South-Western - Management  
At-Home Enterprises Seek Elbow Room
Topic Entrepreneurship
Key Words entrepreneurship, expansion, risk and reward
InfoTrac Reference A138512098
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News Story

The number of self-employed people in the U.S. has grown to seven million, and those with successful businesses need to expand at some point. Entrepreneurs move from home offices into commercial real estate for several reasons including: home offices with cramped conditions; requirement of a quieter place to meet with clients; and running out of space to store inventory. A recent survey found that 12 percent of those with home-based businesses planed to move into commercial space within two years.

With expansion comes risk, which is especially significant when the owner is paying all the bills. There are some solutions, though, such as one entrepreneur who paid a year’s worth of rent in one sum in exchange for a sizeable discount. Another business owner made the transition gradually by subleasing an office for a few hours a week before renting her own space. Researchers also note that some businesses are better suited for a home environment, especially if there is not much inventory, and billing and scheduling can be done at home. Additionally, many entrepreneurs act too quickly and sign a lease without obtaining legal review. They also don’t consider day-to-day expenses such as phone and Internet service, furniture and supplies, heating and air-conditioning, electricity, and possibly parking.

However, the advantages to leasing a professional space are numerous. For some entrepreneurs, it’s the only way they will ever expand and grow more profitable. Office space also gives a small business more credibility, even though many home-based businesses are extremely organized and efficient. In a Small Business Digest Survey, entrepreneurs listed lack of space as the primary reason for moving their business. Other factors include home distractions and neighbor complaints about increased activity in the neighborhood caused by business operations.

Sometimes a professional move is simply inevitable, which was the case of one entrepreneur who wasn’t prepared for the increase in business and did not have a detailed business plan. But since she chose to expand, her revenue has greatly increased, and she recently made a contract stipulation with the property manager that allows her to move into a larger space without paying a penalty. As with any type of venture, entrepreneurs must be as prepared for growth as they are for slow periods.

Questions
1.

Research entrepreneurs in your text. Define the term and explain why entrepreneurship is considered a “firm-level strategy”?

2.

What are the five dimensions that characterize entrepreneurial orientation? Is it necessary to possess all five traits before becoming an entrepreneur?

Source “At-Home Enterprises Seek Elbow Room,” The New York Times Online. Nov. 10, 2005.
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