actively support them. During the compiling of this report, we found reference to home business in only one such document (the RES for South East England). Consider financial incentives to encourage home based business: 5) Home businesses place fewer demands on transport infrastructures (reducing commuting, for instance) and can diminish the cost of some public services (such as road building, and even possibly crime prevention). They are intrinsically environmentally-friendly, and also assist the regeneration of rural communities. These positive contributions could be reflected in offering a basic tax relief for home business owners. 6) The tax implications of working from home should be made clearer and more explicit. This should include greater clarity on issues such as capital gains tax (CGT) liability on the part of the house being used for a business purpose, business rates versus council tax and what allowable home business expenses are available for home businesses. For example, we welcome and support the call made by the Conservative Party in their ‘Blueprint for a Green Economy’ published in September 2007 for a review of CGT levied on the part of the house used for business purposes. 7) Local government could also clarify the position of the council tax and planning issues relating to home business on their council websites and in printed publications. 12 Home Business Report October 2007 Develop more local physical infrastructure to support home businesses: 8) Local authorities should produce planning policies that recognise live/work schemes and take a more positive, encouraging attitude towards planning applications for such schemes. More information on this topic is available at liveworknet.com 9) Local authorities should consider investment funding in dedicated live/work developments or ‘hub’ facilities for homeworkers, where hot-desking, temporary workspaces and meeting facilities are provided, especially in places with actual or potential high concentrations of home based businesses. Promote and champion home based business: 10) Government and enterprise agencies should get actively involved with promotion and marketing campaigns for home based business, following the example of the ‘Homeworking in England’s Northwest’ project in the North West and the ‘Enterprise HQ’ project in Shropshire. 13 Home Business Report October 2007 Notes 1. Each profile contains a table of facts and figures, a regional round-up of home business activity, a home business case study and relevant links. 2. The figure provided on the number of home based self-employed is sourced from the Labour Force Survey, Homeworking Regional Analysis, 2006. 3. Figures on: • Importance of technology to home business • Biggest hurdles • Reasons for starting at home are sourced from ‘The State of the Small Business Nation 2007 Report’ commissioned by BT in October 2007.* 4. References to the percentage of visitors to the Enterprise Nation website are sourced from a demographic analysis of site visitors, January to October 2007. * The geographical breakdown within the State of the Small Business Nation report shows figures for the West Midlands, East Midlands and East of England as one geography combined. The geographical breakdown within the State of the Small Business Nation report shows figures for the North East and Yorkshire and The Humber as one geography combined. 14 Home Business Report October 2007 Regional reviews Home Business in the West Midlands We see great potential for home businesses continuing to prosper in the West Midlands, mainly on account of the enthusiasm being shown by Regional Development Agency, Advantage West Midlands (AWM), towards this modern way of working. The number of self-employed people working Importance of technology to home 90% from home has business increased by Biggest hurdles over 12,000 between 2005 Financial stability 52% and 2006 (to Finding customers 23% 181,235 in 2006.) Reasons for starting at home The percentage of home based Better work life balance 55% self-employed Lower overheads 50% has increased by 2.3%, placing the West Midlands as the region showing the second fastest rate of growth in percentage change. * Number of home based self-employed, 2006 181235 AWM is funding a project that has seen the UK’s first dedicated unit for home business owners being established in Shrewsbury, Shropshire. The ‘Enterprise HQ’ project has attracted hundreds of home business owners since it opened its doors in April 2007. There is potential for this project to be expanded into neighbouring counties that would complement a potential live/work scheme being considered in the market town of Ross-on-Wye. Credit should go to AWM for the commitment it is showing to home enterprise. This focus is clearly paying off. Case study Heather Gorringe, Wiggly Wigglers Heather Gorringe runs Wiggly Wigglers from her home farm in Herefordshire. The company provides worms and other supplies to keen gardeners and is generating an annual turnover in excess of £2.5 million. Heather is a best case example of how home businesses are making full use of the web to promote and sell supplies. The Wigglers website not only carries an e-shopping facility but also Heather’s blog and a fortnightly podcast that ranks alongside Chris Evans and the BBC Breakfast Takeaway on the iTunes listing. Quite an achievement for a home based business selling worms! Links Wiggly Wigglers www.wigglywigglers.co.uk Links Advantage West Midlands www.advantagewm.co.uk Home HQ homehq-shropshire.co.uk *Labour Force Survey, Regional analysis: percentage of self-employed people usually working from home 2005/2006 15 Home Business Report October 2007 Home Business in the East Midlands There are projects underway in the East Midlands connected to homeworking but with more of a focus on home based employees, as opposed to home based start-ups. In its application to the national Digital Challenge, Importance of technology to home 90% Nottingham’s bid business was based on Biggest hurdles ‘homeshoring’, an exercise in Financial stability 52% recruiting call Finding customers 23% centre agents to Reasons for starting at home work from their home. Nottingham Better work life balance 55% was not successful Lower overheads 50% in winning the Digital Challenge (it was one of the 10 finalists) but the homeshoring project is underway with funding support from the East Midlands Development Agency (EMDA). Number of home based self-employed, 2006 134306 EMDA has also commissioned research to look at ‘atypical’ working practices, covering home working, remote working and flexible working. This will include analysis of the contribution made by ‘atypical working’ to the Gross Value Added (GVA) in the region. A more ‘home business’ related project is a plan in the Peak District to offer services to home business owners such as call-answering, businesses addresses and meeting space. Lincolnshire Enterprise is also showing interest in promoting itself as a hub for home businesses. We expect that once EMDA have some positive results from these projects, we will see more of an emphasis on encouraging home business start-ups across the region. Case study Jobsworth Cards Having started a comedy writing club in his local village, Marc Holland joined Peter Hartley and Ivan Gaskell in writing humorous lines for cards related to the business world. Friends and family liked these cards so much that the trio decided to produce a range, appoint an agent and see how they would sell. The response was positive and Jobsworthcards.co.uk was born, selling out its first range to more than 100 shops. This was remarkable as not one of the three founders had any experience of the greeting card industry. The founders have had to become experts in outsourcing, from design and printing to fulfillment and selling via agents. The company continues to grow by distribution to more outlets and introducing new industries and professions featured on the cards. But none of the founding three are ready to move out of their home offices in and around Leicester. Marc says: “Working from home suits us perfectly. We each know our role in the company so we get our work done, without having to be away from the family, and we meet every week to keep in touch. Jobsworth Cards was started from a 3 home base and we hope it will stay there!” Links Jobsworth Cards www.jobsworthcards.co.uk Links East Midlands Development Agency www.emda.org.uk Connected Nottingham bid www.connectednottingham.org.uk 16 Home Business Report October 2007 Home Business in the North East The North East may have a smaller base of home based self-employed compared to other regions (57,911) but this number is increasing at a strong rate. Number of home based self-employed, 2006 Importance of technology to home business Biggest hurdles Financial stability Finding customers Reasons for starting at home Better work life balance Lower overheads 64% 51% 55% 28% 57911 87% Between 2005 and 2006, the North East saw an increase of more than 9,000 people who were operating as their own boss from home.* We believe this figure could be even higher if dedicated home business projects were introduced. Case study Mercury Marketing Geoff Ramm runs a successful marketing business from a home in Tyne & Wear that he shares with his wife and 13 month old daughter, Grace. Having started the business at the age of 27, Geoff has built the company over the past five years so that it offers one-to-one consultancy advice to clients in the north of England and national seminars made available on Geoff’s personally branded site at www. geofframm.com Two years ago Geoff considered relocating to serviced office accommodation but decided against the move after consulting with clients who wanted Geoff to travel to them. He saw no reason to take on the extra overhead and has grown the business from home ever since. Geoff’s business prowess has been recognised in his own region as he has won a South Tyneside Young Entrepreneur of the Year Award. He is certainly one to watch. Links Mercury Marketing www.mercurymarketing.co.uk We have come across a couple of initiatives focused on home enterprise. Rural Enterprise Action in Hexham will host workshops for people starting and growing a business from home in early 2008 and Women into the Network, a membership organisation run from Durham Business School, hosted ‘The Working Mum – how to nurture your business and your family’ in February 2007. The region is also keen for its employers to adopt flexible working practices, as seen by the North East signing up to Work Wise UK, the national movement to promote smarter working and research was commissioned in 2006 to look at the potential for call centres to employ home based agents. The North East does a great job of focusing on its next generation entrepreneurs, encouraging enterprise in its schools, colleges and universities and we think there is a significant opportunity for the region to promote the concept of starting and growing a business at home to its young and student population. Links One North East www.onenortheast.co.uk Rural Enterprise Action www.reaction-online.org Women into the Network womenintothenetwork. co.uk * Labour Force Survey, Regional analysis: number of self employed people usually working from home 2005/2006 17 Home Business Report October 2007 Home Business in the North West The Northwest is showing the highest percentage increase out of all regions, in the number of self-employed people working from home. It is also the region with the third highest percentage of visitors to the Enterprise Nation website.* 189948 The percentage increase in the number of selfImportance of technology to home 89% employed usually business working from home Biggest hurdles between 2005 and 2006 was 4.9% with Financial stability 58% Merseyside being a Finding customers 29% particular hotspot Reasons for starting at home for growth.** This growth has spurred Better work life balance 47% on the Northwest Lower overheads 43% Development Agency (NWDA) to support a dedicated home business project. Number of home based self-employed, 2006 In August 2006, the NWDA commissioned ‘Homeworking in England’s Northwest’; an 18 month project to increase the number of businesses started from home and employees working from home. The project has delivered strong results, including the formation of the ‘North West Flexible Working Group’ that seeks to encourage employers to adopt flexible working practices. We now look forward to seeing the NWDA support the infrastructure requirements of home business owners by investing in homeworking hub facilities. The NWDA appears committed to home business and we expect the dedicated homeworking project to continue to influence home based start-up figures. Case study Travel Counsellors This business is not really one home based business: it’s more like 800 home based businesses. Headquartered in Bolton, Travel Counsellors is just one of the many companies that offer people who want to operate from home, an idea, a franchise and a central support network. Founded by chairman David Speakman in 1994, the Queen’s Award winning company is now the largest home based travel company in the world with agents operating across seven countries. It operates a model that sees travel consultants set up as self-employed franchisees, working from their homes, yet they tap into the central resource of IT and marketing/business development support that is provided by a staff of 170 at Travel Counsellors HQ. Travel Counsellors are provided with ongoing training and IT applications and support. Weekly broadcasts of the Travel Counsellors Television (TCTV) webcast keep the network of travel advisers up to date with the latest company news and an annual programme of live conferences keeps morale high and helps ensure that the company’s retention rate is among one of the highest in the UK travel industry. Links Travel Counsellors www.travelcounsellors.com Links Northwest Development Agency www.nwda.co.uk Homeworking in England’s Northwest www.homeworkingnw. co.uk * Enterprise Nation site demographics, January to October 2007 ** Labour Force Survey, percentage of self-employed people usually working from home 2005/06 18 Home Business Report October 2007 Home Business in the South West Enterprise Agencies across the Southwest are working to make the most of the natural asset at their disposal, offering city-leavers a high quality location in which to relocate, live and work. This appears to be paying off. According to inward investment agency, Cornwall Importance of technology to home 81% Pure Business, business of the 210,000 Biggest hurdles SMEs registered locally, two-thirds Financial stability 45% have been started Finding customers 28% by entrepreneurs Reasons for starting at home moving from urban areas and each Better work life balance 57% start-up has been Lower overheads 47% responsible for creating on average 1.7 jobs. The agency is highly effective in promoting quality of life benefits of the area for those who can relocate and bring their business with them. Number of home based self-employed, 2006 207121 There is certainly suitable accommodation on offer which is to be expected as Penzance is home to Tim Dwelly and his Live Work Network that promotes live/ work accommodation across the UK. Tim was also instrumental in starting the Digital Peninsular Network that provides virtual services and meeting space to hundreds of home based businesses. The South West Regional Development Agency is also supporting the ‘flex’ project that is introducing flexible and homeworking in 50 small and medium sized businesses. Links South West Regional Development Agency www.southwestrda.co.uk Cornwall Pure Business cornwallpurebusinessco.uk Live Work Network www.liveworknet.com We expect the South West to maintain its position in the top quartile of regions in terms of the number of home-based self-employed in view of its attractive offer to existing and potential home business owners and the way this is so effectively marketed in regional promotion campaigns. Case study Mole End Ltd Mole End Ltd is, without a doubt, a family business. The company is run by Jan Strassen and her husband and their two children lend a helping hand at weekends too. Based close to Exeter, the business is made up of three internet shops selling a range of items from software to jewellery and customised printing labels. Technology is key to enabling the business to function and to allowing Jan and her husband to take some time out of the business. Jan says: “When we are out, our call answering service can take orders and emails details to us. We use an online support system to manage our software support, skype to communicate with partners and online banking to maximise efficiency. If the computers stopped working, we would be completely lost!” This business looks set to continue riding the technology wave whilst enjoying life in the beautiful surrounds of South West England. Links Mole End Ltd www.mole-end.biz 19 Home Business Report October 2007 Home Business in the South East It came as little surprise that the South East took the number one position in terms of the number of home based self-employed. The region has a higher start-up rate compared with other UK regions, the highest percentage of visitors to the Enterprise Nation website and is the only region to refer to home business in its Regional Economic Strategy. Number of home based self-employed, 2006 Importance of technology to home business Biggest hurdles Financial stability 363258 Yet there is only one example we can find of a dedicated home 87% business project in the South East. 43% Case study The Fudge Kitchen Sian Holt started her business from her spare room in Kent 10 years ago. It has since grown out of the spare room, into a specially converted barn and into a multi-million pound turnover operation with 8 shops and employing more than 50 people. It’s a far cry from the early days when Sian’s hall was filled with boxes of walnuts and raisins. Sophisticated technology allows Sian and her team to keep in touch with the branches across the UK. The company is also an early adopter when it comes to e-commerce, selling fudge from its online shop. In the beginning, Sian chose home due to the reduced costs, saying “So many small businesses front-load their start up costs with expensive offices when they should be thinking that a desk in a rent free spare room allows for scarce initial funds to be spent on business generation and not overheads.” But she continues to remain at home on account of the flexibility it offers, commenting “once the business reached the stage that it could afford a separate office, I converted an outbuilding because, as a mother, it gave me total flexibility and allowed me to both keep control of my business and stay in touch with the day to day progress of 2 young children (with a little help!).” Links The Fudge Kitchen fudgekitchen.co.uk The Horsham Microbiz Fair Finding customers 21% has been running Reasons for starting at home since 2003 and the events have gained Better work life balance 55% in popularity. This Lower overheads 48% year, visitors were asked for their views on workspace to influence the Council’s building plans. Interestingly, the results showed that: • 24% of those surveyed are looking for accommodation now or within a year • 60% of those surveyed were looking for accommodation with easy in/out terms, rather than being committed to a long lease Confirming that home based businesses are not averse to moving out of the home, if and when the time comes to take the step. With an increase of 2.1% in the percentage of self-employed people working from home between 2005 and 2006*, the South East looks set to continue being a hotspot for home businesses. We look forward to seeing more events like the Microbiz Fair to encourage and support this sector. Links South East England Development Agency www.seeda.co.uk Horsham, Microbiz Fair www.horsham.gov.uk * Labour Force Survey, percentage of self-employed people usually working from home 2005/06 20 Home Business Report October 2007 Home Business in the East of England The East of England, with its large rural economy and major commuter towns and cities, has significant potential for home businesses. And the number of them is on the increase. 238334 The number of home-based selfemployed increased Importance of technology to home 90% by over 14,000 business between 2005 and Biggest hurdles 2006.* The region promotes itself as Financial stability 52% “the ideas region” Finding customers 23% with Enterprise Reasons for starting at home Hubs, funded by the East of England Better work life balance 55% Development Lower overheads 50% Agency (EEDA), driving “innovation in science, technology and research.” We can now see that a number of these ideas are emanating from spare rooms, garages and attics across the region. Number of home based self-employed, 2006 There is one project closely linked to home enterprise. The ‘Enterprising Women’ project has a goal to “increase the number of successful women in business in the East of England.” The project profiles role model home business owners and holds events that show how to pursue a business dream at home. At the inaugural conference in June 2007, the keynote speaker was Julie Bishop, a single mother from Norwich who started out with a mop and bucket and now employs over 20 staff at Living Clean, the environmentally friendly and home based cleaning company. There are huge possibilities for the East of England and we hope that more can be done to support and nurture resident home businesses. Case study Outsec Norfolk-based OutSec spotted a gap in the market as the availability of broadband grew. The company provides outsourced secretarial services to a wide range of companies across the UK through a team of 85 home based secretaries and a pool of 250 specialists who access their work over the internet. The company has created a bespoke software solution that allows clients to upload large voice files directly to the site. The company was founded by Richard and Vanessa Phillips in 1999. With more than 180 customers and 800 individual users across the country, the company is growing by around 5% each month. Richard says, “Broadband has been at the heart of our success. Without it, our growth would have been a lot slower, because teleworking would have been less cost effective and we couldn’t have provided the levels of service that keep our clients happy and win us new business.” Links Outsec www.outsec.co.uk Links East of England Development Agency www.eeda.org.uk Enterprising Women project enterprising-women.org * Labour Force Survey, Regional analysis: number of self employed people usually working from home 2005/2006 21 Home Business Report October 2007 Home Business in Yorkshire and The Humber Yorkshire Forward is making strides in encouraging new start-ups, particularly amongst young people, women and the over 50s. This has delivered an increase in businesses started at home. Number of home based self-employed, 2006 Importance of technology to home business Biggest hurdles Financial stability Finding customers Reasons for starting at home Better work life balance Lower overheads 64% 51% 55% 28% 150492 87% The number of self-employed based at home in Yorkshire increased by just over 10,000 between 2005 and 2006.* This could be on account of Yorkshire Forward’s focus on the startup groups that are most likely to be home based. Case study Toby Hyam, Creative Space Management Toby Hyam has played a significant part in accommodating home business owners in and around Yorkshire. As Chief Executive of The Media Centre in Huddersfield, Toby pioneered new services including live/work facilities for home business owners and business support in the form of a ‘virtual front desk’, IT support and meeting space. After leaving The Media Centre in 2005, Toby headed home to start his own business, Creative Space Management, a company that is dedicated to providing world class facilities for creative, digital and technology companies. Toby is continuing his good work and has secured contracts to manage centres including The Round Foundry Media Centre in Leeds which provides services for over 80 home based businesses and a new digital business centre in Sheffield, due to open in autumn 2008. Home businesses across Yorkshire will thrive on account of the services and accommodation on offer from Toby and his team. Links Creative Space Management www.creativespaceman.com Yet Yorkshire Forward has not adopted a specific project to encourage home based start-ups. The region does boast however a network of centres and facilities that provide the services required by a growing number of creative and digital home based businesses. Yorkshire is home to the largest concentration of universities in the UK and students graduating from one of the region’s 8 Universities are starting up their businesses from home. Almost a quarter of businesses created in the region are set up by under 35s and the Global Entrepreneurship Monitor in 2006 revealed that entrepreneurship for 18-24 year olds in Yorkshire and Humberside stood at 5.1% - higher than the UK as a whole at 3.7%. We will watch with interest to see if these businesses remain at home or move in to the grow-on space that is readily available across the region. Links Yorkshire Forward yorkshireforward.com * Labour Force Survey, Regional analysis: number of self employed people usually working from home 2005/2006 22 Home Business Report October 2007 Home Business in Wales The Welsh Assembly Government is taking home enterprise seriously and this is paying dividends. At the time of hosting the Enterprise Nation conference in Cardiff in 2006, Enterprise Minister, Andrew Davies, opened the event by saying: “Too many businesses that start and are run Importance of technology to home 85% from homes are not business getting the level of Biggest hurdles business support and recognition Financial stability 54% they deserve. This Finding customers 32% conference will Reasons for starting at home make a critical contribution to the Better work life balance 62% debate as to how Lower overheads 46% these businesses can be identified and then nurtured. We have seen at first hand in Wales the benefits that an enterprising mindset can deliver and we are working hard to encourage higher levels of start-up and growth companies - home enterprise has a key part to play in achieving this goal.” Number of home based self-employed, 2006 105237 The Minister’s words were supported by research carried out in lead up to the conference. The report summary read: “A considerable proportion of SMEs in Wales run their business from home. Our findings confirmed 44% of businesses were based at home. Hence it is essential that business support in Wales supports these businesses too.” With a firm focus on supporting home businesses and an increase in the number of home-based self-employed (an increase of over 5,000 between 2005 and 2006*), we expect to see Wales continuing to prosper as a home business hotspot. Case study Peter Hewlett, Edge of Wales Walk Peter Hewlett and his wife moved from Nottingham five years ago in search of a better quality of life. Having settled in Llyn, they spotted a market opportunity to provide high quality walking holidays. The business, is a cooperative, a limited company with 6 local investors. Now employing 4 people, the business was started from the Hewlett’s home and is growing rapidly. According to Peter, the benefits of a home base include increased productivity, the ability to deliver longer hours because of the absence of commuting, a lower cost base that can be passed on to customers and being able to provide a personal service to those customers who finish up their week long walks with a refreshing cup of tea and Bara Brith in Peter’s house. The business is doing so well that there are plans to build a walking centre at the back of the house to offer accommodation and other services to walking guests. Links Edge of Wales Walk www.edgeofwaleswalk.co.uk Links Welsh Assembly Government www.wales.gov.uk Cyfenter Partnership, Home Enterprise Report http://tinyurl. com/2vrmo7 * Labour Force Survey, Regional analysis: number of self employed people usually working from home 2005/2006 23 Home Business Report October 2007 Home Business in London With its buzzing creative and professional service sectors, it was inevitable that London would appear high in the home business rankings. Number of home based self-employed, 2006 Importance of technology to home business Biggest hurdles Financial stability Finding customers Reasons for starting at home Better work life balance Lower overheads 320343 It hosts the sectors that are most attractive to home 85% business owners and the city region has a strong business start-up 44% scene. The number 35% of self-employed working from home increased by 52% more than 17,000 57% between 2005 and 2006.* Case study Paul Stuart-Smith, Integral FX After a career with Morgan Stanley in London and New York, Paul StuartSmith set up a foreign currency transaction business, Integral FX, from his London apartment. The business has doubled its turnover in the past six months and Paul is now considering taking someone on. On working from home, Paul says “I can start work early and have a number of transactions complete by the time I take my children to school. I enjoy the flexibility of running the business from home so don’t want to move out but the business is prospering so I’m hoping to recruit someone who will work from their own home. Keeping this business as a home-based business means keeping overheads down and productivity high.” Links Integral FX www.integralfx.com The London Boroughs are becoming keen home business advocates. In response to a question on support for home business, CEO of Croydon Enterprise, Stella Okeahialam, had this to say: “The Croydon Enterprise programme is keen to encourage and support home business activity. We want to encourage individuals to turn a hobby into a business from home. We are also keen to involve other successful home workers to promote the concept and show how it can be done.” The only possible threat to the city’s position is the number of people moving out of the city when they reach a certain point in their life/career. Links London Development Agency www.lda.gov.uk Croydon Enterprise croydonenterprise.com * Labour Force Survey, Regional analysis: number of self employed people usually working from home 2005/2006 High property prices mean more Londoners work from the kitchen table than in any other region. According to the State of The Small Business Nation Report 2007, only 38% of home business owners in London worked from a dedicated home office, compared to a national average of 53% and 57% started out from home for reasons of ‘lower overheads’ compared with a national average of 49%, so highlighting the impact of property prices. 24 Home Business Report October 2007 Home Business in Scotland Home business in Scotland is alive and well – more so in the rural areas than in the urban landscape – and this is what accounts for the strong focus on broadband provision. Number of home based self-employed, 2006 Importance of technology to home business Biggest hurdles Financial stability 44% 33% Finding customers 130704 81% In 2005, 35% of organizations in Scotland were trading online, an increase from 27% in 2004. Case study Deborah Watson, Scottish Linen Deborah Watson created Scottish Linen in 2005, inspired by a trip to South Africa. Only two years on and the company’s luxury linen products can be found in many guest houses, holiday homes and hotels in Scotland. The company exports to overseas markets including Australia, America, Poland and Japan with an increasing product range that now includes bath, baby and travel products. Deborah makes full use of her website and online shop and is living proof that working from home is by no means a barrier to selling worldwide. Deborah says “Being at home to provide stability (and do the chores!) for our family-of-6 is working out well. My ‘commute to work’ is a 10-step walk to a log cabin that overlooks Ardnamurchan’s lochs and hills; not even in my 30something day-dreams was home-working ever this good.” Links Scottish Linen www.scottishlinen.co.uk Over 97% of organisations Reasons for starting at home involved in creative industries, software Better work life balance 71% & ebusiness Lower overheads 50% and financial services access the internet. There has also been growth in internet connectivity in the tourism and agricultural industries. These are all the most likely sectors for home businesses. Scotland is certainly making the most of utilising the power of technology to trade. This can also be seen in a private project in the Highlands & Islands called ki-work. The project prepares people for setting themselves up as self-employed and home-based call agents. It also appears that home businesses in Scotland are content with staying at home. According to The State of the Small Business Nation 2007, commissioned by BT, 68% of home business owners are not considering moving out of their home office any time soon. Links Scottish Enterprise scottish-enterprise.com Ki-work www.ki-work.com Highlands and Islands Enterprise www.hie.co.uk The future looks bright for Scotland. The Scottish economy enjoyed an exceptional year of growth in 2006 and the services sector is predicted to expand in 2007, a prime sector for home business start-ups. With the technology in place we feel the full benefit of home enterprise would be felt with some dedicated support projects. Here’s an example of an effective marketing campaign from the South West Regional Development Agency. It appeals to home business owners by placing an emphasis on work/life balance. 26 Home Business Report October 2007 Appendices Appendix I: Data sources The following reports/data sources were reviewed in compiling this report. Department for Business, Enterprise & Regulatory Reform, SME statistics, August 2007 Labour Force Survey, Regional Analysis, Office for National Statistics, 2005/06 Enterprise Nation poll results [various, over period Jan 2006 – September 2007] RAC Foundation, Motors and Modems report The State of the Small Business Nation, 2007 Barclays, Quarterly SME start-up data, Quarter One, 2007 Yellow Pages and London School of Economics Research, September 2006 Under the Radar, Tracking and supporting rural home based business, Live Work Network, July 2005 Home Enterprise – Ideas for Action, Live Work Network, September 2006 Delivering Advantage, The West Midlands Economic Strategy and Action Plan 2004 – 2010 Northwest Regional Economic Strategy 2006 Leading the way, Regional Economic Strategy for North East England 2006 Scottish Enterprise Entrepreneurship Policy The Regional Economic Strategy for Yorkshire & Humber 2006-2015, A Summary A Shared Vision, The regional economic strategy for the East of England The Regional Economic Strategy 2006 – 2016, South East England ‘A flourishing region’ Regional Economic Strategy for the East Midlands Regional Economic Strategy for South West England 2006-2015 Sustaining Success, Developing London’s economy, Economic Development Strategy Cyfenter 2 Development Partnership, Home Enterprise Report, Welsh Assembly Government Global Entrepreneurship Monitor, regional summaries 27 Home Business Report October 2007 Appendix II: About the author Emma Jones is founder of Enterprise Nation, the home business website, and has successfully started two businesses from home offices in London, Manchester and rural Shropshire. Following a career with an international accountancy firm, Emma started her first home based business at the age of 27 and successfully sold it just 15 months after launch. Redbrick Enterprises Ltd was founded in 2002 to advise the public sector on effective homeworking. Spotting a gap in the market to provide information and inspiration to homeworkers, Emma launched Enterprise Nation [www.enterprisenation.com], the home business website, in January 2006. The website is a free resource for people starting and growing a business at home and has a readership of more than 250,000 people. As well as site content, there is also a free fortnightly e-newsletter and podcast. Emma’s first book on how to start a business from home will be available in March 2008. The team at Redbrick Enterprises Ltd work for Enterprise and Regional Development Agencies that are looking to encourage and support home enterprise. The company works with clients to calculate the size and potential of home business in an area, through to developing marketing messages to communicate with home based entrepreneurs. If you would like further details of this service or would like to comment on the report, please contact Emma at emma@enterprisenation.com Redbrick Enterprises Redbrick House • 9 Town Walls • Shrewsbury • SY1 1TW T: 01743 272555 M: 0789 9871698 E: emma@enterprisenation.com