Back to the future

Home-based businesses were once common, then largely disappeared. Now they’re making a huge comeback—for good reasons

For much of our country’s history, home-based businesses were the norm. Farmers processed their own crops into food, sometimes trading or selling them to their neighbors. Amateur brewers made their own beer and sold a keg or two to the local pub. Kids learned the trades their parents plied and grew up to take over the family home, which generally was the family business.

The days of the cottage industry in America were brought to a close by the industrial revolution of the late-1800s. With the rise of the factory as the model of the new workplace, the entire social and economic structure of the country was reinvented. People moved to the cities in search of work, kids went to school instead of doing chores around the farm, and the United States was transformed from a sleepy agricultural province into a humming and prosperous industrial nation.

Since then, the U.S. has been pretty much on autopilot as far as planning for new economic paradigms goes. The generations following WWII have grown up believing the way to make it in America is to go to college, get a degree, then get a job and work one’s way up the corporate ladder. Those few entrepreneurs who manage to build successful businesses are looked at as exceptions to the rule, possessing some kind of secret or innate money-making charm that the rest of us only wish we had.

But there is a growing cadre of modern economists who believe we are poised on the verge of a completely new way of thinking about making a living. Just as the previous advances in industrial and agricultural technology have freed most Americans from subsistence-based lifestyle, new advances in computer technology are creating opportunities for manufacturing, marketing and managing businesses that, 30 years ago, would have been possible for only the most advanced capitalists.

At the same time, Americans are chafing under the yoke of corporate control. While automation of menial tasks should have resulted in increased production and more leisure time for all, what has actually happened is dramatically different. The overpowering drive for corporate efficiency has produced a situation where we now have fewer people working harder and longer hours in highly specialized positions, while the less-skilled workers who used to manufacture goods are seeing their jobs either sent overseas or replaced by machines.

Economist Jeremy Rifkin writes in his 1995 book The End of Work that “The wholesale substitution of machines for workers is going to force every nation to rethink the role of human beings in the social process. Redefining opportunities for millions of people in a society absent mass formal employment is likely to be the single most pressing issue of the coming century.”

Photo Illustration by Carey Wilson

Many of us who still have jobs are becoming less enchanted with them. Faced with a widening disconnect between our work lives, family lives and personal lives, we’re developing a desire to re-integrate those shards, putting the pieces back together in a way that completes us rather than dissects us.

Perhaps this is why so many people are turning to home-based businesses. With regular work becoming scarcer and job security becoming a thing of the past, it has become much more attractive to take what skills one has and sell them on the new global market that the Internet has helped to create. Why should people sell their labor to a company that turns around and sells the products of that labor at a mark-up, when they could eliminate the middleman and simply make and sell the product themselves?

This revolutionary idea—that workers should seize the means of production in order to set their own prices for their labor—was once the rallying cry of the Bolsheviks. Today, it is the mission of millions of small-scale capitalists who are increasingly finding that almost anything that can be done in an office can be done just as well from home.

How popular are home-based businesses becoming? According to the federal government’s Small Business Administration, more than half of all small businesses are now run out of the home. That comes out to about 24 million businesses generating more than $430 billion a year, with some 20 percent of those businesses grossing between $100,000 and $500,000 annually. About 60 percent of home businesses are in the service or construction industries. The vast majority are completely owner-operated, with only about 10 percent hiring one or more employees. Women run about 70 percent of all home-based businesses in the U.S.

Starting a business out of one’s home has obvious advantages, the main one being lower overhead costs. There’s no extra rent, no commute and very little busy work. You don’t want to fill out a TPS report? Don’t do it. After all, you’re the boss.

But working out of one’s home has its pitfalls as well. For those with families, it can be tough to keep kids occupied while mommy or daddy works. There are tax forms to fill out, licenses to procure and zoning requirements to comply with. Meetings with clients often end up taking place at coffee shops so potential customers won’t be subjected to seeing your dish-filled sink or pantyhose hanging in the bathroom.

What scares many would-be business owners is the lack of a safety net. There’s no worker’s comp, no sick days, no company-provided health or retirement plan and no one else to blame if something goes wrong. It’s an oft-quoted fact that only about 30 percent of small businesses will survive their first three years. But with lower overhead costs and a work-anytime atmosphere, most home-based businesses far surpass that figure, with 70 percent surviving that initial three-year hump.

For those looking for help in starting a home-based business, there are a few organizations locally that can provide help drawing up business plans, obtaining financing and marketing new products. A good place to start is the Chico Chamber of Commerce (891-5556), which can direct would-be entrepreneurs to a variety of resources.