States should prohibit zoning restrictions which discriminate against small business owners

It is very important in business to have the right office space. This can be a particularly vexing challenge for the owners of very small businesses, but it doesn’t have to be. A simple change in state law would give many business owners a new option for resolving their facilities needs.

Consider the service business with two to five employees. It is too big to be considered a home-based business. Such companies could lease office space but they won’t get the best deal because most owners of office buildings want to deal with 10,000-square-foot tenants, not a business that only needs 1,000 square feet.

Many small business owners really want to buy their office, but commercial space is generally too expensive and too big for small businesses. Unless that business owner is ready to go into the rental business, buying commercial isn’t an option. There are, however, many residential properties that would make magnificent offices for small companies. Unfortunately, out-dated zoning laws in many communities prohibit business owners from using residential property to house their business. This is where I think a change in state law in most states is needed.

I would encourage every state to pass a law that prohibits municipalities from discriminating against people who want to use residential property to house low-impact micro-businesses. One line of language added to the eminent domain legislation that so many legislatures are considering would be sufficient to give small businesses a real boost. The Minnesota legislature, which opened yesterday, will be considering eminent domain legislation and I hope that it will consider this small but important provision.

Businesses that mainly operate over the internet or phone and have no walk-in customers have less of an impact on a home and neighborhood than a typical family of four. Yet many municipalities will write zoning code that prohibits property owners from operating a business in a residence. Code that restricts frequency of deliveries, noise, the exchange of money, parking and signage seem to me to be worthwhile, but a blanket restriction against the “operation of a business” is simply too vague and discriminatory.

In Minnesota, there are 133,000 people who work in firms with one to four employees, and another 120,000 people who work in home offices. I believe many of these people would consider the purchase of a home to use as an office, if local zoning allowed it.

One of the real benefits of owning property, of course, is the opportunity to build equity. For small business owners, who have limited retirement savings options, this could be a significant benefit. A state law that would eliminate discriminatory municipal zoning code would do a lot for small business, the engine that is driving most of the new job growth in this economy.