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Half of U.S. Businesses Are Home-Based

But home businesses are small earners and have few employees
  • January 30 2012

Many Americans dream of working for themselves or working from home. It may be no coincidence, then, that about half of all businesses in the latest Survey of Business Owners operate out of someone’s home.

Overall, 51.6 percent of all businesses that responded to the 2007 Survey of Business Owners (whose results were released in 2011) were operated primarily from someone’s home. Broken down by whether or not businesses had employees, 23.8 percent of employer businesses were home-based, and 62.9 percent of non-employer businesses were home-based.

Yet these home-based companies were mostly small or micro businesses. Only 6.9 percent of home-based businesses had $250,000 or more in receipts, while 57.1 percent brought in less than $25,000.

The study also examines the amount of start-up capital that was used by these businesses. About three in 10 (30.6 percent) of first that required start-up capital needed less than $5,000. At the other end of the spectrum, 1.5 percent of the firms needing start-up capital required $1 million or more for this purpose.

Other findings include:

More than half of women-owned businesses (58.2 percent) were home-based; for businesses owned by men, the figure was 49.1 percent.

Most non-minority-owned (54.4 percent) firms \ were home-based, while 46.5 percent of minority-owned firms were home-based.

One in 10 businesses (10.4 percent) was started or acquired by owners who used a credit card to finance the start-up or acquisition of their business. A similar percentage (10.7 percent) financed their start-up or acquisition with a business loan from a bank or financial institution.

Most firms (72.7 percent) reported that sales to individuals accounted for at least 10 percent of their total sales; 1.9 percent of firms reported that sales to the federal government accounted for at least 10 percent of their total sales; 5.2 percent reported that sales to state and local governments accounted for at least 10 percent of total sales; and finally 35.3 percent reported that sales to other businesses and organizations accounted for at least 10 percent of their total sales.

 

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