In an effort to boost local economies, states and cities nationwide are amending zoning laws to make it easier for entrepreneurs to set up shop at home. For years local governments either banned home businesses outright or riddled them with red tape, such as requiring potential owners to seek approval through public hearings. But over the past decade restrictions have eased, paving the way for home businesses ranging from food makers to music instructors.
Small businesses often drive economic recoveries, but the severity of the recent financial crisis has made it difficult for many new companies to start strong. As a result, today’s entrepreneurs oftentimes launch out of home to avoid the costs of acquiring office space. A recent survey found that 69 percent of new businesses in the U.S. start from home. What’s more, experts estimate that home enterprises make up half of the nation’s 28 million small businesses. With governments across the board desperate for tax revenue, legislators are quickly altering zoning codes to accommodate these new ventures. For instance, in October an Atlanta suburb dropped the requirement of a public hearing to approve home businesses. Meanwhile, Polk, North Carolina, made its first zoning change in 20 years by lifting its ban on home businesses.
These suburban operations aren’t encouraged too enthusiastically, however. Restrictions still apply in many places against how often delivery drivers can come and go through neighborhoods. In some cases, small towns end up retightening laws if they receive complaints about increased traffic or noise. Home businesses are also advised to shift to office space or incubators if they see a big increase in customer demand. In fact, Louisiana recently placed a revenue cap of $20,000 on home food businesses. This ensures that these companies don’t get so big that they require commercial kitchen licenses. In light of these circumstances, then, entrepreneurs should look at home businesses as strong starting points but not long term solutions.
Questions:
- Is it fair for communities to put limits on the size of home-based businesses?
- What’s the primary reason that most small businesses now start from home?
Source: Nicole Hong, “More and More, There’s No Place Like Home for Small Firms,” The Wall Street Journal, September 30, 2013. Photo courtesy of Pall Spera Realtors.