Tapping into the growth potential of home-based businesses
What do Amazon, Apple, Microsoft, and even Disney have in common apart from being some of the world’s most well-known companies? The answer, they all started as small-time home-based businesses that grew to dominate global markets. The main takeaway, never underestimate the potential of a home-based business.
What is a home-based business?
Simply put, a home-based business is a business of any size and type that is based primarily in the founder’s home. To get started, all you need is to translate your marketable idea into a feasible business plan and begin offering your services or products. In today’s digitally connected landscape, reaching potential customers has never been more accessible, which enables home-based business owners to exponentially expand their outreach and engage in economic activity in local or wide-scale national markets.
To put this in perspective, there are nearly 15 million home-based businesses in the U.S. making up fifty percent of all enterprises and sixty-nine percent of startups in the country. While in the UK there are an estimated 470,000 home-based companies and reports indicate that these entities have the potential to generate over three billion pounds profit to the country’s economy.
While there aren’t any numbers to indicate the scope of home-based businesses in the MENA region, MSMEs are the dominant type of enterprises across the region. An estimated nineteen to twenty-three million MSMEs are encompassing both the formal and informal sectors, which translates into eighty to ninety percent of the total business activity in most countries. Suffice to say, when it comes to regional micro or small enterprises, owners unable to pay the costs for renting out a commercial space will base their business straight from their home.
Biggest trends in the world of home-businesses
First off, the appeal of home-based business cannot be overstated, especially in the context of COVID-19. As a result, innovative demand-driven enterprises that embrace the world of digital technologies is a strategic entryway for those looking to explore the potential of setting up shop from home.
Just Business reports on some of the fastest-growing trends in this respect include graphic design, copywriting, content writing, photography, editing and proofreading, social media management, and digital marketing consultation services. In the world of digital technologies, opportunities are endless and include website design, coding, and app development. Educational services like tutoring and business support services, including accounting, business coaching, event planning, and remote customer service, are also growing in demand.
Digital technologies bringing the world closer together
Ultimately, today’s global community has become a very interconnected place, facilitated by the dominance of digital technologies home-based businesses are not restricted to their local economic ecosystem but can grasp opportunities beyond borders. With international marketplaces like Amazon, Etsy, and even eBay, home-based businesses can market their products and reach potential customers from anywhere.
Social media giants like Facebook and Instagram have also provided strategic platforms for smaller home-based businesses to expand their outreach. Through these mediums, business owners can market their products like crafts or baked goods, while service providers within the realm of IT, for example, can connect and collaborate with clients on an expansive scale.
To better tap into external markets it is essential to access value chains. This allows home-based businesses to have a better understanding of the industry they are competing in and receive input from suppliers and end-market buyers. Through the value chain, smaller enterprises can also access and contribute to support markets that provide a variety of services that range from the technical, business, and financial side of operations.
Overall, accessing the value chain will help home-based businesses compete in global markets and deliver a higher quality product/service more efficiently in demand-driven markets.
The emergence of COVID-19 and the resurgence of remote work
The human cost of COVID-19 has been devastating, to say the least. With over 51 million cases, 1.2 million deaths, and regular lockdowns imposed on the national level, this global pandemic has virtually touched the lives of most, if not all people, around the world. As a result of social distancing measures, and again city or nationwide lockdowns, the global economy has been negatively impacted. In fact, the World Bank forecasts a 5.2 percent contraction in global GDP in 2020, which will bring on one of the most severe global recessions in decades.
And businesses have been hit hard, with many forced to close up shop, especially in developing countries where demand is waning due to constricted spending power of individuals and organizations alike. Within this context, remote work has become the new normal with employees and small business owners across the public and private sector forced to work from home. As a result, innovative home-based businesses that offer digital solutions have the potential to seize new opportunities, both regionally and internationally.
In the MENA region, COVID-19 has offset decades of development, economic and otherwise, impacting the lives of millions. According to a recent UN report, the region’s economy is expected to shrink by at least 12 percent, with an estimated GDP loss of 152 billion USD. In addition to the 14.3 million individuals contending with unemployment, another 17 million full-time jobs are expected to be affected in the second quarter of 2020, which may double these already staggering rates. To address these concerns, the same report indicates that this is an opportune moment to rebuild the region and create incentives and policies that support equitable development on a cross-sectoral level. For example, strategies that support the integration of vulnerable groups like women and youth into the job market.
While foreign direct investments are projected to drop by 45 percent,, investments that are coming into the region need to be reallocated to promote the viability of MSMEs, which encompasses home-based businesses to strengthen local economies and protect the most vulnerable from poverty. This will help home-based businesses increase their standing in local markets and improve their access to value chains needed to compete internationally.
Our efforts to support home-based businesses
At MENACatalyst, one of our number one priorities is to strengthen the resilience of local MSMEs, which includes startups at multiple stages, as well as up-and-coming home-based businesses run by vulnerable socio-economic groups. Our approach brings together innovators, founders, and enablers to promote the creation of new and decent jobs as well as improved access to essential support services to thrive in the labor market. MSMEs and home-based businesses are the backbone of many economies throughout the developing world, especially in the MENA region. As a result, we provide several interventions to strengthen the viability of these enterprises led by entrepreneurs as well as more marginalized socio-economic groups such as women and youth.
Our latest intervention was focused on marginalized women starting home-based businesses of their own in the Palestinian city of Hebron. For example, Enaam Abu Sharrar joined the program to gain the strategic support and tools to translate her idea for a small business into a reality. Fast forward to today, MENACatalyst helped Enaam launch the one of a kind Stevia Sweets, a small business specialized in dietary friendly confectionery and baked goods which has a growing following on Instagram and Facebook. In order to continue to achieve sustainability, MENACatalyst continues to work with Enaam and offers her business services and access to professionals and local markets she needs to succeed.
Ultimately, as COVID-19 continues to transform the way the world does business, remote work has fast become the norm in today’s unprecedented times. Smaller and home-based businesses that vie to compete in more sustainable and high-impact international markets must embrace the standing power of digital technologies and solutions. This will allow enterprises to better offer innovative digital-based services and/or in-demand products to international and regional markets.
Despite this, it cannot be overstated the importance of promoting locally made in national markets, to create a culture that values home-grown products and services rather than relying on costly external imports. To do so public and private sector interests need to coincide to create policies conducive to supporting small-scale home-based businesses to improve their survival and sustainability power. The key here is leveraging the power of the digital world to create more viable, and just as importantly, visible enterprises based out of the owners' home, wherever that may be.