Garage Entrepreneurs - The New Normal?

By Barbara Weltman

It used to be that when a business started up, the first thing the owner did was rent commercial space in an office, a strip mall, or factory (depending on the type of business activity). Then it became fashionable, post-Apple’s founding, to start in a garage (hence the term “garage entrepreneur”).

Today because of technology and the way in which business is transacted (much online, much globally), a business can start anywhere. Is this really something new?

History of alternative launch locations

The garage, which was the birthplace not only for Apple and Amazon, but also for some companies that pre-date Apple: Harley-Davidson (1903), Walt Disney Company (1923), Wham-O (1948), Mattel (1945), Maglite (1955), Yankee Candle Company (1969), and HP (1939).

Other alternative locations:

• Basement: UPS (1907)
• Dorm room: Dell Computer (1984); Twitter (2004); WordPress (2002); Yahoo! (1994)
• Kitchen table: Lillian Vernon (1951)

(Did Microsoft start in the Harvard dorm in 1975 or from a motel room in Albuquerque? Did Google start in the Stamford dorm room in 1998 or in someone’s garage?)

Scholars argue whether these were the “real” locations for the birth of businesses since the business ideas were formed (at least in part) and the owners’ skills were often honed in traditional business settings (see one 2005 Dartmouth article) .

The fact remains, however, that businesses are being launched from an alternative location.

Alternative locations today

Garages, basements, dorm rooms, and kitchen tables continue to be viable locations to start a business. Add to these locations spare bedrooms, business incubators (in commercial spaces and universities), and just about anywhere else.

According to the Dartmouth study mentioned earlier, about 25% of startups are in alternative locations. And the SBA says that 52% of all small businesses are home-based. So many businesses not only start from home but stay there.

What does this mean for business?

Using alternative locations can help nascent businesses try out their ideas and ramp up without costly overhead. In my opinion (without any research to back it up), I think home-based and alternative location businesses are wise to operate there and use the money they’d otherwise spend on rent and office-related costs on other things, such as marketing and employee compensation.

The next alternative business location? Maybe the ocean or space?