Home business

essentials
A guide for business operators in South Australia

[Link]/smallbusiness
Table of Contents

01 Overview ....................................................................................................... 3
02 Why operate a business from home? ......................................................... 4
03 Do you have what it takes?.......................................................................... 5
04 Is your home suitable? ................................................................................ 6
05 Insurances .................................................................................................... 9
06 Handy tips ................................................................................................... 10
07 Summary ..................................................................................................... 12
08 Notes ........................................................................................................... 13

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01 Overview
What do you think owning your own business means? Is it all the benefits of
employment without the restrictions, time off when it suits, no bureaucracy to
hassle you, no child-care problems and no commuting? You might think it offers
the best of both worlds.

While running a business from home offers many attractions, to be successful it

is not only you who will need to stand up to the rigours of being your own boss. A
home-based business is likely to call for changes to family routine, support from
family members and a host of other considerations. Detailed attention to planning
is a must.

Readers are advised:

• The purpose of this guide is to provide general introductory information.
• The guide does not purport to contain all the information that would be
relevant to any particular business opportunity.
• The guide is provided to interested persons on the basis that they will be
responsible for making their own assessment of that opportunity with the
assistance of the information provided.
• All figures contained in the guide should be regarded as estimates only based
on general samples and may be subject to error.
• The information in the guide should not be relied upon in substitution for
professional advice and individual investigation.
• Persons interested in pursuing any particular business opportunity are
strongly advised to fully inform themselves by taking professional advice as to
the extent of their rights and obligations—particularly in relation to any
proposed investment.
• The guide is provided subject to the terms of the formal disclaimer, which
appears on the last page.

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02 Why operate a business from home?
Owning a home-based business is, for the most part, just like owning any other
business. Regardless of location, every business must serve a market for its
products and services, generate sufficient sales to cover operating expenses,
and make a profit. The level of profit must be sufficient to reward the business
owner’s time, repay any loans, accumulate capital for expansion, reward the
capital invested and pay any taxes applicable to net income. Just like every
business, you must ensure that you have all the necessary fundamentals in place
e.g. registering your business, organising licences and permits, financial controls,
business planning, records management, marketing etc. (refer to the
Department of State Development’s Start Your Own Business Workbook.

Running a business from home offers many advantages. You can cut overheads,
avoid travelling to and from work, enjoy a pleasant working environment,
conserve capital, gain flexibility, start part-time while bringing up small children,
learn the ropes with a low level of risk and service customers outside normal
business hours.

But there are pitfalls. Without colleagues and peer support, you can experience
feelings of isolation and may operate in isolation from other business contacts
and so be unaware of market changes, legislative changes, etc. Also, you cannot
go home to get away from work, so in a sense, you never leave work. Business
operations can often impact on the family and family interruptions can intrude into
time set aside for the business. Friends, used to you being ‘off work’ while at
home, will need re-education. It can sometimes be difficult to look professional,
especially with high-profile clients, and lack of space can present a problem as
the business grows.

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03 Do you have what it takes?
The following self-assessment checklist may help you to assess your capacity to
cope with the demands of a home-based business.

CHECKPOINT Y N NOTES

Why do I want to run a business from

home?

What problems are likely to occur in my

family and personal circumstances if I
operate a business from home?

How determined am I to succeed,

especially if relatives and friends do not
seem to share my commitment?

Am I strong, emotionally and

physically?

How effective am I at organising

myself, my work and my domestic life?

When the going gets tough, do I get

going in the face of market downturns,
organisational calamities and the
uncompromising demands of family
members?

Can I maintain concentration against a

background of domestic chaos?

How resilient am I to physical illness

and emotional stress, mindful that there
is no paid sick leave or relief staff to
take over?

Do I have a thick skin to protect me

from criticism from all sides?

Am I highly disciplined in my attitude

and work ethic?

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04 Is your home suitable?
LEGISLATION AND RULES FOR HOME BUSINESSES
A home base is not suitable for every type of business. Requirements such as
machinery, traffic congestion and noise or odour problems may upset
neighbours. You should consider whether you have suitable space and facilities
in your home.

Generally, most councils allow a “home activity”, but at an early stage, check
their regulations and requirements to determine whether your proposed manner
of operation is acceptable.

Visit the Local Government Association (LGA) of South Australia website

([Link]/[Link] ). SA Councils work together through the Local
Government Association. Home Business owners can use this website to find
and telephone the local council where their business is located to determine the
home business legislation and rules with which they must comply.

If you are renting the house, you may need permission from the owners.

Before you approach your local council for permission to use your home as a
business premise, be aware of the following points:

ZONING CONTROLS
The Development Act controls land use in a designated area. Local councils
have the responsibility for deciding whether a proposed land use complies with
the Act. The regulations provide for the creation of different land use zones and
the classification of land uses into groups. A council may decide whether a land
use is in compliance, or not in compliance within a particular zone.

HOME ACTIVITIES
Manufacturing, trading and office uses are not generally permitted in almost all
residential zones. There are provisions for some business uses to be classified
as a home activity and can be carried on with council consent.

Business use must not have an adverse impact on the local environment and the
general surrounding area. In South Australia a business operating at a residential
property must not:
• Employ more than one person over and above the owners of the property and
business.
• Occupy more than 30 square metres.
• Use machinery drawing more than 0.4 kilowatts.
• Impose greater load on utilities than would be the case for a residence.
• Create any noise or nuisance.
• Generate more than normal vehicle traffic in a residential street.
• Display a sign without consent of the local council.
• Display goods for sale outside the house.
• Involve the use and parking of a vehicle greater than three tonnes tare weight.

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04 Is your home suitable?
Home activities are classed as a hobby, craftwork or similar activity that the
resident may carry out without causing offence or annoyance to other nearby
residents. An example is an online business.

Permission to engage in a home activity should not be seen as consent to

conduct a backyard industry or business in the home.

BREACH OF REGULATIONS
Local councils are given clear rights and criteria for prosecuting breaches of
zoning regulations. No business activities should be carried out without council
approval. If you are unsure if your proposed home business activity is permitted
as a home activity then you should consult your local council.

GAINING COUNCIL APPROVAL

To gain council approval to use your home for business purposes, you should
write to them with details of your business and state clearly how it meets the
criteria given for a home activity.

If the home activity qualifications cannot be met, it may be difficult to receive

approval to operate a commercial business within a residential zone.

Contact your local council to determine the home business legislation and rules
with which you must comply and consult a business adviser, accountant or
lawyer.

CHECKPOINT Y N ACTIONS TO TAKE

Is the location of my home easy for a

new client to find?

Is the nature of my business permitted

in the particular council zone?

Do I need any council permits to carry

out alterations or additions to my
home?

Do I need signage outside my home?

Is it possible to set aside a workspace

of adequate size in my home,
specifically for my business?

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04 Is your home suitable?
CHECKPOINT…CONTINUED Y N ACTIONS TO TAKE

Is the area chosen removed from

family activities?

Do I have adequate storage space?

Do I need office equipment such as

computer, photocopier and facsimile
machine?

Does my business have a requirement

for natural light, extra lighting or
additional power?

Is there an appropriate reception area

for clients?

Is a separate line for business

telephone, fax or computer modem
required? Would a mobile telephone
service be a viable option?

Is there adequate parking space for

suppliers, clients and staff?

Does provision have to be made for a

large letterbox for business mail?

Is there a separate entrance for

clients?

Do I require office furniture (new or

second-hand) such as desk, chair,
filing cabinets etc.?

Will I be able to keep my home tidy

during business hours?

Will the ‘business’ aspect of my home

appear professional to clients?

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05 Insurances
You need adequate insurance cover when establishing a home-based business.
The insurance required will depend largely on the type of business you operate,
whether you employ staff and whether you have any special equipment.

Be aware that household insurance will not cover business activities —

customers coming to your home. Check with your insurer to see if any
changes are required to your policy.

The following checklist will give you a few thought starters, but it is best to
consult with an insurance broker about your specific needs.

CHECKPOINT NOTES

Personal accident and sickness cover?

Life assurance?

Workers compensation cover? It is

compulsory if you employ staff, or if
you run your business as a company
and you are an employee.

Loss of profits insurance? It may

provide you with an income should the
business temporarily cease due to fire
or other accident.

Public liability insurance against claims

for injury, death or damage by persons
other than family members or
employees?

Cover for property, assets and

equipment against fire, burglary etc.?
(As a general rule, household
insurance does not cover business
activities).

Personal liability insurance against

claims for damage by clients to whom
you have sold something or provided
paid advice?

Other?

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06 Handy tips
FEASIBILITY STUDY
As with any business before you start, it is important to undertake a basic
feasibility study:
• Is there a sustainable market at a price sufficient to provide an adequate
profit?
• Can you secure the funds needed to establish and sustain the business?
• What level of profit is your target?
• When will cash flows be substantially positive?

If the numbers look promising it will be important to extend the study into a
written business plan that looks to project sales, expenses and profits over the
first three years of the business.

The plan will take account of the fact that you will be operating the business at, or
from, home.

A word of warning! Many people think that operating a business at home means
lower overheads and therefore the selling price of goods and services can be
lower than currently paid by the market.

In preparing a feasibility study and business plan, talk with a business

adviser to ensure you include all the possible costs of business operation
and determine overheads accurately.

EFFECTIVE NETWORKING
It is important to keep up-to-date:
• Join your local industry network. Contact your local council for details of your
nearest network.
• Participate in networking and business support programs and workshops (visit
the Events for small business section of the Department of State
Development Small Business website:
[Link]/smallbusiness
• Subscribe to industry magazines and to home business websites.
• Consider using a co-working facility to plug into a network, make connections,
spark innovation with others and to transition your business (visit the
StartupAdelaide website ([Link] ) for details of co-
working spaces within SA).

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06 Handy tips
DAILY BUSINESS OPERATION
• ‘Go to work’ at a set time each day and shut out any household activities.
• Where possible, connect a separate phone/fax line for your business.
• Establish a separate business email address from personal emails.
• Establish a simple but effective book-keeping system and keep your financial
accounts up to date.
• Establish a firm customer payments policy.
• Payment by credit card is preferable to extending credit to your customers.

ADVICE AND ASSISTANCE

• Establish a good relationship with an accountant for advice on records, tax
issues and business structure.
• Contact your local business advisory centre for information, and the
opportunity for face-to face discussion with an experienced adviser, before
you start and when the business is in operation. Visit the Getting advice
section of the Department of State Development Small Business website
to find your nearest centre in metropolitan and regional South Australia:
[Link]/smallbusiness
• Attend business management education programs to improve management
skills and to keep up-to-date with business systems and practices.

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07 Summary

1 Be fully organised from the outset.

Be practical. Is your house really suited to conducting

2 a business from home?

Is your family ready for it?

3 Is it prepared to support you through thick and thin?

4 Seek approval from your local council.

5 Persist to achieve your objectives.

Start networking. Isolation and inability to market

6 effectively are two weaknesses of home-based
businesses.

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08 Notes

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Department of State Development
GPO Box 320
Adelaide SA 5001

T: +61 8 8226 3821

E: DSDSmallBusinessStrategy@[Link]
W: [Link]/smallbusiness

DISCLAIMER
The Government of South Australia gives no warranty and makes no
representation, whether express or implied, as to the accuracy of information
contained within this guide or the suitability of the information for any purpose.
Any use of the information contained in this guide (whether authorised or not) is
at the users’ sole risk and the Government of South Australia disclaims
responsibility for any loss or damage incurred as a result of such use. The
information is provided solely on the basis that users of the information will make
their own assessment of the accuracy of the information and users are advised to
verify all information contained within this document. Any information about the
law in Australia or South Australia is provided as general information only and is
not legal advice. This guide is a starting point only and is not a substitute for legal
or professional advice. While the Department has attempted to ensure the
information is accurate at the time of publishing, no responsibility will be
accepted for any errors or omissions and the Government of South Australia will
not be liable for any loss or damage incurred by any person as a consequence of
any use, reference or reliance on this information. Any such use, reference or
reliance shall be at the sole risk of that person who should seek their own legal
and/or professional advice if required.

COPYRIGHT
Produced by the South Australian Government
© March 2015

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