Home-based e-business - an option for the self-employed?

2.3. Home-based business or Micro-business

In the United States, almost all industries in the economy are beginning to use the Internet as a means of cost savings on purchasing, managing supplier relationships, streamlining logistics and inventories, planning production, and reaching new and existing customers more effectively. (U.S. Department of Commerce, 1998 According to the U.S. Small Business Administration report on e-commerce 1999 [32], the number of U.S. households that have a home-based business currently exceeds 12%. Home-based businesses represent about 18 percent of all homes with personal computers (PCs) and 22 percent of home businesses that have made an online purchase. The number of home-based businesses in the United States surpassed 20 million in 2001, and is expected to eclipse 25 million by 2003 (see table), according to the research firm International Data Corp. (IDC) [24].

Exhibit 1. Source: International Data Corp

The average household income of those with home businesses topped US$57,000 in 1998, says the (IDC). Nearly 8,500 new home businesses start every day, and there are no signs of a slowdown. By 2003, home-based business technology spending is projected to be $30 billion, and 71 percent of those businesses will be conducted online. ( Forrester Research, 1998 ). Home-based e-businesses has grown substantially in the United States , but this type of set-up is not very popular in Hong Kong despite its relatively high company formation rate each year. By comparison, most of the home-based businesses in Hong Kong nowadays are still confined to some early home businesses (Hot Home-Biz Directory) [17] such as private tuition, freelancer or direct sales which have a low adoption level of e-business.