What Entrepreneurs Need to Know About Business Approval in Urban US Areas

You shouldn't need to be a lawyer to start the small business you want. But too often, local regulations make it hard for entrepreneurs to do business because they have to deal with high fees, long wait times, and a lot of papers. If people who want to start their own business can't figure out how to deal with these problems before opening day, they'll die a thousand deaths. Local leaders need to make it easier, faster, and cheaper for people to start their own businesses. This study gives specific suggestions for how to do that.

Starting a business is hard in towns across the country because it costs a lot

takes a long time, and has a lot of steps that are hard to understand. Entrepreneurs have to follow a lot of different rules, and they often don't get clear instructions from the people in charge in their area. The problems small companies face from local government are made worse by rules and regulations that make it hard for officials to communicate and be open with the public.Even if an entrepreneur has a great idea, these problems can make it even harder to get their business off the ground. For some aspiring business owners, especially those who don't have a lot of resources or access to capital, they may have to choose between giving up and working in the informal economy.We looked at the zip codes of 20 large to mid-sized cities, talked to entrepreneurs from across the country, and mapped out the real-world steps for starting five common types of businesses from the point of view of an entrepreneur in order to better understand the problems small businesses face and make suggestions. Some important results are:CostStarting a business already costs a lot of money, and local rules add extra costs for things like permits, licenses, and following the rules, which makes it hard for people who don't have a lot of money. In the 20 towns that were looked at, people who want to open a restaurant have to pay an average of 13 different fees for licenses and permits, which add up to more than $5,300.

And in San Francisco, where fees are expensive, it costs more than $22,600 to get a restaurant up and running

Hold-upsNot only does following local rules cost money, it also takes a business owner's important time. Regulations aren't always clear, and towns don't do a good job of making one-stop shops (called "portals") that give entrepreneurs reliable step-by-step guides on how to follow the rules. Five criteria were used to judge cities as one-stop shops. None of the cities that were looked at met all five, and half of the cities did not even make the cut. Of these cities, Birmingham and Des Moines don't meet any of them. Boise, Boston, Jacksonville, Phoenix, Raleigh, San Antonio, Seattle, and St. Louis are the eight places that only meet one or two.ComplexityWhen you want to start a small business, you have to deal with a lot of unnecessary red tape. Zoning rules and building permit requirements are two of the most difficult parts of this process. For instance, in the 20 cities that were looked at, an entrepreneur has to go through an average of 55 steps and work with eight different government organizations to open a barbershop.It is possible and necessary to make the regulatory environment for small companies cheaper, faster, and easier. This study includes reforms that can be put into action and the best ways for regulators from across the country to make rules easier to follow in cities across the country. Towns and cities shouldSpend less on itIt will cost less to do business if you cut fees.

This will make it easier for everyone in the area to become a business, even those from poor areas

Speed it up.Streamline the legal process and set up one-stop shops to help entrepreneurs understand the laws that apply to them. This way, entrepreneurs can focus on starting their businesses instead of following rules that aren't necessary.It should be easier.Cut down on the steps needed to start a business so that owners don't get lost in the details, especially those who can't afford to hire lawyers or process servers. America's downtowns and small-business corridors are still having a hard time with low profit margins, staffing gaps, and empty storefronts two years into the COVID-19 pandemic. Government officials can help businesspeople who want to boost the economy by getting rid of the legal and regulatory barriers that make it hard for small businesses to start up and run, even in the best of situations. Cities can help small businesses without spending money on legal workarounds. They can do this by getting rid of barriers that are already in place. City leaders can really help their entrepreneurs if they follow our specific suggestions for change and the best ways to do things from all over the country.