Having two buildings just 10' from each other can make a significant psychological difference for both you and them.
Speaking from experience (currently entire main floor of my house is my shop...due to circumstances), Tin's statement rings very true.
It's difficult enough being self employed because you never really leave work and don't have "days of the week", just some days stores are closed, so that feeling of "leaving work" is challenging in itself. This is magnified when your work and living space is that close, in that even though you may go into your living quarters, you never "leave work". It's nearly impossible to relax when you have a partially finished project sitting in the other room, you feel guilty for not working on it.
On the positive side, you visit friends and family a lot more often to get out of the house and have that disconnect
If it's just a short term thing, it's doable, but I wouldn't recommend doing it for more than a year. I have heard of a few people doing a two story garage and living upstairs with the shop downstairs (examples in this FHB article:
http://www.finehomebuilding.com/design/departments/drawing-board/designing-two-story-garages.aspx) while saving enough to build their house. Psychologically this is a much better option, even better to have that 10' separation of another building.
$0.02