The 10 best cities for running a home-based business - includes related article on how to select a good business city - Cover Story

Home Office Computing, Nov, 1993 by Kimberly Stansell

BY KIMBERLY STANSELL AND THE EDITORS OF HOME OFFICE COMPUTING

America has always been a mobile society. Nearly 74 percent of all householders have changed residences since 1975 and only 8.8 percent have not moved since 1960, according to the U.S. Census Bureau. And as homebased business owners you have the flexibility and technology that enable you to live anywhere. There is, however, a caveat: Certain cities are definitely pro home business and others are not. Being in the wrong place can cost you plenty--in dollars and qualty of life. But being in the right place leads to greater profits, growth, and lifestyle you left the corporate world for.

That's why we set out on the arduous task of selecting the 10 best cities for running a home-based business. Although many successful home businesses can be run from anywhere, you improve your chances in densely populated areas and within striking distance of Fortune 500 companies, all of which are dependent on subcontractors. We left no stone unturned in our ruthless pursuit. To find cities within strong-regional economies, we poured over piles of data, starting with the 1993 Development Report Card for the States. Published by the Corporation for Enterprise Development in Washington, D.C., the annual 215-page report grades five years of a state's economic health in three key areas: ekconomic performance, how well a state is doing providing its citizens opportunities for employment, earnings, and widely shared growth; business vitality, how competitive and diversified the businesses in that state are and how many new ones are being created; and development capacity -- the availability of the building blocks of economies, such as a skilled workforce, technology resources, financial and amenity resources, and physical infrastructure.

Using the most timely resources available, the enxt step was to collect information on relocation patterns form Atlas and United Van Lines. The inbound and outbound activity of each state for corporations, employees, and families was a good indication of a location's health and appeal. Next we checked housing opportunity indexes from the National Association of Home Builders, crime reports from the FBI, job growth forecasts from the Economic Outlook Center in Arizona, and U.S. Census Bureau statistics that evaluated and ranked business, population, and state and local income patterns. After plowing through all that data, we proceeded to interview hundreds of local business experts and home-business owners to see what kinds of program and incentives each area had for the home-based entrepreneur.

Maybe you'll agree with our top 10 choices, or you may think your home city is better. We hope you'll let us know. Still, when you look over our ranking, one thing is clear: All the cities are more alike than different. They all offer relatively affordable housing, permissible zoning regulations, good-quality public schools, an educated or skilled workforce, easy access to a major city, leading colleges and universities, and business opportunities. However, each city has distinctive qualities that may make it the best choice for you.

#1 Gaithersburg, Maryland City population: 43, 732 ( 35,000 Montgomery Village) County: Montgomery County population: 757,027 Nearest major city: Washington, D.C. (20 miles) Median housing price: $155,000 Average household income: $60,586 Major employers: Bechtel Power Corp., IBM, Marriott Corp., National Institute of Standards and Technologies Climate: Four distinct seasons, with an average snowfall of 23.5 inches. Average temperatures: winter 33.3 degrees; spring 58 degrees; summer 75.7 degrees; fall 53.4 degrees Taxes: State--net taxable income of more than $3,000 and under $100,000 is taxed at4 5 percent, plus $90 for the first $3,000; real estate--$24.66 to $35.73/$1,000 assessed valuation; sales--5 percent Strengths: Extremely proactive small-business climate; easy access to D.C. and rest of Northeast Corridor

The seventh largest city in Maryland, Gaithersburg is one of the fastest-growing communities on the East Coast. Located in the heart of Montgomery County, Gaithersburg offers easy access to both Washington, D.C., and New York City, which could be crucial when trying to set up important clients meetings.

The federal govenment and the hightech industry are major contributors to employment in the area. More than 10 percent of the county's 23,000 firms are home based, with a higher number of them being located in Gaithersburg than any other city, according to Jon A. Gerson, director, Montgomery County Office of Economic Development.

"Home-based businesses are a priority in tersm of our strategic plan for economic development. We're creatig an environment in which home-based businesses can thrive," says Gerson. Specifically, the county's commitment has included: revising its antiquated zoning ordinance to one that authorizes the use of one's home for an occupution or business, active participation in establishing a local association for home businesses, and making county contracting opportunities more available to home-business owners.