by Terry L. Besser
Assistant professor and extension sociologist
Iowa State University Extension to Communities
What community wouldn't want a business that provides local people with a wide range of products, services and employment opportunities, that is committed to the local community and won't move to find cheaper labor or taxes, that grows faster and survives better in small towns than affiliates of large corporations, that is flexible and adaptable to the local economic situation, and that is relatively recession proof?
Some communities work very hard at attracting businesses with these characteristics. Few succeed. What often goes unnoticed, however, is that businesses with all of these great qualities exist in every town's back yard. They are called home-based businesses.
All of us work at home. As much as we like to think of our home as a refuge from the demands and stresses of the workplace, in reality most of us toil many hours each week keeping house, preparing meals, maintaining yards, caring for children, etc. Some people who work at home get paid for their labor by an employer.
This is usually referred to as home-based employment, to distinguish it from home-based businesses. The much touted telecommuter who works in a home office, E-mails and faxes legal briefs or advertising copy back and forth to his or her employer is an example.
The remainder of people who work at home for pay are self employed. They make a product or provide a service which they then sell. Examples are tax preparation businesses, insurance sales, bookkeeping, auto repair, beauty shops, lawn care, appliance repair, computer consulting, child care, catering, dog kennels, veterinary, art and craft production, music lessons, plumbing, carpentry, and general maintenance.
Although almost invisible, the cumulative impact of home businesses on the economic activity of large and small towns alike is significant. About 8 million people nation wideÑ9.6 percent of the adult populationÑare involved in home-based businesses for at least part of each week. According to studies cited in a recent article in Western Wire, a publication of the Western Rural Development Center, "home based businesses are more than a holding ground for employees hoping someday to get a job with a big company. In many cases, they represent significant business startups, where good ideas mature into very successful enterprises." In addition, the article noted that small firms are the fastest growing segment of the economy and are an important source of job growth.
Why then do home based businesses get so little respect among community developers and officials? There are number of reasons. One is that since this economic activity is decentralized and inside homes, it is easy to overlook and easy to underestimate its importance. Researchers have not been interested in studying it, and so little data exists about the impact of home based businesses on communities. Second, the popular press has created the impression that home based employment and businesses are a relatively new phenomenon. Actually, a study of home workers in nine states concluded that most have been engaged in this form of income generation for at least a decade.
A third reason for the lack of attention directed toward home businesses is that it is frequently thought of as "women's work," hairdressers and knitters who can fit their occupation around their household and child care responsibilities. The error of this assumption is demonstrated in the nine state study mentioned above. The study revealed that 58 percent of home workers are male. Further, worker/owners averaged 37 hours of work per week, and the majority were engaged in marketing and sales, contracting and mechanical transportation occupations.
In light of all of the advantages resulting from home based businesses, smart communities promote and support them at least as zealously as they chase large industrial employers. The Western Rural Development Center recommends the following policies and programs as ways that communities can encourage strong home businesses:
*Lift zoning restrictions on home businesses
*Streamline license and permit procedures
*Establish a revolving loan fund
*Sponsor a business incubator program
*Offer classes and/or advice on management skills, bookkeeping, tax preparation, marketing, etc., for home business owners
*Encourage networking among home workers
The economic impact of home businesses is not as flashy or dramatic as that of a large traditional business. However, home businesses are far less likely to move operations to another location, they have a greater stake in the welfare of the community as a whole, and they are less likely to take down the whole community with them if they should fail.
Contacts:
Terry L. Besser, ISU
Extension Sociology, (515) 294-6508
Del Marks, ISU Extension
Communication Systems, (515) 294-9807
