Local government support programs for home based businesses: challenges and strategies.
Small businesses play a significant role in the Australian economy, yet an increasing number of them are home based and relatively small operations. These home based businesses(HBBs) actually account for some 67% of the small business sector in Australia. Due to their large number, they are a politically and economically important grouping, thus attracting policy attention from various government levels. Previous studies of home based businesses reveal that HBBs do face significant problems and could benefit from government support. Local government is the obvious first contact point with HBBs. However HBBs contacting local government is not common, as these businesses prefer to remain anonymous as much as possible. These firms are often wary of government contact due to a belief that it will lead to some restraint on the business. And because these HBBs are not readily identifiable, it is a difficult task for local government to engage with them.

This paper reports on a study of the role local governments play in facilitating and supporting the home based businesses in the State of Victoria, Australia. It involved telephone interviews with representatives of all of the local government jurisdictions in the State together with a survey of their websites. In-depth interviews were subsequently undertaken with 20 selected councils running local government. This study reports on the various forms of assistance provided to home based businesses. The findings indicate that the levels of assistance provided are related to the perceived level of need for employment-generating business activity in the local municipality. The paper analyses the various forms of assistance and identifies specific forms of assistance that are more likely to be associated with supporting the development and employment generating capacity of home based businesses.

Keywords: Home-based business, support programs, local government

Article Type:
Home-based businesses (Political aspects)
Economic conditions (Political aspects)
Local government (Political aspects)
Ali, Shameem
Paguio, Rafael
Breen, John
Pub Date:
Name: International Journal of Business Research Publisher: International Academy of Business and Economics Audience: Academic Format: Magazine/Journal Subject: Business, international Copyright: COPYRIGHT 2011 International Academy of Business and Economics ISSN: 1555-1296
Date: Jan, 2011 Source Volume: 11 Source Issue: 1
Event Code: 290 Public affairs Computer Subject: SOHO
Product Code: 9300000 Local Government; 9200000 State & Local Government NAICS Code: 92 Public Administration
Accession Number:
Full Text:

The Australian Bureau of Statistics reported the number of home-based businesses (HBBs) at 856,000 as of June 2004. Of these, 198,700 are located in the state of Victoria (ABS, 2005). The large number of HBBs helps to support a popular estimate that some twelve percent of households host a home based business, and this proportion is likely increasing (Jay, 2003). There is now widespread agreement that HBBs create significant and meaningful employment opportunities. Indeed, each HBB is estimated to provide, on average, some 2.8 positions for its operators and employed staff (Hitech Marketing, 1998). Cognizant of HBBs' employment generation potential, the Federal and State governments have taken a keen interest in promoting the sustainability and growth of the HBB sector (Commonwealth of Australia ,2004; Victorian Government, 2004).

Small businesses in Australia comprise a significant proportion of overall business activity, as is the case in most economies. These small businesses defined as those employing less than 20 people, count for as much as 96 percent of the total number of businesses in the country and provide 42% of existing jobs (Peacock, 2004). In June 2004, there were an estimated 1.269 million small businesses. Interestingly, the Australian Bureau of Statistics (ABS) report that that some 67% of these could be classified as home-based as these businesses are actually conducted from the operator's home (ABS, 2005).

At the state level, the Victorian Government sought information on the relationship between local government and the HBB sector across the state to provide a framework for policy and program development for this sector specifically. Thus a research project was commissioned by the Department of Innovation, Industry and Regional Development to survey the attitudes, initiatives and experience of local government authorities across Victoria in relation to HBBs in their municipality. The project's aim was, on the one hand, to determine challenges facing local government in dealing with HBBs, and on the other hand, to describe initiatives undertaken to nurture this important sector. This paper reports on the nature of extent of HBB programs and issues and problems faced by local government authorities (municipal councils) in contacting and engaging their constituent home based businesses.

To a significant extent, the interest in home-based businesses (or HBBs) in Australia as a distinct group within small businesses has occurred because of better understanding of the small business data as well as more attention to proper definitions of various sub-categories. For example, the HBB sector as a group within the small business classification was not clearly delineated in the past. Peacock (2004) reports that in 1994, the ABS undertook the first study of HBBs as a component of small businesses, using the definition of a HBB where "one or more of the operators of the business worked more hours at home than away from home". From 1997, the sector has since been better defined and this definition is still currently in use. For instance, the ABS (2005) report reflects this definition, and describes the two classifications of HBBs.

1 "Businesses operated at home": where most of the work of the business was carried out at the home(s) of the operator(s)

2 "Businesses operated from home.": where there are no other premises owned or rented other than the home(s) of the operator(s)

These HBB classifications are not mutually exclusive as the data in Table 1 shows (ABS, 2005):

Home-based businesses have been the target of policy interest from all three tiers of government in recent years. The Federal government and most State governments now have a policy on home based businesses. The strong interest in HBBs on the Federal and State levels comes from the recognition that these numerous businesses provide employment for operators, their families and other hired staff. For instance, 69 percent of the 856,000 HBBs provided a livelihood mainly for their operators, 28 percent or 240,000 actually hired one to four additional staff, and 3.1 percent or 26,000 had between 5 to 19 employees (ABS, 2005). Another reason for interest is the assumption that many HBBs could have growth potential that could be tapped to facilitate local economic development.

Starting a new business is onerous for many people, involving both cost burdens and risks. Many HBBs are at the early stages of business development and face difficulties related even to mere survival (Walker and Still, 2003). Local government authorities have the closest connection to HBBs. These councils have started to realise the economic contribution of this sector and are initiating programs to encourage, sustain and grow these businesses. One of the earliest initiatives in the State of Victoria was the study commissioned by the City of Casey and its neighbouring councils in the Southeast Region of Victoria. The study, prepared by Hitech Marketing Services (1998), involved a survey of HBBs and recommended action plans for the councils to develop this sector.

Some other Victorian councils followed suit and conducted research on HBBs within their jurisdiction. Melton and Wyndham councils collaborated to survey the demographics of their HBBs and emerging trends within the sector (Melton Shire Council and Wyndham City Council, 2001). The report forwarded suggestions for a role by local government. Similar approaches have been noted in another report prepared for Mitchell Shire (Hitech Marketing Services, 2003).


2.1 The Stages in Business Development

An understanding of the life-cycle model of small business growth is important in the development of appropriate policies and programs relating to support provision by local and other levels of government. Greiner's (1972) life-cycle model contends that businesses go through five developmental stages: inception, survival, growth, expansion and maturity. The model implies that a business firm in a particular stage of its life-cycle will be characteristically different from another firm in another life-cycle stage. Such a model is useful for business operators, who can respond in a proactive fashion with respect to planning and providing for the required resources to enable the business to capitalise on opportunities.

Similar to the model set out by Greiner (1972), other authors have suggested that businesses go through a process of growth, which can be divided into stages, (Churchill and Lewis, 1983; Scott and Burns, 1987). The staged approach to describe small business growth and development, as is the basis of the life-cycle model, seems intuitively reasonable. Whether firms go through all these specific growth stages is however debatable (Storey, 1994). For instance, Carson et al., (1995) describes a range of internal and external factors that could influence a firm's progression in this lifecycle model. Internal factors concern the goals and personal characteristics of the owner manager that have a considerable impact on the future of the business. The owner manager can make a deliberate choice to control the growth of the enterprise for purely personal and lifestyle reasons. Or on the other hand, the choice could be to remain entrepreneurial, thereby actively seeking growth opportunities.

Then there are the factors of owner abilities and their capacity to capitalise on opportunities, which Morrison et al. (2003) suggests are key variables in identifying small firms that will grow further. They also propose that these operator capabilities can be enhanced by targeted external support to the business. Ali et al. (2001) build on this proposition by identifying elements relating to both "smart business operator" and "good business practices" that are essential for businesses to draw on available support, and hence, be able to take advantage of growth opportunities.

Other contributions that may help inform government policy for small business support come from economists (Jovanovic, 1982; Frank, 1988; Reid, 1993) who have expressed the view that there is much "adaptation" or learning required on the part of the business operator as the business develops and grows. This adaptation process suggests that the business' development at various stages could be characterised by changing resource needs, managerial and leadership demands, knowledge and information needs, as well as systems and planning demands.

2.2 Small Business and Support Programs

Previous studies on obstacles to small business participation in support programmes (Sims et al, 2002; Hull, 1987) suggest that lack of awareness of support services was an impediment to small business growth. Hull (1987) also found that business support programmes have failed to consider the individual attitudinal and behavioural characteristics of small firms, the business characteristics of individual firms, and the specific and often unique nature of the support provision needed. This was seen to have hindered business participation in such programmes.

It is important to recognize that there are various obstacles facing support service providers in dealing with small businesses. Gibb (2000) describes economic factors that inhibit the delivery of appropriate support such as the costs of establishing credibility with these businesses and customisation of such support. Similarly, Kearney (1998) refers to the cost of incorporating flexibility in the delivery mechanism to suit the business operator. Government funding support is implied to overcome these hindrances. Beyond financial assistance, there could be an intermediary role which was originally defined by Hull (1987) as linking local firms on one hand and various local, regional and national resource-providing institutions on the other. An issue addressed in this paper is: Do local councils provide an effective intermediary role for small firms, particularly home-based businesses?

In Victoria, Breen and Bergin-Seers (2003) reported on a study of small firms to investigate the nature of the take-up of Government business assistance services. Small firms surveyed were found to be confused about the type of services available and which level of government provided the service. Further, while there was broad agreement that these businesses require support, there appeared to be a misconception that the available assistance services from Governments were perceived to be predominantly for information on compliance and regulation issues, and do not include business operation and development support, as is actually the case. This perhaps explains why there is a low uptake of these assistance services offered by Government. Breen and Bergin-Seers (2003) argue that a lack of communication is a major cause of this confusion.

2.3 Recognising and Supporting Home Based Businesses

Though home based businesses account for more than two-thirds of all small businesses in Australia, this sector is not well understood and research on this sector is only now gaining momentum. A reason for the lack of attention to HBBs is because they have often been assumed to be hobby or artisan types of businesses, operated on an ad-hoc part-time basis, mostly by women and often out of the metropolitan area. With this perspective, HBBs do not conform to mainstream business (Walker, 2003).

A sense of isolation, or a feeling of being alone and without support, is to be expected among HBB operators. Working long hours and mostly just by themselves, HBB operators do not have opportunities for professional support and personal development as would be normal in larger organisations. Another problem is that HBBs are often perceived as not "real businesses". They therefore do not have the credibility of regular businesses, such as those operating in commercial premises. HBBs are as a consequence of this image problem, handicapped in attracting customers for their products and services. The Commonwealth of Australia (2004) recognised the economic value of HBBs, owing to their large number, and has encouraged local government in particular to address problems and needs in the HBB sector. Many Councils are involved in the provision of support for businesses, with funding either by themselves or jointly with other government agencies or industry organisations (Breen and Bergin-Seers, 2003). Councils and other Government stakeholders need to understand the territory in their quest to support the important HBB sector. First, government must learn to communicate with this group, a task which is not easy as HBBs prefer to keep a low profile (Peacock, 2004).

The other challenge for government is identifying appropriate support programs. The staged small business life-cycle model discussed earlier provides a starting point in identifying the assistance scheme appropriate to the particular stage of the business life. The staged model implies that as businesses progress from one stage to the next, their characteristics, and therefore their needs, change. HBB operators are also expected to exercise different types of adapting behaviour depending on what stage their business is at so that they can exploit market opportunities.


The study collected data using pre-arranged telephone interviews with representatives of all 79 councils across the state, and then follow-up in-depth interviews with 20 of these councils. All councils were contacted by a faxed letter and requested to nominate a suitable person to discuss HBB related issues with the researchers. The telephone interviews used a questionnaire guide, and lasted between 30 and 45 minutes. The phone interview was designed to collect information on the council's interest, experiences and development programs in relation to HBBs. Supplementary surveys of council websites were also conducted. Based on the information gained, in-depth face-to face interviews were conducted with 20 councils that displayed some degree of interest in HBBs and reported specific initiatives for the businesses in this sector.

The face to face interviews were conducted by two researchers and lasted between 60 and 90 minutes. Following a semi-structured format, the interviews collected more detailed information on the context of HBBs in the municipality, the specific projects undertaken by the council for HBBs and the rationale behind these initiatives. The interviews were tape recorded and were later transcribed by a third person not present at the interview. During the visit to the Council offices for the interviews, Council reports and other relevant publications were collected. These documents were later referred to in preparing individual reports of interviews. In some instances, telephone follow-up calls were made and web-sites were revisited to verify some findings.


4.1. Challenges faced with engaging HBBs

Making contact with HBB operators has reportedly been problematic with councils due to their low profiles and their being dispersed in residential locations. The general non-mandatory registration of HBBs was also cited. The difficulty was demonstrated in an example where one council tried to conduct a survey of their HBBs. The council had no choice but to form its HBBs sampling frame by listing one at a time, those businesses listed with the Yellow Pages and other general directories, which have addresses in residential locales without visible commercial activities. An address given as a Post Office Box was another assumed indicator that the business is home-based.

Council officers also confirmed that their major barrier to a better understanding of HBB characteristics and needs is the negative view many business operators have about councils. This view results in behaviour ranging from caution to avoidance by HBBs of any form of council intervention. One interviewee, who described the view of a local HBB operator, best expressed the sentiment:

"If the council is interested in you, it can't be for your benefit."

A recurring message was that HBBs prefer not to be identified and wish to remain anonymous, as they are unsure of the motives of local government in wanting to make contact with them. This image problem can, for many councils, represent a serious impediment to effective service delivery.

"They think that they are going to be regulated, or that we are going to find out that they are not complying with the rules."

The general suggestion from the local government officers was that while HBB operators may have such a view, it is essentially unfair. They also assert that their modern-day councils are much more proactively engaged with the community and business constituency. To these HBB-supportive councils, the first steps in engaging their HBBs are obviously to make contact with them, dispel their fears and build trust for council initiatives.

4.2. The level of Local Government interest in home businesses

The phone interviews served to assess individual council's interest in HBBs. The research team evaluated the information collected and rated each council using a five point scale, from 1 (very low interest) to 5 (very high interest). Results of ratings for the 79 local councils are presented in Table 2.

Twenty two councils comprising 28% were rated as having high or very high interest in HBBs. The top 11 which had a rating of 5 have shown a strong commitment to supporting HBBs and have been running a number of projects to support the sector for some time. Those with a rating of 4 have expressed clear interest in HBBs but have a limited range of HBB-targeted initiatives, which are mostly in the early stages. Those with a moderate interest rating of 3 state that HBBs could be important to them but at are still to show definite plans on how they could support HBBs.

On the other hand, those with a rating of 2 (classified as having some interest) are supportive of HBBs but do not see themselves planning anything definite for these businesses in the near future. Those with a rating of 1 (very low interest) have given very little thought for these home based businesses. Councils, who have ranked with the lower 1 or 2 ratings, are mostly resource-strapped councils who do not have the staff and funding to plan, much less implement support projects for HBBs.

On the question of what drives councils' interest with HBBs, a few of the HBB-supportive councils reported that in the past, they gave preferential assistance to large employers. However, a string of closures of such large companies in the last ten years has left behind social and economic problems for the affected municipalities. With this unpleasant experience and the general difficulty in obtaining new big investors, interest has emerged for sustainable small-medium enterprises (SMEs) and more recently, HBBs.

Three factors were identified that appeared to be related to the degree of councils' HBB interest: 1) location in highly populated dormitory suburb, 2) the area's business profile, and 3) previous involvement with community business revitalisation programs.

A majority of councils that are proactively pushing for the development of HBBs tend to be located in highly populated municipalities and where there is an absence of large businesses to provide employment in substantial numbers. These councils with populations of more than 50,000 are mostly outer metropolitan ones, located in dormitory suburbs with significant numbers of residents who travel outside these suburbs for work. Councils in these areas affirmed that they support HBBs as they generate local jobs and support the local economy.

The business profile of the area was found to be a significant influencing factor on the degree of councils' interest in HBBs. Of the councils which were rated low on the HBB interest scale, some are metropolitan councils but with large industries or more land for industrial development. These councils (with large industries within the municipality) prefer to direct their economic development attention to existing large businesses and prospective investors.

Some councils, which rated highly on the HBB interest scale have taken advantage of the State Government's StreetLife program, which is aimed at business stimulation at the community level. These councils have matched the amount of State funding available and initiated projects that either involved home based businesses from the start, or evolved at some stage, to give this sector more focus. Thus, having the set-up and experience to engage HBBs, these councils are inclined and motivated to pursue further development of this sector.

4.3. Programs and Strategies for engaging and supporting home businesses

Reaching as many of the hidden HBBs is the common objective of interviewed councils. There were several media used to achieve this, which include disseminated brochures, mail-outs, the Internet and CDs, networking sessions and visits by council officers.

Brochures. Brochures seem to be a popular medium for councils in delivering their message to HBBs. A range of publications from modest three colour hand-outs to glossy publications were observed. Whatever the format, the brochures similarly convey to HBB operators that government recognizes the many benefits that they bring to local communities. It also informs them of the existing State-wide regulations relating to HBBs, and assures them that as long as they comply with these regulations, they have all the right to continue operating without council intervention. Finally, it invites them to participate in council activities designed to foster the sustainability of their businesses.

Building trust for the council's efforts is an underlying objective in the way the brochure is written and distributed. This theme is deliberately pursued and is likewise observed in the use of other media to reach out to HBBs. The local government's message is delivered mostly through the Economic Development group within the Council. This conveys a statement that this message is about promoting business and not about regulation. This hopefully puts wary HBBs on a less defensive mode.

Some councils have incorporated the effort of contacting HBBs as part of a business promotion program, which is branded and prominently bannered throughout the municipality, such as Business Melbourne. This is designed to put a positive, appealing tone to the council's message. The brochures are distributed to HBBs in a non-direct way, such as display racks in council front offices or in even more neutral locations such as community libraries. The idea is to use a soft, rather than direct approach in contacting HBBs.

Mail-outs. One council that was interviewed felt that the best way to reach HBBs is to include an invitation to HBBs to register with the council with the annual property rate notice mail-outs. With some 80,000 properties in the municipality, this planned initiative is expected to deliver the council's message of support and invitation conceivably to all HBBs resulting in the identification of a greater number of these businesses.

The Internet and CDs. The emergence and increasing prevalence of information technology has been valuable in engaging HBBs. As discussed previously, HBBs' use of computers and connectedness to the Internet support this proposition. Councils have reported the increasing use of their websites to deliver information. The more pro-active councils have a dedicated webpage catering to HBB audiences. One council officer described the website as a way to provide and access information in an anonymous, non-threatening manner.

Home based businesses are also being identified and engaged with the hosting of on-line directories. Through this self-registration functionality for HBBs, a few councils have requested permission for them to council bulletins via emails. Opt-in email from the council allows the distribution of relevant and timely information on business services that are available.

The absence or unreliable state of broadband services dampens the potential offered by the Internet for councils to engage HBBs, other businesses, and their constituents, in general. Issues were consistently raised by councils in regional areas and interestingly, even those in outer metropolitan municipalities. A few councils have accepted the situation and have come up with the dated, yet still acceptable, alternative of disseminating information via the use of CD-ROM disks. Hence, information on council services, business listings and training materials are provided in CDs and sent by post to identified businesses.

The use of CDs has found an innovative application with one council disseminating specific information for businesses involved with food preparation. The council has developed a CD to highlight some of the issues faced by food businesses, including home catering. The CD allows a food proprietor to tour virtual premises and learn about best practices in facilities design, and the storage and preparation of food. It contains about 120 photographs and helps to simplify the legislation that food proprietors must comply with daily. This format of delivering information, using a good amount of visual elements, is especially helpful in the culturally diverse municipality.

Networking Events and HBB Associations. The hosting of networking events is a common practice used by councils to draw out HBBs. The council starts by advertising such events in the local press to catch the attention of HBBs. These networking sessions are typically breakfast meetings where there are interesting speakers giving inspirational talks, small business workshops conducted by training consultants or presentations by specialists on particular issues like taxes.

Networking events appeal to HBBs not only for their knowledge benefit, but perhaps more so in that these events allow operators to meet peers and share experiences and information. Councils are aware of the sense of isolation felt by many HBBs, a downside of running a home-based business, which generally does not provides the opportunity to interact with colleagues. Thus, as they deliver important benefits to HBBs, networking events give councils an attractive and effective window to draw out and identify HBBs and engage them in ongoing information dissemination, support and feedback activities.

A few councils have decided that for the long term, it is best if HBBs can form their own association to represent their cause and to manage their activities. While these councils initially do most of the preparation for the networking sessions, they gradually turn over the responsibility to a core of HBB operators who show interest in taking lead roles in a formally organised association.

Two schools of thought have been noted in a council's relationship with HBB associations. One council wants to maintain a direct hold on the association by being part of the committee running ongoing activities. The reasoning for this is to have greater assurance that the council's objectives are effectively pursued. On the other hand, another council believes in maintaining an arm's length distance to the association and confine the council's role to providing regular funding, information and occasional advice. The association is however expected to present the council with its business plan and provide periodic feedback. This council believes that with this scheme, the HBB association appears independent in the public view, and as such, becomes more attractive to prospective HBB members.

Visits to HBBs. One council felt that a direct approach to HBB may work. Using an easy-going friendly tone, the council's Economic Development officer hopes to meet with identified HBBs and win their trust. This could be time-consuming but the results have been positive. Some HBBs visited have started participating in council projects.

Another council has taken the idea of visits to HBBs further by providing opportunities to legitimise the business. This council has a program of visits to HBBs to discuss issues with the business operator and then to certify that the business is compliant with local regulations. This provides evidence for the HBB to use, should any neighbours complain about the business activity. It also provides some comfort to the council that it is promoting compliant businesses when it takes a stance that is supportive of HBB development. An added benefit of this approach is the widespread promotion of the idea that HBB operation is allowed as a right within the planning provisions.

4.4 Business Support Programs and Activities

Many of the services provided at the local level would be classed as generic business support and did not specifically target the home based business sector. This applied even to those councils that rated 'high' to 'very high' in their interest in HBBs and had specific policies and strategies for the HBB sector. Such generic services were widespread in availability and accessed by all businesses, home-based or otherwise.

There was a wide range of services identified in the follow-up interviews with the twenty councils. Some Councils demonstrated a clear and strategic agenda for HBBs within their economic development framework. However, the general picture revealed that while business support was seen as important, few Councils were able to clearly articulate their underlying objectives and the expected outcomes from such programs. Many of these programs were funded by the State or Federal governments and those councils best able to make a case tended to be funded at various levels.

The lack of well defined program objectives and parameters made it difficult to match the programs into the five business developmental stages in the small business life cycle model (inception, survival, growth, expansion and decline). Closer examination of the services reported by the councils revealed that the programs were related to the first three stages in the life cycle model. Thus, the three categories of support were defined as: (1) start-up support, (2) survival support, and (3) growth support.

Start-up support services are those that relate to the pre-setup and the setting-up stages of the business (or the inception stage in the life cycle model). At this stage, information needs are likely to be the highest and would involve meeting of tax and regulatory requirements, including planning scheme and council by-laws. This information was provided through websites using links to government portals and through hardcopy brochures. Councils are active at this stage and play a 'facilitation' role. For the operator the information needs are diverse and include the assessment of risk and business potential.

Survival support services correspond to the second stage, when business activity has commenced and market interactions are beginning to be established. The survival phase objectives involve financial breakeven and normally, operators earn no more than survival income. The support needs are for market development, time management and business skills training. The most common services provided by local councils in this stage included providing local business directories, organising business seminars and facilitating network formation. Networks were seen by both councils and operators to be of critical importance at this stage.

Growth support programs are designed to help the HBB operators to steer their business operation through stages of growth in turnover and clientele. It may involve new pressures relating to division of available human resources and tasks to meet new business needs. There are greater demands on financial resources because of increasing overhead costs and working capital requirements. Often the business dynamics undergoes change as additional staff members are hired and functions are delegated. Thus, the business operators would still be experiencing significant pressure despite having passed the survival stage. A few Councils which were providing support consistent with this stage of business development were offering activities such as training, research or network development, but these were targeted to and specifically designed for HBBs.

Table 3 presents the range of services offered by the councils within these there categories. There was no measure of the effectiveness of the services carried out as it was beyond the scope of this research. The classification of the service into a corresponding support category was based on the nature of the support provided and how useful they were at meeting the business needs during that particular stage of development. Generally, the support infrastructure for the first two stages (start-up and survival) appears to be well established and information about services provided is readily available. Only 11 of the 20 Councils interviewed have some local research data on HBBs. Generally, the sector was not well understood and while there was a clear interest in developing and supporting HBBs, only a handful of Councils were able to demonstrate a good grasp of issues and problems facing HBBs. The survival support programs were more likely to be generic in nature and not specifically targeted to HBBs. For example, only a few councils had developed a HBB manual to provide specific information for their local HBBs. These manuals were considered to be popular for existing and prospective home business operators. Further, while there were a few exceptions, many of the support services provided by councils, such as network formation and business seminars were generic in nature and not specifically targeting or relating to HBBs. It is difficult to say whether generic business support programs are appropriate for the HBBs without undertaking a research on the businesses themselves. User feedback received by Councils indicated that such programs could be of value to HBBs; however, another observation is that the extent of HBB participation in these generic programs appears to be quite limited.

Growth support services were reported by a small group of councils whose interest in HBBs were observed to be significantly higher than the rest. These councils have implemented HBB-specific support services and are located in the outer fringes of the metropolitan area, characterised by high populations. These councils also tended to have a small commercial sector, comprised mainly of retail. There is a strong belief within these councils that HBBs can make a significant contribution to economic activity and employment in their area. The rate base of these councils provides for the availability of financial resources to allow the employment of staff whose sole focus is the introduction of specific programs targeted at HBBs. These tailored programs, such as site visitations, creating synergic networks and helping individual businesses with marketing, are labour intensive and require professional management. Initiatives of this type are underpinned by a relationship building strategy and are well placed to deliver more business-growth support assistance. The effectiveness of these initiatives is reported to be positive, but is yet to be tested.

4.5 Strategic Business Support

Councils have learnt from many years of business support provision that in developing support programs and in delivering such support, it is important to articulate goals and expected outcomes at the outset. For example, if an important policy goal is to identify and support HBBs with growth potential, then individualised programs specific to one or a group of similar firms would need to be developed. If the aim is to achieve an increase in the number of HBBs, then start-up and survival programs would be more appropriate, complemented with mentoring programs. While it is tempting from the point of view of costs and convenience to do what others are doing and in the same way as others are doing it, purpose and objectives should drive the design and introduction of support programs. This implies the need for local HBB research, which is not generally undertaken.

The understanding of the various business development stages and corresponding requirements is important from two perspectives. Firstly, as pointed out, it will enable the creation of appropriate support services that meet specific needs. Secondly, businesses can be supported in the transition from one life-cycle phase to the next. For instance, facilitation programs can be delivered, such as mentoring, marketing of innovations, building networks and alliances, and supporting entry to new and foreign markets.


This paper reported on assistance provided by Victorian local government for home based businesses (HBBs). This assistance is motivated by the fact that the HBB sector is large in numbers and makes a significant contribution to economic activity and employment generation. While there was general interest among the 79 municipal councils for this sector, some 28 percent of these councils have already been proactively providing assistance and support services. The knowledge of what the leading councils are doing for HBBs may provide an impetus to their colleagues in other areas to increase their commitment to HBBs.

HBB-supportive councils have pro-actively employed practical and creative measures to reach HBBs, such as brochures, mail-outs, networking events and visits. To draw out these "hidden businesses", the principal theme of these measures is the deliberate building of HBBs' trust with council efforts. Thus, the soft, non-direct and pleasant approach is preferred. Playing a specially important role is information and communication technology (particularly the Web) in disseminating council information and support services to the majority computer-equipped HBBs. And those HBBs with poor broadband or internet services can still benefit from informative compact disks prepared by some councils.

A conceptual understanding of the range of HBB assistance and support measures provided by councils was underpinned by the small business life-cycle model. It was found that the observed council initiatives only cater to the requirements of the first three development stages of inception (or start-up), survival and growth. A frequency distribution analysis of these services, however, revealed that they were predominantly skewed to the start-up and survival stages. There were minimal initiatives reported for the growth stage, which would involve specific or even firm-tailored support.

The analysis pointed out the apparent lack of strategic consideration in the design and provision of HBB assistance. In particular, there ought to be an articulation of council objectives after considering their local HBB sector. Finally there is a need for councils to pursue regular information-gathering research with the HBBs in their municipality in order to better inform the development of their assistance activities.

The findings have broad application across the local government sector helping to better understand the economically significant HBB sector and inform new policy development. These findings will also be of interest to firms that provide consultancy and training services to home based businesses.


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Shameem Ali, Victoria University, Melbourne, Australia

Rafael Paguio, Victoria University, Melbourne, Australia

John Breen, Victoria University, Melbourne, Australia

Shameem Ali is a researcher with the Centre for Tourism & Services Research and a Lecturer in Marketing at Victoria University, Melbourne, Australia. His research areas are small business, entrepreneurship, innovation and marketing strategy.

Rafael Paguio is a researcher with the Centre for Tourism & Services Research and a Lecturer in Finance at Victoria University, Melbourne, Australia. His research areas are small business finance, entrepreneurship, small enterprise policy and strategy formulation.

John Breen is the Director of the Centre for Tourism & Services Research at Victoria University, Melbourne, Australia. He specialises in small business research and policy advice for governments.

These authors agree to this submission and confirm that this article has not been submitted to or being considered by any other publisher.
Table 1:
Home Based Businesses in Australia, June 2004

Description                                         Number

Operated from home                                  820,000
Operated at home                                    281,000
Operated both from and at home                      231,000
Total HBBs operating either from home or at home    856,000

Table 2:
Rated Level of Council Interest in HBBs

Interest Level   Number   Percentage

Very low           6         7.6
Some               31        39.0
Moderate           20        25.0
High               11        14.2
Very high          11        14.2

Total              79       100.0

Table 3: Council Support Services for HBBs Classified According to
Business Life-Cycle Stage

Description                                                  Frequency
                                                              (N = 20

Start-up Support

Offer website link to Government business information           20

Provide brochure/checklist to help understanding of             12

Develop materials to encourage local business start ups         13

Offer website links to support agencies for business            16

Receive general enquiries via email                              7

Develop a HBB manual                                             2

Survival Support

Conduct research on local HBBs                                  11

Provide local business databases/directory                      18

Identify local needs for support and training (generic)         18

Facilitate network formation (generic)                          17

Make HBB a priority in economic development strategies           8

Organise business seminars (generic)                            17

Include HBB development in policy documents                      1

Growth Support

Support local HBBs to build their websites                       1

Undertake visitation program to address issues                   2

Develop networks for subsets of local HBBs                       2

Survey local HBBs regularly                                      2

Organise business planning training for HBBs specifically        3
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