Home-based businesses employ more people in the United States than venture-capital backed companies.
This surprising fact — along with a number of other myth-busting facts — comes from a new report titled “Homepreneurs: A Vital Economic Force.” The report is culled from the recent Network Solutions Small Business Success Index (SBSI) survey, commissioned by Network Solutions, LLC and the University of Maryland’s Robert H. Smith School of Business, along with some other federally-available data.
Successful homepreneurs are viable home-based businesses that provide at least 50% of their overall household income. Roughly 6.6 million home-based businesses fit the homepreneur description, yet according to the report, these businesses are:
“… the Rodney Dangerfields of the small business world, rarely regarded as significant players in the U.S. economy. Instead, the common perception is that home-based businesses are merely hobbies or side businesses contributing little to the business owner’s income or the overall economy.”
Steve King — one of the Small Business Trends Experts and principal at Emergent Research — authored the report. And what he points out about these “homepreneurs” is sure to challenge long-held biases.
“Homepreneurs are operating significant businesses that are as successful as non-home based businesses,” states Emergent’s report. “Even more noteworthy, their home-based businesses are important contributors to employment and the overall U.S. economy.”
Steve commented to me:
“I was very surprised to see that the home-based business sector employs more people than venture-capital backed companies. I was also surprised to see that home-based businesses scored as well on the Network Solutions Small Business Success Index as firms located outside the home. It turns out size and physical location aren’t predictors of competitiveness or success.”
The Small Business Success Index measures small business competitiveness on a scale from 1-100 along six key functional dimensions: capital access, marketing and innovation, work force, customer service, computer technology and compliance. Home-based businesses in the study scored within one point of non-home-based businesses in all six categories.
Here are some other myths this report puts to rest:
Myth: Home-based entrepreneurs are part-timers.
- Reality: The vast majority-75% – work full-time in their businesses.
Myth: Home-based businesses are short-lived.
- Reality: Nearly half of the homepreneurs in the survey had been in business for more than 15 years. Just 20% had been in business for less than five years.
Myth: Home-based entrepreneurs are solo entrepreneurs.
- Reality: Half of all homepreneurs have employees. The average number is two (including the owner), but 39% have between two and five , and 10% have more than five. Based on these numbers, Emergent Research estimates home-based businesses employ some 13.2 million Americans when you include their owners.
Myth: Home-based business owners don’t make much money.
- Reality: There are some 6.6 million home-based businesses that generate at least 50% of the owner’s total household income. Home-based businesses also account for about 34% of all small businesses that provide more than half of the owner’s household income. As for dollar figures, 35% of home-based businesses generate more than $125,000 in revenue; 8% make more than $500,000 annually.
“Due to everything from advances in technology to demographic and economic shifts, the number of homepreneurs is likely to surge over the next few years,” the study concludes. That makes now a better time than ever to fully understand the impact of these businesses on our economy.
To read the full study and find out more about home-based entrepreneurs, visit the Network Solutions Small Business Success Index site. Or, download the PDF report on homepreneurs here.