When Scott Rollert learned that the building housing his business was going to be demolished, he spent months looking for another storefront.
But Rollert, owner of the College Time Shop, couldn’t find a suitable space in his price range, and he ended up taking the suggestion his long-time customers made. He moved into the basement of his home.
Since November, he’s been one of numerous entrepreneurs and service providers who work where they live.
According to a survey of U.S. businesses recently reported by Small Business Trends, about 59 percent of established businesses are home-based, and 69 percent of enterprises launch from the owner’s home. According to the U.S. Small Business Administration, most are sole proprietorships.
It’s evident why home-based startups are so popular. They appeal to all demographic groups — particularly fitting the needs of moms with kids and older people — and they require less overhead to operate.
Rollert’s watch repair business had been at its location at 825 N. Tejon St. for nearly 30 years. But the shop fell to the wrecking ball to clear the space where Colorado College’s Edward J. Robson Arena will be built.
Rollert started working with the city of Colorado Springs in June to make sure he was meeting the requirements for a home occupancy license and then began moving equipment, supplies and worktables into his basement workshop.
The new College Time Shop’s door opened in mid-November, a couple of weeks early, and Rollert likes it.
“First and foremost, I’ve got a much lower overhead,” he said.
With a well-established customer base, he doesn’t anticipate losing many orders but thinks any losses will be offset by not having to pay rent and utilities.
“I’ve gotten tons of phone calls from customers,” he said.
Rollert doesn’t miss the 7½-mile drive to and from his shop each day, either.
“Another advantage is my hours are much more flexible,” he said. He keeps regular hours, 9 a.m.-5 p.m. Monday through Friday, but can also work later hours or weekends if a customer needs to stop by to pick up a watch.
“The only thing — and it hasn’t been much of an issue — I’ve got three cats,” he said. “They see all these little parts and think they’re toys.”
Home business owners in Colorado Springs need to obtain a home occupation permit, said Cody Webb, a city planning technician. Usually, a business license and sales tax license also must be obtained, and some businesses, like massage therapists and home day care facilities, require separate licenses.
“What I normally tell people is if you’re advertising any kind of business and if your address for that business is out of your home and has your home address, then you need a home occupation permit with us if you’re receiving any kind of payment for that business,” Webb said.
The city issued 55 home occupation permits in 2017, 74 in 2018 and 48 in 2019, Webb said. Owners pay a one-time fee of $120 for the permit.
“They don’t have to renew them yearly, and as long as these homeowners are keeping their businesses in the same homes, they don’t have to change their permit with us,” she said. “A good chunk of the ones that we get normally just do office work for an outside business.”
The city has set regulations for home-based businesses that mainly are designed to protect the neighborhoods where they are located, while also allowing home businesses to flourish. The idea is that small home businesses should remain small.
According to city code, a home business cannot interfere with neighboring properties by creating dust, noise, odors, traffic congestion, parking problems or other nuisances or hazards.
Certain uses are prohibited in residential neighborhoods, including vehicle repair, barber or hair styling shops that serve more than one customer, businesses that offer instruction to more than three people at a time, and paint shops that use spray equipment.
The city’s regulations do not allow outside employees to work at a home-based business unless they live at the residence, and sales may be conducted only by residents.
“That’s the No. 1 thing that we tell people,” Webb said. When a business grows to the point that additional employees are needed, “they would have to find some kind of outside commercial space.”
Businesses that have ongoing visits from clients must assure that client parking is not detrimental to neighbors, that any sign they display on their homes is no larger than 12 inches square, and that they secure any outside materials within a fence or sheltered in the rear of their homes.
“We do that more from a safety standpoint as well,” Webb said. “We’re trying to keep the neighborhood a neighborhood and not as a commercial business [area], but we’re still just trying to help those smaller businesses.”
COUNTY HOME BUSINESSES
El Paso County allows two kinds of home occupancy businesses: residential home occupation and rural home occupation, said Lauren Tostenson, digital and social media specialist for the county. The regulations for each are spelled out in the county code.
The code is not meant to regulate “a small home lawn mowing service, lemonade stand, magazine sales, cookie sales, or other traditional small-scale businesses,” the code states.
Instead, it is the county’s intent to set clear standards for home businesses in zones that allow residential use, to prevent any adverse effects on the character of the zones.
Residential home occupations specifically permitted in zoning districts where residential uses are allowed include:
• an occupation, trade or hobby that results in the sale or trade of products made by the resident on the premises or the provision of a service by the resident;
• a professional or business office;
• an educational or training service;
• a nonprofit, civic or religious organization that employs the resident; and
• a bed-and-breakfast home that conforms with other code sections.
The county code prohibits auto repair garages, any form of food service, vehicle sales or rentals, pet boarding, warehousing, industrial and other uses as home occupation businesses.
The county does provide a separate category — the rural home occupation — that includes some of those uses and includes a broader definition.
The intent, according to the code, “is to recognize the unique land use characteristics in low density agriculturally zoned areas and to reasonably accommodate the home-based businesses that traditionally occur in these areas.”
Rural home occupation businesses may include contractor’s equipment yards, construction businesses, welding shops, trucking and hauling businesses, vehicle storage or repair businesses and other small businesses that serve rural agricultural or ranching customers.
Heavy industrial, solid waste disposal or transfer, scrap tire recycling, mineral extraction uses, commercial towers, outdoor concerts, shooting ranges and race tracks are among the excluded rural home occupations, as well as others that don’t primarily serve an agricultural or ranching clientele.
Rural home occupations must conform to the requirements and standards set for residential home occupations, but they are allowed to have outside storage, parking and work areas as long as they meet setback requirements, and are limited to 1 acre or 5 percent of the total property. More than one home occupation may be allowed on a single property.
Rural home occupation businesses are permitted to employ two people who are not family members. Home occupation business owners also must comply with environmental regulations that aim to keep hazardous substances contained and protect neighboring properties.
HEALTH DEPARTMENT RULES
In both the city and county, other regulations might come into the picture if a business is selling food from a home.
“The Colorado Cottage Foods Act does allow people to serve specific food items from home without requiring a license,” said Sammi Jo Kirst, El Paso County Public Health retail food program manager.
“That would cover things like shelf-stable baked goods, as well as picked fruits and vegetables at a pH of 4.6 or lower,” she said.
Dehydrated and freeze-dried produce, applesauce and cookies are examples of the kinds of goods that can be sold under the act, but cream pies, salsa and tamales cannot.
“There are some best practices they are asked to follow,” Kirst said. “We want to make sure they are properly labeling food, that they understand sanitary practices and that they know the basics of safety.”
The act allows home business owners to earn up to $10,000 per calendar year for each product they sell.
“So the goal of this act was to help small businesses who want to see whether or not they could potentially get big enough for a retail food license,” she said.
The Colorado Department of Public Health and Environment oversees cottage foods, but the county health department assists with any issues and helps educate potential cottage food business owners.
The county health department regulates licensed food businesses, “but when it comes to somebody who falls into this cottage foods area, usually I help provide guidance and education that we can give them to make sure they know where they’re allowed to operate before we would require them to get a license,” Kirst said.
“Tamales is a popular thing people like to sell,” she said. “If they are indeed selling to the public and they do not have a retail food license, we definitely would get involved. That would be explaining to them why they need a license and what their options are.”
A license for such a product is required because of the necessity for temperature control and refrigeration for safety.
Kirst said she gets at least a few inquiries about cottage food per month.
“It gets far more busy once May hits, when we have all of our farmers markets,” she said.
The department issues special event licenses that allow cottage food vendors to operate at farmers markets and festivals. Those licenses are issued separately from retail food, catering and mobile licenses.
“We do inspect special events,” Kirst said. “If we come across somebody that doesn’t have a license, we address it right then and there.”
Kirst said she has not personally seen any home-based businesses grow to the point where they needed to get a license, “but I have had these conversations with people where their goals are very big. To them, it’s better to do the investment up front.”
HOME BUSINESS RESOURCES
Home-based business entrepreneurs can use some of the same resources available for any small-business owner, such as classes and coaching from the Pikes Peak Small Business Development Center.
They also can access COSOpenForBiz, a new website that walks entrepreneurs through the details of getting started.
“The first couple of steps can help startup home businesses,” said Yemi Mobolade, small business development administrator with the city of Colorado Springs.
“Most business ideas and experimentation start at home,” Mobolade said. “If people choose to keep it at home, it is important that they go through the regulations. It’s all about health and safety for the business owner and for the public too.”