From the January 1998 issue of Startups

Imagine working 16 hours a day, seven days a week to create your dream business. Then, just as you've got it up and running, an anonymous call to the authorities threatens everything you've built. That's exactly what happened to Colleen Wolf, who started communications and marketing company Wolf Prints Inc. in Yorklyn, Delaware, in 1992.

"I had converted a garage into an office," says Wolf. "It had a separate entrance and was attached to the house. Then, once it was finished, I put a sign in my front yard advertising the business."

Within two weeks, Wolf says she got a call from the local zoning office saying a complaint had been filed against her and that a representative was coming out to investigate whether it was legal to operate the business from her home. "It was shocking," recalls Wolf. "When I filed for my business license and incorporated the company, at no point did anyone ask me where it was going to be, nor did they tell me about county codes. I had no indication it might be illegal to operate a business in my home."

To Wolf's relief, the authorities deemed it legal for her to operate her business from home and simply instructed her to post a smaller sign. Unfortunately, not all homebased business owners are so lucky.

Common Concerns

What happened to Wolf is not unusual. Homebased business owners all over the country live in fear of losing their livelihoods, says Steve Lang, an Evergreen, Colorado, marketing entrepreneur and founder of the Mount Evans Home Based Business Association. "We have members who are in fear that someone will show up at their door one day and say `You can't do that here,' and they'll be out of business," says Lang.

Inconsistent zoning laws within certain geographic regions compound the problem, say homebased advocates. For example, county regulations may differ from homeowner's association rules, leaving business owners unsure about which requirements apply to them. "You could walk 10 feet down the road and talk to someone who is working under entirely different regulations from the ones governing you," says Lang.

Wolf experienced a similar situation in Yorklyn. "Delaware says two types of homebased businesses [are legal] to operate. One is a home occupation, which stipulates you cannot have customers come to the house, have any employees or sell anything from the house. It's chiefly designed to support the person who is a consultant or sales rep working a regional office from home," says Wolf.

The second option is for professional use, which Wolf says permits any person with a business license issued by the state (doctor, engineer, architect, dentist, musician, artist, accountant and so on) to operate a business from home and hire employees.

Wolf's experience helped her understand how easily some of her homebased marketing clients could be put out of business by a competitor or even a vindictive neighbor. This realization prompted her to try to get the law changed. One of the first people she turned to for assistance was Ron Walker of the New Castle County Chamber of Commerce.

"We'd been encountering a tremendous amount of downsizing by the corporate community here," says Walker. "These people didn't want to retire yet and had technical skills, so they found it pretty easy to set up a business at home doing something related to the expertise they had in the corporate world."

But there was one problem, says Walker: "They were operating illegally. It was time to bring it out of the closet. These are legitimate businesses that represent a significant business segment."

Several homebased business roundtable groups lined up supporters--the few homebased business owners willing to go public--as well as someone in the city zoning department who wrote a proposed ordinance allowing homebased businesses to hire up to two employees and conduct business on the premises.

A small-business and community hearing was held in July 1996 with a follow-up workshop in September 1996, and the outcry Wolf encountered amazed her. "The arguments we heard were that allowing this would change the integrity of the residential neighborhood," she says. "That homebased businesses would litter their yards with signs, clog the streets with cars and make noise at all times of the night." Wolf says she got a sense from many opponents that they just did not care about the people who wanted to operate homebased businesses.

Opponents saw the situation from a different perspective, says Frances West, immediate past president of the Council of Civic Organizations of the subdivision Brandywine Hundred. "The ordinance was really introduced without any sort of review of how it would sit with the community," says West, who was not convinced the ordinance was needed.

What West's organization and other critics wanted was to prevent neighborhoods like those in older communities in the county from disintegrating into "crummy mixed-use locations," she says.

This image of the homebased business is simply not a reality, says Lang. The advent of technology has drastically changed the type of companies being operated at home, and legislation exists in most communities to prevent abuses.

Elections interrupted the fight to change the ordinance in New Castle, and a six-month moratorium was placed on all land-use issues following the elections. "At this point, we have no direction," says Wolf. "It's hard to get people to campaign when just exposing themselves could cost them their businesses. So until we get a councilperson willing to present ordinance reform, I don't know what's going to happen."

Making It Work

The situation is more optimistic for home businesses in other areas of the country. In New Jersey, for instance, homebased business advocates were able to get a bill introduced in the state legislature that says local governments cannot stop people from working in their homes for pay without specifically citing any possible detrimental impact on the community. According to Chris Hansen, founder of the Home Based Business Council Inc., one of the organizations pushing the legislation, the bill passed in the House and is pending in the Senate. The issue will probably be put on hold until after the November elections, Hansen says.

What has made New Jersey's effort so successful, believes the Neptune City computer-supply business owner and former city council president, is the network of people that joined forces to support the legislation. After two years of networking around the state, Hansen helped establish the Partnership for Work at Home in September 1996, made up of the director of the New Jersey Division of Economic Development, representatives from the New Jersey League of Municipalities, members of the Home Based Business Council and departments of state government.

"As part of the partnership, I authored homebased business zoning guidelines and went to the New Jersey League of Municipalities convention, stopping everyone I could and putting the guidelines in their hands," says Hansen. "Most people wanted to know how to embrace homebased businesses without destroying the quality of the residential neighborhood. When you say business, people see smokestacks, tractor trailers, pollution and flashing neon signs. None of the municipal leaders want that."

As Hansen and supporters stumped around the state, that was the image they sought to dispel. "We told municipal leaders the vast majority [of homebased businesses] are benign or beneficial," he says. "They don't pollute, and they buy locally."

Wolf believes that the positive economic and environmental impact of homebased businesses is often ignored by opponents. "What does it mean to us as a country for people not to drive to work every day, to take those cars off the road? What does that mean for pollution?" she asks. "I provide a service to my local community that they would have to drive to [a nearby city] for."

Job creation is another factor Wolf believes many don't take into consideration. "In my fifth year, I created one job, and by next year I expect to add two more people," she says. She also expects to surpass the six-figure mark in annual sales this year, which will in turn provide her local community with more tax revenue.

If the growth of homebased business continues at its current pace and the zoning issue is not sufficiently addressed, city officials could find themselves mired in a mountain of complaints that could take many years and thousands of dollars to resolve.

Aiming For Change

If it's illegal to operate a homebased business in your city or county, there is something you can do to change things. Following are some steps you can take to change the zoning laws in your area.

1. Establish a committee of homebased business owners willing to stand up and be counted. Get mentally prepared for criticism from every corner and the chance that your business could be shut down.

2. Find out what the zoning regulations are in neighboring communities, particularly those similar in character and size to yours. If operating a homebased business is legal in these areas, it could lend credence to your arguments. If no communities in your area have enacted such an ordinance, contact a city with characteristics similar to yours that has.

3. Contact your zoning department to see if it has received complaints about illegally operated homebased businesses. Depending on your findings, you could use the results to prove that home offices are quiet and do not cause problems or to pinpoint a need to legalize home occupations and free up zoning inspectors to handle more important infractions.

4. Do your research. Get local and national statistics on how many entrepreneurs are working from home; describe who they are and what types of businesses they operate. If possible, find out how many people in your community have business licenses, what their average annual sales are, and how much local, state and federal taxes they pay. This will allow you to present data showing homebased business owners as people contributing to the economic foundation of the city. You might also want to highlight anyone who is the only local provider of a particular service.

5. Once you've assembled a research arsenal, use this information to build a coalition that will support a home occupation ordinance. This committee should include homebased business owners, major corporations that use the services of homebased consultants, government officials, homeowner's associations, labor unions, the head of the county zoning department and anyone else with a vested interest.

6. Remember, your goal is to educate first and then mobilize the community to support homebased entrepreneurs.

Contact Sources

Brandywine Hundred, 911 Darley Rd., Indian Field, Wilmington, DE 19810, (302) 475-8154

National Home Office & Business Opportunities Association, 92 Corporate Park, Ste. C250, Irvine, CA 92606, (714) 589-3232

The Homebased Business Council Inc., (732) 776-6496, http://www.hbbc.org

Mount Evans Home Based Business Association, fax: (303) 670-9629, elkbugle@aol.com

New Castle County Chamber of Commerce,P.O. Box 11247, Wilmington, DE 19850, (302) 737-4343

Wolf Prints Inc., (302) 234-4440, cwolf@wolfprints.com