Like emigrants setting sail for a land of golden opportunity, millions of Americans launched home offices in the 1990s. However, many have found that the reality doesn't live up to the promise. The dawn of the 21st century is bringing yet another shift in the ongoing quest for the ideal work situation.

Sidebar: Tale of an ex-HOW (Home-Office Worker)

They're sitting in comfortable sweats at their computer monitors. Hot, steaming coffee lies within reach, as does all the technology imaginable -- multiple-line phone systems, fax machines, copiers, color printers, modems, and CD readers. They've got plenty of business, and things are running smoothly. But something's wrong. No one's there to share the voyage, and the situation falls far short of Nirvana.

In home offices around the country, a number of problems are surfacing. Many home-office workers feel as though they're working in a vacuum. They feel isolated and struggle with a perception that they're not quite "legit." They lament the loss of support staff, employer-provided educational opportunities, health insurance, pension plans, and paid vacation time. They scramble to find suitable places to meet with clients.

Those who run businesses from home also run the risks of running into zoning violations and IRS audits. They may also have trouble keeping work hours under control, not to mention the difficulties associated with keeping family life and its inherent intrusions at bay. In other words, the flexibility and freedom that come with a home office have their down sides. As a result of this disillusionment, many home-based workers are seeking another alternative. Some may return to the rat race they left behind. But others are seeking yet another way. In the process, they are creating a growing diversity in the officing of American workers.

Pursuing the Dream

Approximately 30 million Americans now work at home at least some of the time. As many as 8,000 people a day join the home-working movement, claims the American Home Business Association. More than four in ten Americans say that owning their own business is something they want to do, according to Roper Starch Worldwide of New York City. This share is highest among those aged 18 to 29, at 63 percent.

The work-at-home market, as defined by a leading market research and consulting firm, contains two major segments: income-generating home-office households and corporate home-office households. The income-producing work-at-home households include "primary self-employed and part-time self-employed." Corporate home-office households include "after-hours workers" who bring work home but are not paid extra for doing so, and telecommuters who work at home but are officed elsewhere.

Typical home workers of either type have been and remain distinctive. Most are married, in their 30s or 40s, and college-educated. This demographic profile is decidedly linked with the professional work they do. Even in a so-called information economy, most people don't have the kinds of jobs that they can do exclusively or even mostly from a home base.

What numbers fail to tell is why people have chosen a home-office setting. For some, it hasn't been a first choice but a fallback. For others, it's temporary until business gets off the ground. And for others, it's a long-term lifestyle commitment. Understanding the motivations of home-based workers can shed light on their needs. It might also explain why some are deciding to give it up. Corporate Refugees are home-office workers who were ". . . laid off, reduced-in-force, downsized, rightsized, outsourced, bought out, or fed up with corporate life," according to Dixie Darr, editor and publisher of The Accidental Entrepreneur. In the last two years, 9.4 million Americans became displaced workers. Approximately one in five will end up self-employed, at least for a time.

For Dabblers, working at home is just beyond a hobby. They may be retired and not quite ready for the idea of retirement, or employed and toying with the idea of a home-based business. Some are teachers and corporate workers who moonlight on the side. In 1996, 6 percent of American workers had two or more jobs, according to the Bureau of Labor Statistics. The majority of multiple jobholders have a full-time and part-time job or two part-time jobs. Some do the same type of work on their side jobs as in their primary jobs. Others pursue things closer to their heart if their "day" job doesn't allow it. Most moonlighters don't work at home, but some do. Home-based Entrepreneurs perhaps best exemplify the most traditional vision of what home-based work is. These people have deliberately chosen to launch a home-based business to realize their entrepreneurial dream. They may or may not stay there. Nesters work at home because family is a high priority. This category includes entrepreneurs who prefer not to leave family for work. Family businesses also fall into this segment.

Techies are "plugged in" and able to "virtual office" anywhere via computers, modems, and networks. Novelty may play a part in their motivation. These workers may work at home in part because they can. Similar to Techies, Telecommuters work from home because they can. They may be less fascinated by the technology, but they have no qualms about taking advantage of it. They are in one place and their employer is in another, but that doesn't matter. Powerful laptop computers that offer off-site access to company networks enable many corporate employees to telecommute part-time. About 7 million Americans did some telecommuting in 1996. Some places encourage telecommuting. In California, where traffic congestion and pollution is a big problem, organizations like RIDES for Bay Area Commuters even offer incentives to keep people at home. Although the San Francisco-based nonprofit primarily encourages workers to carpool and use public transportation, it linked up with Pacific Bell last spring to offer a prize of $700 of computer or home-office equipment to the lucky winner among those who honored California Work-at-Home Day (May 7th).

Home-Office Bonanza

Pacific Bell naturally has a motive to be involved with a work-at-home promotion. It offers lots of products and services that cater to home-office workers. Small offices/home offices (SOHOs) don't have huge corporate budgets, but they have money to spend. In 1996, the average annual work-at-home household income was $59,200, substantially higher than the national average. The needs of home-office workers closely parallel those of their corporate counterparts: office space, computers, phones, answering devices, supplies, fax machines, copiers, furniture, and access to the outside world in the form of information, ongoing education, technological support, and networking. Home-office workers spent approximately $14 billion on products and services in 1995. By the end of the decade, SOHO spending on computer and telephone equipment and services alone is expected to reach $30 billion.

Quality phone systems are a high priority. They are the home-based worker's primary contact with the outside world. Pacific Bell says that home workers "have 30 percent more [phone] features and products than our average customers." Multiple phone lines are a priority. Currently, 19 percent of Americans have two or more phone lines in their homes; approximately 30 percent of new requests for additional residential lines are for business reasons. "Most homes are wired for two-line capability," says Brad Derthick, team leader of home-office marketing for US West Communications. "We are seeing so many requests for third- and fourth-line capability that customers are having to wait for construction."

Home-office workers are in the market for more unusual products, too. Some use "white noise" (sound-muffling) systems to screen out children, pet, and appliance noises and offer a more professional image to the outside world. Disenchantment Sets in

Covering up the imperfections isn't enough for some home workers, though. "You meant to be in business for yourself, not by yourself." US West's advertising campaign says it all. While significant numbers of workers are still heading into home offices, they are to some extent merely counteracting the migration stream heading in the reverse direction. Bobbi and Mike Mostyn are president and vice president of InData Group, Inc., a systems integration and multimedia networking company in Issaquah, Washington. The couple ran a successful high-tech business from a home office for three years. But last year they moved into a commercial office space. Their reasons? "We wanted a more professional image because we deal with very large corporate and government accounts, and we also wanted a separation of our personal and business lives," says Mike. "It was getting to the point where we were doing business all the time. Now we're able to create a better balance."

For Jan Monti, outplacement and management consultant of the Janus Group in Seattle, image and privacy were the major reasons for leaving her home office. She tried to make her home look professional at all times, but was unable to keep the office and residential areas separated to her satisfaction. She also believes when people operate out of home offices, they "always charge less for their services, and they never seem to have the same status as people who might be officed elsewhere."

Matthew Johnson and his partners thought home offices would be perfect for their new venture, Caledonian Associates of McLean, Virginia. After brief home-office stints, they moved into an executive suite together. Among other things, Matthew found that his barking dog "made it very difficult to maintain a corporate image."

Entrepreneurs such as these, who start their businesses at home, then move into "real" offices, represent the traditional vision of business success in America. It's the logical place to begin. Once the business expands, it's time to move on.

In some cases, the push out of the home-office nest comes from an employer. Paul Allen is the multi-billionaire cofounder of Microsoft and owner of several other high-tech companies. He is moving all his high-tech employees onto one centralized campus. Considering his employees' "virtual office" and work-at-home capabilities, why centralize? As spokesperson Susan Pierson says: "Nothing replaces face-to-face communication."

For some erstwhile home workers, the hassles involved with zoning issues, lower overhead efficiencies, and increased risk of IRS audits are off-putting. Former home-office workers also say they missed the security of working in a larger organization, including access to support staff as well as the all-important employee issue of the 1990s -- benefits. Finally, some realize that working at home doesn't work for them because they are unable to maintain a satisfactory distinction between work time and family. Personal business gets in the way of professional business, and vice versa.

Heading for Suite Success

The home-office entrepreneur who chooses to flee has a few options to consider -- aside from bagging the alternative lifestyle altogether and returning to the corporate world of cubicles, that is.

Some people, such as Bobbi and Mike Mostyn, moved to another nontraditional setting. The Mostyns' "office" is a two-story log building in Issaquah, a rural suburb of Seattle. It's a 15-minute walk from their home. For others, such as Jan Monti, the choice was a more standard office rental. Monti's new office involves a 15-minute commute, too, but by car.

Another option is to relocate to an executive suite. This is a popular option for a steadily growing number of "home-office refugees" as well as Fortune 500 companies looking to provide suitable settings for remote employees. Executive suites offer a wide range of services, quick move-ins, a full support staff, and, most important for many choosing to leave their home offices, a "corporate look." Last but not least, it offers relief from isolation.

Executive suites are also known as working environments and even, in a tongue-in-cheek manner, as McOffices. They're no joke to commercial real-estate developers, though. "The $2 billion (revenues) executive-suites business has doubled in size over the past five years. . . . The reason for growth sounds like a business journal lexicon: 'downsizing,' 'globalization,' and 'satellite locations' all pop up in explanations, as does the phrase: 'home offices that didn't work out,'" according to the Journal of Property Management.

What began in New York in the 1960s as low-cost suite hotels for businesses has grown over the past five years to about 4,000 executive suites nationally, according to the Executive Suite Association in Columbus, Ohio. Some attractions that pull in former home-office workers are "highly effective shared resources such as shared facilities, equipment, and support personnel," says Jane Booras, a Dallas consultant to the industry and former executive director of the

Executive Suite Association.

HQ Network Systems, Inc., one of the world's largest operators of executive suites, started out as a telephone-answering business back in 1966. In the past ten years, HQ profits have risen from $10 million to more than $200 million. Loren McDonald, former marketing vice president, says that people moving from home offices to executive suites are a "high-growth area." Part of the reason is summed up by Mark Lenart, owner of a Cleveland construction company and an HQ executive-suite tenant: "When you're on your own, you get in your own little world and lose sight of what's going on. Here you can share war stories."

Those who provide this type of office space are well aware of the shift in their tenants' origins. "The share of our clients who used to work at home has doubled in the last five years," says David Beale, president and chief executive of another large executive-suite operation, Alliance Business Centers of New York City. Home-office clients account for 70 percent of the company's "flex-time" clientele.

Executive Office Link of Malvern, Pennsylvania, also provides "shared-office space," but in a space that's not exclusively devoted to the concept. The 650-acre community of The Great Valley Corporate Center offers lessors amenities such as a 200-room hotel and conference center, a licensed child-care facility, a business development and training center, 24-hour banking, a fitness center, and a number of restaurants. "At least 20 percent of our clients left home offices to come here," says Executive Office Link spokesperson Sharon Nothnagle. Considering the many prestigious large companies that also use such facilities, the opportunity to network is an added advantage to small-business entrepreneurs.

Suites have their limitations, says Sonny Moyers, president of Management Consultants, Inc., an executive-suite industry consultant. "For power computer users and high-tech companies, executive suites don't provide the needed high-tech support. Executive suites should be equal to or better than their client base for technical support." For example, Moyers himself uses a 9000 projection system for presentations and a multimedia computer. He networks with three computers and his system runs substantially faster than those furnished by most executive suites. "They would have difficulty providing that level of service to me," he says. Other limitations to executive suites are that they are relatively expensive and highly dependent upon close proximity to strong commercial downtown areas. Home workers in rural areas don't have access to them, and probably never will.

Marketing to Discontent

No office is perfect. Corporate employees aren't worried about how to appear professional -- it's a given. This doesn't mean they don't have other concerns, though, such as achieving privacy in the era of cubicles. Home-office workers worry about how to project a professional identity and maintain a semblance of separation between work and personal life. Those in executive suites may have access to shared reception areas and conference rooms that offer a professional image, but they're paying for it out of their own entrepreneurial pockets.

Who's paying the bill affects the relative demand for certain office-related products and services, but it's not the only criterion. For home-office workers in particular, each purchase is viewed from a combined perspective of productivity, support, and image. "One of the most important considerations for entrepreneurs is not how fast and how powerful computer technology has become, but how technology can make them more professional and productive," according to Nation's Business. IDC/Link's 1996 Work-at-Home Survey reveals that while price is a factor in purchasing, "quality/reliability and service/support are cited more often as key factors by both home-office types [corporate and self-employed]."

To some extent, it doesn't matter where people are physically located. But the same beauty of technology that permits telecommuting also creates difficulty for the business-to-business marketer. It's gotten to the point where a mere company name and address says little about the specific needs of the business-to-business customer. Someone affiliated with a big corporation may be housed in a remote home office. Someone running a solo entrepreneurial venture may have a corporate-sounding office-park address.

Even so, it's worthwhile to understand the variety of settings in which people work. Our ongoing quest for the ideal workplace is launching opportunities for everything from office furniture that doesn't look out of place in a home to specialized insurance policies for home-based businesses.

The home-office market is expected to grow at an annual rate of 7 percent through the year 2000, as more Americans explore alternatives to the traditional office. Over the same period of time, millions may leave by the back door in pursuit of another solution. Our restless natures will drive an ever-changing and growing market for the products and services we need to run our offices, wherever they may be. About the authors

Kathi S. Allen owns Allen Research & Communications, a corporate communications and research firm in Issaquah, Washington. Gloria Flynn Moorman owns GFM Communications, a corporate writing and publications firm housed in the same professional office building. Ironically, the authors had to prepare this article from makeshift quarters after their offices were vandalized. Kathi says she "re-experienced the trials and a few of the pleasures of working from home" during the temporary displacement.

Taking It Further

CDB Research & Consulting Inc. of New York City conducted a November 1996 telephone survey of several hundred adults based on its National Research Panel. Results were published in the March 1997 issue of Home Office. Find/SVP published a comprehensive look at the Home Office Market-U.S. in January 1997; call (800) FINDSVP. The report covers markets for home computers, multiple phone lines, Internet access, modems, faxes, and more. It focuses on three distinct segments of home-office workers: telecommuters, home-based workers, and after-hours workers. IDC/LINK, a division of International Data Corporation, offers several reports, including 1996 Small Business/Home Office Market Update (which includes the Work-at-Home Survey); Small Business Market Forecast: 1995-2000; Surging Demand for Second Phone Line and Call Management Services; 1996 Home Media Consumer Survey; and U.S. Small Business Forecast: 1996-2001. For further information, call Janis Dempsey at (508) 935-4145. Management Consultant Services publis

Executive Suite Industry Perspective, a manual for executive-suite industry insiders that also discusses current and future trends in officing trends; telephone (972) 248-8212. Business@Home magazine offers information and advice to home-based workers; telephone (800) 995-3590. American Demographics addressed the question "How Many Home Workers?" in May 1996. Executive Suite Perks

(standard and optional features offered by executive-suite facilities)
StandardExtra Fee**Limited AvailabilityPrivate office(s)*Administrative/accounting services24-hour bankingConference room(s) with visual aidsPhotocopy/fax equipmentVideo/teleconferencingTelephone answering and voice-mail800 telephone linesLanguage interpretersShared reception area with receptionistSecretarial/word-processing servicesChild-care centerOn-site coffee serviceOn-site food serviceRestaurants/hotel facilitiesU.S. mail serviceUPS/Federal Express shippingFitness center
* Includes utilities, janitorial services, basic furniture/decor, and shared restrooms.
** Ranges from nominal to expensive; may be included in some leases.


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Published: May 19, 1998

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