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5 Reasons why Home-Based Businesses Fail

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Top 5 Reasons Home-based Businesses fail

Having started several businesses from home, I dare say that I am some kind of an expert on the subject. In 2013, there are 28 million small businesses in the US, of which 52% of them are home-based. Approximately 75% of all U.S. businesses are ‘non-employer’ businesses, meaning that there are no additional employees other than you.

In other words, small business is ‘big’ business nowadays, and there is no smaller business than home- based businesses.

There are many reasons people choose to start a home-based business: No commute, low startup costs, comfort and convenience, amongst many other reasons.


However, even with all these advantages, most small businesses, including home-based businesses, fail within the first 5 years. From my 20 years of experiences dealing not only with my own business, but also as a business and entrepreneurial consultant, I came up with a list of 5 reasons why home-based businesses would fail:

  1. Clutter –

    while your home may be comfortable, most American families that way too much clutter inside their homes. Whether you believe in Feng Shui or not, your work place has to flow freely. Imagine you are stuck inside a closet full of books, newspaper, and magazines. Can you still focus on your work? Can you even find your desk?

To make things even worse, if you decide to take your work to bed, you tend to leave your notes, books, and other work-related stuff on your bed. And while you sleep, you kept getting nightmares about unfinished work, forgotten tasks and you get poor quality sleep.

My suggestion is to create a dedicated work space, ideally a room with a door, bright windows and lighting, and quiet (away from street noise) that will allow you to focus, to let your creativity juices flow, and to be your most productive self. For a more comprehensive guide on setting up your home office, you can download my ebook: Setting up your home office, for free.

  1. Children and Pets


If you think clutter is bad, moving things are worse. I mean, kids and pets. Personally, I have 4 cats at home, ages from 1 to 13 (really young to really old). Good thing is that my cats tend to sleep a lot, which gives me the quietness and privacy that I needed to get my work done.


Kids, however, cannot be handled the same way. You can’t exactly put your kids to take 4 hour naps in the morning and another one in the afternoon. Kids need constant attention, and, honestly, they are happy that you are home. Kids want to spend time with you, and they want to help. So the best way to keep them busy is to give them something to do. Get them to lick envelops, organize your mail, dust your shelves. By asking them to help your business, your children feel like they are truly contributing to the business as well, and they tend to understand when you need time away from them to do some work.

  1. Comfort

I did mention that comfort is a good thing. However, it is also bad for business. The more comfortable your work environment is, the more tempting it is to just ‘give in’ to the comfort and let go of your work. Personally, I find it best to get out of my PJs. While it is comfortable, it does not put me into the right mindset for work.

I also stay away from my bed or my couch. Both tends to drag me back to sleep or to watch TV, both things that I love to do and should not do during work hours. The rule of thumb is, if there’s something that you would never do while you are at work, don’t do it at home while you are working on your business. Your work hours may be different, but your work ethics and habits should be the same.

  1. Distractions

Your home may contain mountains of distraction. If you are a clean freak like me, cleaning the house tends to take over as the must-do-task of the day. Or, if you enjoy watching TV, that giant box in front of the couch is like siren’s call that drags you into the bottomless pit of TV watching.

The kitchen is also constantly calling you. It needs to be cleaned, you need to check the fridge to see what’s for lunch and dinner, you need to wash the dishes, take out the clean ones and put them back, the snacks needs to be eaten. If you have a garden at the back, your plants will call you all day too, to look at them, trim them, water them, take care of them. Swimming pool? Don’t even go there.

  1. Supervision

While home-based businesses are great, most people lack the discipline to manage themselves. In other words, you are your own BAD BOSS. You let yourself slide, you miss your own deadlines and you don’t need to be answer to anyone. You take hours or even days off work, not doing anything productive and you get away with it. From my research, the lack of supervision is the number one cause of failure for home-based businesses. Your business becomes a hobby.


If you truly believe that you can and want to operate a home-based business, don’t fall into the traps that I mentioned above. Start here by downloading and reading my book: “Setting up your home office”. This book tells you everything you need to create a workspace that you will love, that will allow your creativity to flow freely and 10X your productivity.


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