During the pandemic, more people were working from home than ever, and we’re still navigating what the future of work will look like.
But not everyone working at home is working for some huge company — some people are working for themselves, as the last couple years have also seen an increase in entrepreneurship. In this work-from-home era, that can mean navigating all sorts of hurdles with regulations that haven’t changed with the times.
In 2020, nearly 4.4 million new business applications were filed. Data from the Census Bureau shows that’s almost 1 million more than 2019, and the most we've seen in years. Those numbers continued to rise in 2021.
So, let’s say someone's business is based out of their home, which is pretty common nowadays. They may run into some issues, since there are actually laws in place that make home-based businesses illegal in some areas.
There have been headlines popping up of home-based businesses facing backlash over zoning violations.
Nolan Gray is a city planner and housing researcher. He studies the intersection of home-based businesses and the zoning codes that limit them.
"These rules vary by city, but in many cases, home-based business operators might be forced to secure a special permit, which entails a public hearing and a sales review," Gray said. "Maybe some of your neighbors yelling at you, or it might come with really onerous rules. So total bans on maybe having a customer or a client come to your home if you're maybe doing nails from your home, or if you're tutoring from your home or anything like that, that might be illegal, or operating out of a garage.”
The concept of home-based businesses isn’t new. Small Business Administration research says that in 1992, home-based businesses accounted for half of U.S. companies, and in 2014, they accounted for 1 in 6 businesses.
These zoning codes date back decades and are typically only enforced after a neighbor complains. While some of these codes are aimed at protecting people’s health and safety, prohibiting businesses from operating inside the home at all is an entirely different issue. And the process of going before a planning commission to secure a permit is risky and can be expensive.
Gray says some people may not even be aware of these rules or know how to navigate them, leading them to knowingly or accidentally operating illegally underground.
Zoning codes can also hinder potential growth for small businesses.
"So many of the firms that have transformed the U.S. economy started out of garages," Gray said. "We're talking not only contemporary tech businesses like Amazon or Apple, but even traditional businesses like Disney or Harley-Davidson.”
Statistically, women are more likely to stay at home and look after their family. In the U.S., 3 in 5 caregivers are women, and 27% of moms are stay-at-home parents. Running an at-home business offers them flexibility, and these city-wide rules disproportionately impact women and people of color.
"You have to have some of that money to maybe make upfront payments for some of these investments to purchase a commercial space or even just to be eligible to sign a lease for a retail space," Gray said. "In many cases, too, when a business is first starting out, you know, if you don't have that maybe generational wealth that will disproportionately disfavor, maybe, Black and Hispanic entrepreneurs, it can be very hard for you to start that business.”
Since the pandemic began, cities across the country are working to make running these businesses more attainable.
Florida lawmakers passed a bill that allows home-based businesses in residential zones and places around the country are taking similar steps, like New Jersey legalizing selling baked goods out of your home, and in Nashville musicians winning the battle to legalize home-based recording studios.
"These are things that if you get the rules right, the impacts on neighbors are pretty minimal, but the opportunity granted to people who want to run a home-based business can be totally transformative," Gray said.