One third of all small businesses in the UK operate from home but they are often “invisible” to policy makers, according to a report published today by the University of Strathclyde.

The ‘Invisible Businesses: the characteristics of home-based businesses in the UK’ report claims that while the home is one of the most important locations for small businesses today, the home-based business sector is not being recognised by policy makers. 

According to the report the most significant proportion of home-based businesses is in rural areas, notably the Highlands and Islands of Scotland. It also argues that the commonly held belief that home-based businesses are part-time, small and marginal does not reflect reality, with the majority provide jobs for other people and just over half generating revenues of more than £50,000 per year. 

It also found that while the businesses operate in a wide variety of industries, the most common are in computing, business services, personal services, financial services, agriculture, forestry and fishing and construction sectors. 

One of the report’s authors, Professor Colin Mason from the University’s Hunter Centre for Entrepreneurship said: "There is a perception that local authorities are against home- based businesses while nationally they are dismissed as being of little economic significance. 

"But although many are small, their size does not indicate lack of ambition or vitality - indeed, more than half (57 per cent) of our survey respondents had increased their turnover in the previous year. 

"As more and more entrepreneurs choose to base their companies at home, we need to see a change in enterprise policy at local, regional and national levels to actively encourage home-based businesses. We hope our research will act as a first step in helping to debunk some of the common myths about this growing and important sector." 

However, he said a lack of guidance has left many home-based business owners unsure about their legality. 

He continued: "This blurring of home and business life has a number of implications. We are likely to see a growing demand for domestic properties that can accommodate home businesses. Moreover, some types of housing, such as high rise apartment blocks, are likely to be significant barriers to operating a home based business in a large city. 

"We also found that home businesses can breathe new life into communities by increasing social and economic activity in their neighbourhoods, from increasing demand for complementary business services such as copy and printing shops and postal services, to coffee shops for meetings with clients. 

"But many home-based business owners feel unsure of their legality and fear the complex tax system and what regulation might mean for them. The sector needs more clarity and encouragement if it is to reach its full growth potential." 

The full report can be found here