Sunday, January 22, 2017

Do Home Based Businesses Compete with the Shops on Main St.

It seems that when the topic of home-based businesses comes to the forefront, it brings out a discussion as to whether or not home-based businesses create unfair competition with the shops located in commercial store fronts. I understand these concerns.  Let's talk about them.

1- It's not fair that shop owners need to pay commercial taxes while home based businesses pay only residential taxes.

This is not true in Nova Scotia.  All permitted home-based businesses pay commercial taxes for the portion of their house used for the business.  In some cases, they actually pay more per square foot than commercial businesses.  Home-based businesses cannot factor their income into their tax assessment and assessments cannot be compared to shops in the commercial district.  The assessment in a residential zone is based solely on the value of similar residential properties.

The only thing that might not be fair is that home-based businesses receive no extra services for the extra taxes they pay.  They don't benefit by having their streets plowed first or by being in close proximity to other shops where they can easily be found.

2-Why allow retail sales from home when there are empty storefronts to fill?

 It is generally not permitted to have a retail shop from a home, unless you live out in the country where there are no land use regulations and no commercial zone to compete with.

Hold on there, Hat Junkie!  Don't you have a retail shop from your home in Lunenburg?  Yes and No.  Land Use regulations usually prohibit retail shops, but often permit only the sale of goods made in the house.  What's the difference?  When things are made by hand, production is limited.  That means the amount of people that visit per day is also limited. If I had a constant stream of customers coming into my studio, I would very quickly run out of hats. Things made by artisans: hats, pottery, quilts, artwork, are niche markets.  They appeal to a small group of people and only draw a small group of people.  I have less than 50 customers per year in my studio.  There are just not that many lovers of big, nutty hats with giant flowers.  Most days, my only company is the radio and my dog. The good news is, that with the internet, people who love nutty floral hats will travel all the way to Lunenburg, Nova Scotia just to visit me. Great for tourism.

3- But still, even if you don't draw crowds,  why not just rent a shop?

The simple answer is that specialty businesses that  produce in small quantities and do not supplement by purchasing goods to resell cannot afford commercial rents.  Overhead needs to stay low in order to stay in business.

There are other answers as well.  Home-based business owners are often caring for children or elderly family members. These business owners need the flexibility of hours in order to juggle the demands of home and work.

Home-based businesses are also run by retirees and disabled people, who are often excluded from traditional work places because of a lack of accessibility.

Artisans often need to limit their on site customers.  If I was greeting customers all day, I would not have the time to make hats.  Working from home means it's a bit harder to find me.  Those that do find me are looking for me.  It works out perfectly.

4- Do home-based businesses draw people away from the commercial shops?

Not at all.  The opposite is true. Small specialty shops and services come with their own loyal following.  Anyone that drives across the province or country to visit a home-based business is pretty much guaranteed to spend a couple more hours in town patronizing other local businesses.

5- Home-based businesses cause extra traffic and noise and disturb the peace of a residential neighbourhood. Who wants to live next to a home-based business?

Take a deep breath.  Land Use bylaws are a beautiful thing.  They have been written by people that went to school to study these things and every regulation ensures that a residential zone stays peaceful. In most cases you would have no idea that you were living next to a home-based business.

Businesses cannot produce any more noise than ordinarily happens in a house.  You can use a machine that sounds like a vacuum cleaner, but you can't use a machine that sounds like a jack hammer.

You can't store anything related to the business outside of your house.

When signage is permitted, it usually needs to be small and appropriate.

Twenty five percent of the home  is generally what is permitted to be used for a business.  There is a maximum square footage specified in case you live in a mansion. So, we are talking about a small portion of the house.  The physical size of the business keeps the business itself small.  If the business grows past the size that is permitted then it has to move out of the house.   At that point the business needs to rent a store front. That's awesome, right?

Even the amount of employees are regulated.  In Lunenburg you can have two employees, but most home-based businesses have one or none.  My studio is 250 sq. feet.  If I had two people working with me in my studio, we would be tripping over each other.

If you have a small dog grooming shop, you won't fit three dogs at a time.  If it turns out there is too much noise, you would have to sound proof.  Excessive noise is prohibited.  Do you see what I mean?  All these concerns have already been addressed in land use bylaws.  We just need to understand the rationale behind the rules.  The rules are good.

6- OK, fine.  So, a home-based business doesn't compete with a commercial business. But we need to revive our main streets.  Shouldn't that be our first priority?

Actually, I think encouraging home-based businesses is a great way to revive the commercial district.
In rural Nova Scotia it is very difficult to keep a shop open on the main street.  One only needs to pay attention to the constant turn over of businesses to see that this is true.

The biggest obstacle to success is that when the tourists leave the, income leaves with them.  In order to change this reality, we need to fill our homes with as many full time residents as possible.  People can live in rural Nova Scotia when they can earn a living in rural Nova Scotia.  Good paying, full time jobs are scarce.  Self employment is often the only way to make a life in rural Nova Scotia possible.

Every family that can support themselves by running a home-based business is a family that can shop in the local bookstore, toy store, clothing shop and grocery store, when the tourists have gone home.   Every family that lives in town full time, brings family visitors who also support the local stores.

We all want the same outcome for our communities.  We want bustling, vibrant main streets.  Supporting home-based businesses is a great way to achieve this goal.

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