Lorinda Forrest, DSN Small Business, Tracks Down on Home-Based Businesses

Performing research for the small business sector has been challenging because through the normal reporting channels, not all small businesses are captured. If a businesses is owned by a sole proprietor, the business is the owner and taxes are reported on a personal tax return. If a small business has no employees or pays employees under the table, data cannot be collected. Not every county or city requires a business license, or doesn’t require a business license for home-based businesses.

Other reports may show that the top businesses are contractors, dry cleaners or restaurants. All of these businesses have some sort of state licensing or permit process and therefore data can be collected about these businesses. Other small businesses, such as service businesses, are more difficult to track.

I asked Jenni Abbot at the Centers of Excellence to prepare a report on home-based or micro-business in the region. The attached reports are encouraging in that in the Central Valley one in four, and in the Mother Lode one in three home-based businesses earn revenues higher than $500,000 annually. Across all industries, wholesale trade home-based businesses generate revenue that exceeds $2.5 million annually. 78% of businesses in the construction sector report revenue generation up to $1 million annually.

There are roughly 17,000 home-based businesses in the Central Valley and approximately 1,018 home-based businesses in the Mother Lode. These micro-businesses contribute significantly to the local economy. 95% of annual job gains can be contributed to the expansion of existing micro-businesses or the launch of new ones. Micro-businesses tend to invest more into the community they are located than corporations that have headquarters outside the area. Higher levels of local investments indirectly create jobs and strengthen the regional economy.

Construction (residential remodeling, electrical contractors, plumbing and painting contractors) still tops the list, with Professional, Scientific and Technical Services second (dominated by photography studios, translation/interpreter services, marketing and logistics consulting firms, offices of attorneys and accounting services and certified public accountants in the Central Valley) and (in the Mother Lode most prevalent are landscape and architectural services, photography studios, offices of attorneys and graphic design). In third place we find Retail Trade (with no predominant sector) in the Mother Lode and Administrative Support and Waste Management & Remediation in the Central Valley (with a concentration on landscaping services, janitorial businesses and carpet cleaning).

Community Colleges can better prepare students for a career path as an entrepreneur by providing students with information about careers as an entrepreneur, by integrating business and entrepreneur (soft skills) with traditional degree and certificate programs and by offering mentoring programs in entrepreneurship.


Central Valley Home Based Businesses – 2015

Mother Lode Home Based Businesses – 2015

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