When you work for yourself, being in the right place at the right time can create the best opportunities. But how can you put yourself in the right place when you are restricted to a home office every day? On the surface a home office may seem like a cheap option, but the cost of missed opportunity can often outweigh the savings.
Whether you already work for yourself or are thinking of establishing a home office, the savings of working from home are instantly appealing. But where you might save on things like commuting, you will still have to shell out for quality internet, office equipment, printing, increased electricity bills and maintenance. And if you decide to take over the spare room, you’ll be sacrificing the personal use of that room or its potential to generate revenue through rent or even Airbnb.
To help you decide whether a home office is right for you, we have weighed up the various costs of running a business from home.
THE TANGIBLE COSTS OF WORKING FROM HOME
Depending on where you live and how much you spend on things such as electricity and printing, the costs of a home office do add up. Most freelancers simply absorb them into their living expenses without considering how much working from home is really costing them. If you have slipped into this habit, it may be worthwhile going through your accounts and expenses to work out what you are spending. Include utilities, office furniture and even the lost revenue from your spare room in these calculations.
THE INTANGIBLE COSTS OF WORKING FROM HOME
While you can easily calculate the cost of extra electricity and all the coffees you drank while working at your local cafe, there are other expenses associated with working from home that are slightly more difficult to work out. A large portion of people who work from experience issues with productivity and isolation, both of which lower your output and cost you money in lost revenue.
For example, a freelancer with an hourly rate of $70 has the potential to earn $560 in an eight-hour workday. Let’s say they spend two hours on admin tasks, so this figure becomes $420. But if the freelancer has a needy pet at home, distracting family members or housemates, or simply a lack of discipline for focused work, they may lose an extra two hours of productivity each day. That leaves them with just four billable hours of work and a grand total of $280, which means that the home office is costing our freelancer $140 per day in lost productivity.
Over a year, that $140 per day adds up to $33,600 (we’ve accounted for four weeks of holiday in this calculation), and that’s before you have even paid your other office expenses.
THE COST OF MISSED OPPORTUNITY
As we mentioned before, there is a lot to be said for being in the right place at the right time, but that’s not always easy when you spend your days at home. This makes it harder to meet other professionals and build your network, and to impress clients when meeting in cafes. Without these benefits, it becomes difficult to generate referrals and find businesses to work with.
The cost is even more difficult to calculate, as it’s almost impossible to know what opportunities you are missing out on.
SO HOW CAN YOU REDUCE HOME OFFICE COSTS?
When you work for yourself, there are certain costs that you need to account for. And in terms of outlay, working from home is one of the cheapest options around. As a result, your means of reducing costs are most likely limited to turning off the air-conditioner on summer days, cutting back on printing and not going to the cafe as much.
If, however, you feel that your income could do with a shot in the arm, you may want to think about investing in office space. While this won’t reduce your tangible expenses, it will help you to increase your productivity (and earning capacity) and to overcome the costs of missed opportunity.
Traditional office space does come with expensive overheads and fixed contracts, but coworking spaces are a cheaper and more flexible alternative. Expenses such as printing, internet, tea, coffee, electricity, meeting room hire and office furniture are all included into weekly fee of all members, making it a much more feasible option. Your membership fees are also tax deductible – saving you cash come June 30.
Coworking on the Sunshine Coast has a number of other benefits too, including access to a wider business network, a dedicated space, 24/7 access, for focused work and professional facilities for meeting clients. All of these elements help you to grow your earnings and build a strong reputation amongst both peers and clients. So while you may not be able to substantially reduce the costs of working from home, maybe it’s time to change the way you think about your business costs. By spending money wisely, you can increase your chances of success.
YOUR FREE COWORKING TRIAL
The cost of our membership is just $35 per day (give or take a few cents). If you want to experience the financial benefits of a coworking investment, you can try Inbox for free. Register to claim your complimentary trial.