Motivations of home-based business operators, their support needs and awareness about existing support programs.

• Author: Ali, Shameem
• Position: Report

1. INTRODUCTION

   Micro-businesses operated from home are often ignored in the business literature (Sayers and Monin, 2005) and not considered significant enough by policy makers, who often appear confused about their contribution to the economy and employment (van Gelderren, Sayers and Keen (2008). Small businesses are an essential component of our economy and a large percentage of small businesses (approximately 67% in Victoria) are actually home-based. Governments at both the State and Federal levels realise the importance of small business and are keen to ensure that HBBs are not hindered by an over regulated environment and are supported at the local level. As of June 2004, there were 856,000 home-based businesses across Australia (ABS cat 8127.0). They provide employment to the business operators and their household and family members as well as employing people who do not reside in the operator's home. Over recent years the significance of the economic contribution that home-based businesses make to the economy has been recognised and reflected in government policies and programs.

   There is a wide range of factors which has been associated with the development of HBBs over the last decade. These factors may be summarised as follows:

   * Emerging new technologies making it easier to work from home

   * The Internet providing a channel of distribution conducive to home-based operation

   * The considerable industrial restructuring that has occurred over the last decade, especially downsizing and outsourcing

   * A recognition that certain small businesses can be effectively run from home on a part-time basis, hence supplementing employed incomes

   * Studies by Walker and Webster (2004) and Jay and Schaper (2003) have shown that many of the more recent emerging HBBs are operated by women

   * Many businesses commence at home. As these businesses become established and grow, relocation to commercial premises occurs (Horgan, 2001)

2. LITERATURE REVIEW

   Motivations for starting a new business

   The motivations for starting a business differ across countries and may depend on such factors income levels and employment opportunities. In environments where these conditions apply, business owners are more likely to be motivated by the need to create income and employment for themselves as opposed to independence motives (Benzing, Chu and Kara, 2009). Kuratko, Hornsby and Naffziger (1997) found that business owners were motivated by the need for autonomy and independence but also for family security. With business owners, the need to increase their income and to provide employment opportunities for themselves and their family members (Benzing, Chu and Callanan, 2005) is a strong motivator where social welfare supports programs are lacking.

   Entrepreneurial motives and to some extent the facilitating factors that influence the creation of small businesses, are often evaluated in the context of the labour market. The attractiveness of starting a small business increases when it is difficult to find employment (Mayes and Moir 1990). There are also "pull" factors such as the desire to be self employed and independent and "push" factors such as redundancy or early retirement which lead people to start their own business (Gray, 1990; Krueger et al, 2000, Segal et al, 2005). An Individual's access to resources and opportunities as well as relevant skills and knowledge, which can be obtained through education and experience contribute to new venture creation (Wiklund and Shepherd, 2003, p 1922). The business venture allows operators to gain personal independence and develop their own ideas (Douglas and Shepherd, 2000).

   An individual's decision to start a business is affected by the economic context, the characteristics of the individual's life and career, and the individual's personal disposition (Reynolds, 1991). Individual characteristics, personality and visions interact with significant environmental factor and events resulting in decisions about new venture creation (Greenberger and Sexton, 1988). Gartner (1985) argues that new venture creation is the process of the interaction of the environment, the individual, the business and the entrepreneurial behaviour (entrepreneurial process).

   Support needs of home businesses:

   Walker and Still (2003) found that while home based businesses showed a willingness to expand their operations, very few were using paid consultants and other forms of professional advice. Small business operators generally tend to source business advice from accountants, banks, family members, friends, and to a limited extent government agencies (Breen et al, 2006). Chell and Baines (2000) found that micro-business operators regarded customers as the most important information source and second was other business owners and managers.

   In a study of 1000 cases in Ontario, Brown and Segal (1989) found that lawyers and accountants were the most often consulted and that women were more likely to consult multiple sources of advice at start-up than men. A US study by Nelson (1987) reports that the top four sources of information were networking, accountants, business and professional organisations, and advice of partners. Government agencies were ranked low as a source of business start-up information. Australian studies also report low use of government sources of training and assistance and greater reliance on family, friends and colleagues (Stranger, 2004).

3. AIMS OF THE STUDY

   The purpose of this research was to help develop an understanding of the nature of home based businesses in the City of Hume, such as the range and size of business operations conducted at and from home. Recent research (Breen et al, 2005) has confirmed that the HBB sector is largely an unrecognised and "hidden" sector of business. This feature is not conducive to lifting of the profile of the sector and acknowledging their importance to the economy. A better understanding of the local HBB sector will help the local council to provide appropriate levels of support. Local councils are keen to encourage enhanced outputs from existing businesses and facilitate the creation of new home based operations.

   The understanding of the nature of home based operations and the issues and problems faced by the operators of such businesses will enable informed decisions to be made about the support needs of the sector. At the local level, services for small businesses have generally improved over recent years. If appropriate support services can be targeted at the HBB sector then there is the potential to enhance the contribution of this sector to local and regional economies. Both the Federal and State governments have shown interest in funding support programs over recent years, however there is a need for local research to assist in the efficient allocation of resources.

4. METHODOLOGY

   The study involved two stages. The first stage involved a survey of HBBs in the outer western metropolitan fringe area of Melbourne. A database was constructed using sources such as the local telephone directory, business directories and newspapers advertisements. A survey questionnaire with a reply-paid envelope was mailed to 340 businesses identified in the database. A sample questionnaire is provided in the Appendix. There were 33 questionnaires returned due to incorrect addresses or where the business did not meet the HBB criteria. A total of 54 usable responses were received, generating a response rate of 18%.

   The second stage of the study involved in-depth...