New report: Half of businesses now based at home but ignored by policymakers

Half of all British businesses are now based at home and one in 10 domestic properties is home to a business, a new study by Enterprise Nation has found, but they are not recognised as a sector or counted in official figures.

The Home Business Report 2016, conducted in association with Direct Line for Business and PC World Business, found that despite the trend, 2.75m home-based firms are often excluded from advice and support and their contribution to the economy remains largely unseen and unquantified.

The regions with the highest concentration of home-based businesses are the South East (21%), Greater London (17.5%), the South West (14%) West Midlands (11%), Yorkshire and Humber (8%) and East Midlands (6%).

Those running home-based firms were found to be most-likely aged between 35 - 54 (64%), followed by 55 - 64 (18%) and 25 - 34 (14%).

A huge 76% of homepreneurs have never been involved in running a business before, which suggests there is a need to provide early-stage support to individuals that go under the wire in terms of what's on offer.

Around 67% of respondents said they spend more time and money in their local economy as a result of working from home which equates to around £40bn for local economies.

Meanwhile 44% said they know between one and five other local firms also working from home with 12% knowing more than 10.

Home based business owners are an optimistic bunch, with 89% expecting to see growth in the next 12 months. A quarter said they were turning over between nothing and £5,000, while 23% put the figure between £10,000 and £30,000. One in 10 have a turnover in excess of £100,000.

Based on the report, Enterprise Nation has four recommendations to support home businesses:

1. Compilation of home business census

We call on the Office for National Statistics to carry out a home business census to secure up-to-date statistics on the number and activity of home based businesses. This will build on work to date of the Inter-Departmental Business Register which looks at data on 2.1 million small businesses, but does not include 'businesses without employees or below the tax threshold' which ignores the majority of businesses operated from home.

2. Local Enterprise Partnership recognition and support for space

In a review of 10 LEP websites, it becomes clear that home business is not recognised as a sector in its own right by Local Enterprise Partnerships and Growth Hubs. We would like to see this change. In supporting the build-out of co-working, temporary retail and maker spaces, we feel this should be accompanied with particular promotion to the home business sector, the exact businesses that are looking for their next phase of space from which to prosper and grow.

3. Refine definitions of growth to match modern reality

We call on central and local government to redefine growth in an age where today's small business owner is more likely to outsource and subcontract work, as opposed to hiring staff. Businesses should be valued based not just on the number of people on payroll, but on the self-employment opportunities they are creating ie generating new wealth that circulates to other self-employed professionals.

4. Plug in business support to co-working spaces

To fully realise the growth ambitions of home-based businesses, it's essential that they have access to business support; both online and off. As they move into co-working and shared spaces, we feel there's potential to plug in business support via partnerships with space providers. The space provider benefits as the health of their tenant businesses has a direct correlation to the stability of rental income. As tenants continue to grow, so does the need for space.

For the full findings and analysis, download the report by filling in the form below.

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