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Small Businesses: Government Watch

April 3, 1995

ZONING LAW proposals alarm home-based business owners.

Zoning laws, which often curb or ban home-based businesses, are a constant worry for the growing number of Americans who have put the daily commute in their rear-view mirrors. Chicago officials want to liberalize the city’s zoning laws, which prohibit home-based businesses. But many of the proposed revisions, which might set an example for other cities, are alarming home-business owners far beyond the Windy City.

These revisions would restrict the size of a home office to 300 square feet, prohibit nonresident employees, limit the number of clients who can visit a home office and ban display signs outside the residence. The city administration also proposes an annual licensing fee, probably about $125, for its estimated 100,000 home-based businesses.

Some fear Chicago’s revisions will be adopted elsewhere; Los Angeles also is in the process of revising its laws to regulate home businesses. ``These communities have to realize that businesses operating under the old zoning rules aren’t hurting anybody,″ says Richard Ekstract, president of the 10,000-member Home Office Association of America in New York.

In Chicago, some business groups fear that the restrictions on business visitors will crimp their revenue. Others, including coalitions representing artists and freelancers, argue that the proposed licensing fee is unfair.

Gary and Beth Hoover, consultants who work from their apartment on Chicago’s North Side, say they don’t find the proposed fees and space restrictions prohibitive. But they say the city’s actions are motivated partly by the prospect of fresh tax revenue.

Chicago officials who have worked on the proposed ordinance for the last three years say the changes are necessary to preserve the residential flavor of the city’s neighborhoods. ``We don’t want a home-based business that draws attention to commercial activity,″ says William Banks, a Chicago alderman.

The ordinance wouldn’t apply to corporate employees who occasionally work from home, Mr. Banks says. The full City Council is expected to vote on the measure April 12, he adds.

The U.S. has about 24.7 million full-time home offices, up from about 12.8 million in 1988, according to BIS Strategic Decisions Inc., a research firm in Norwell, Mass.

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BUSINESS GROUP SNUBS the Small Business Administration.

The Small Business Association of Delaware Valley, a 5,000-member advocacy group in Collingdale, Pa., said it no longer wants to run a ``designated″ SBA resource center.

``We feel the SBA, at this point, is not functioning well,″ says Stephen Markowitz, who sits on the business group’s board. ``We cannot find a single member who has had a satisfactory experience with the SBA.″

The Delaware Valley group’s action reflects widespread dissatisfaction with the SBA in the small-business community. Many national advocacy groups have similar complaints about the agency’s alleged lack of responsiveness. But few groups have distanced themselves from the SBA as clearly as the Delaware Valley group.

In letters to SBA Administrator Philip Lader and Susan Myrtetus McCann, administrator for the agency’s mid-Atlantic region, the group complained that its members have received no guaranteed loans and little technical assistance from the SBA. The organization, which has operated an SBA resource center since 1983, is calling for the restructuring or elimination of the agency.

Because SBA resource centers provide only informal counseling and receive no government funding, the advocacy group’s action won’t diminish the agency’s services in the Delaware Valley, the SBA says. The agency has 43 resource centers in the Philadelphia area.

The SBA’s Ms. McCann says she was surprised by the group’s decision to sever ties. ``We had no idea they were dissatisfied,″ she says. She says she knows of no other mid-Atlantic resource center that has dropped out of the SBA program.

Ms. McCann says that since its announcement, the organization’s board has turned down invitations to meet with SBA officials.

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TRADE MISSIONS HELP small companies get business in India.

State and federal trade missions to India _ fast becoming the junket of choice for lawmakers _ are also helping small and midsize companies go global.

While the headlines have focused mostly on the ventures of big corporations such as Raytheon Co. and Enron Corp., several smaller concerns have benefited from the latest government push to do business with the emerging Asian nation.

``I was face-to-face with decision makers and people who could really make things happen for us,″ says Tomye Tierney, vice president of Genzyme Corp., a Cambridge, Mass., maker of high-technology drugs. Genzyme, with about 1,500 employees world-wide, was one of 25 companies on a recent India trade mission headed by Massachusetts Gov. William Weld. ``I wish I had done this sort of thing sooner,″ she adds.

Trade specialists say India, which began courting U.S. investments in earnest less than three years ago, is going to be a major export market in the coming years. Much business is conducted in English, and India’s legal system resembles those of Western countries.

Exports by very small companies to India already have begun to rise, the Export-Import Bank says. Some states are actively seeking business opportunities in India for their local businesses. Massachusetts, for example, will host three delegations of Indian business leaders this year.

Indian government officials and business leaders expressed an ``eagerness to do business with much smaller entities,″ says Nicholas Rostow, executive director of the Massachusetts office of international trade and investment.

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SMALL TALK: The SBA found 111 active Small Business Investment Companies and specialized SBICs that are engaged in regulatory violations and misconduct, the General Accounting Office said. ... Practicing what it preaches: The House small-business committee has reduced its staff to 30 from 42.

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