In my opinion the best type of small business to start from home today would be either a service related business or an internet related business.
In general service businesses can make ideal home base businesses because they don’t necessarily require an expensive office or high traffic retail location to be operated successfully. A good example of this would be a residential or commercial cleaning business. Service businesses also don’t have many of the high cost equipment requirements of starting a restaurant business for example and overall generally have much lower start up costs. Another big advantage of starting a service business is they are also easier to expand and acquire new customers as you are not tied to operating from a physical location.
Starting a small Internet or web based business from home today also has many obvious and inherent advantages for an entrepreneur. This includes generally very low start up costs, low overhead, few or no employees, and more personal freedom and flexibility regarding working hours. And theoretically depending on the product or service you are offering your target market can be very large.