National University System Institute for Policy Research

(858) 642-8498 Get Started

A Helping Hand for San Diego's Home-Based Businesses

As published in the San Diego Daily Transcript

by Vince Vasquez

Friday, March 5, 2010

As the nation’s dreary economic climate hovers above San Diego for yet another year, job creation and regulatory relief must continue to be on the forefront of our local policy agenda. Paying closer attention today to a silent segment of entrepreneurs can help local lawmakers craft a more representative and balanced pro-business agenda that is desperately needed.

At issue are home-based businesses (HBBs), commercial enterprises that are primarily located in an owner’s home. From graphic designers to yoga instructors, HBBs are a major segment of our national workforce; according to the latest data from the U.S. Census, 49% of America’s businesses are home-based. Federal figures also reveal that HBBs are richly diverse – the majority of women-owned, African-American and Asian-owned businesses are in fact home-based, and nearly half (45%) of all Latino businesses are HBBs as well. These companies are also largely self-made; nearly nine in ten (89%) have no paid employees, and the vast majority of HBB owners tap their own assets for start up costs.

Despite the magnitude of HBBs in our economy, preliminary research in digital archives by this author suggests that the needs of home-based businesses have received scant attention from San Diego City Hall over the last fifteen years. On some level, this should come as no surprise; by nature, HBBs are independent and inconspicuous, making political organizing difficult. However, there are many common red tape challenges faced by HBBs which make a compelling case for collective action, particularly here in California, which is nothing short of hostile to small business owners. According to a September 2009 study commissioned by the California Small Business Advocate’s Office, the total economic cost of state regulations on small businesses weighs in at a staggering $492.9 billion, depriving our workforce from 3.8 million additional employees.

Before local lawmakers can weigh the needs and concerns of home-based business owners, a clearer understanding of where and how HBBs operate in our city must be achieved. Utilizing city government data, Microsoft Excel tools and GIS software technology, the National University System Institute for Policy Research has taken the first step towards opening the doors of this secluded economic sector. Analyzing the 58,796 San Diego business licenses on file at the Office of the City Treasurer that have a city addresses, we identified 19,016 companies, or 32% as being located in residentially zoned areas. Most of these enterprises are split between fast growing North County neighborhoods (Mira Mesa and Rancho Penasquitos) and the coastal communities (La Jolla and Pacific Beach) where land comes at a high premium. The types of businesses range across more than 680 categories, but are weighted heavily among the highest skilled professional and technical fields (computer systems design and management consulting), and the day to day services that keep our city moving (taxi service, janitorial work, and landscaping).

The San Diego City Council should consider advancing targeted regulatory relief for this large and unique business community, particularly as it becomes a growing haven for workers in our economic turmoil. City Treasurer data reveals that more than 3,300 HBBs received their first business license over the last twenty-one months, suggesting that many residents have been turning to independent contract work to survive in this difficult economic climate. This figure does not include the thousands of self-employed San Diegans who have not filed for a city business license, nor does it include the infrequent contractors who are not required to have a business license under the Municipal Code. Important debates are occurring today in San Diego about local business fees, contracting reform and regulatory changes that will have a lasting impact on HBBs, however their perspective remains elusive to those who could benefit from hearing it. Though HBBs do not have an exclusive trade association to represent them in the chambers of City Hall, local leaders can build an organizational framework to address their needs in a cost-effective and equitable way.

Recognizing the rise in HBBs and self-employed residents in the early 1990’s, the Sonoma County Board of Supervisors advanced planning for a countywide program that would improve the economic environment of HBBs. With support from leaders in the HBB community and the Sonoma County Economic Development Board, a new public-private partnership known as the “Home Team” was created. The Home Team was guided by an aggressive nine-point work program that included organizing annual workshops and conferences for HBBs, assembling an online HBB directory, pressing zoning ordinance reforms, and developing a home-based business guide. Buoyed by financial support from major corporate sponsors, including Bank of America, Pacific Bell (now AT&T) and Office Depot, the Home Team was later deemed a success, and its efforts were later absorbed into the Small Business Development Center at Santa Rosa Junior College.

Sometimes the best solutions to a problem are the easiest to find. When it comes to home-based businesses, San Diego City Hall doesn’t have to reinvent the wheel – it just has to agree to move the wheel forward. Hopefully for home-based business owners, that critical spark of decisiveness will come sooner than later.