At first, running a small business can seem like a dream come true. You’re the boss. You set your own hours. You have people working for you.
Once the honeymoon period is over, however, reality can come as a shock. The lines between work and personal life often get blurred. You’re responsible for the livelihood of your employees. And there’s the everyday stress of running a business: the licenses, the permits, inspections and taxes.
To try to minimize some of the headaches that come from bureaucracy, New York City mayor Bill de Blasio last week announced Small Business First, a five-year plan to reduce regulatory obstacles to local businesses. The $27m initiative aims to streamline licensing and permitting for small businesses by bringing together more than 15 city agencies to help. It will create a one-stop shop where business owners can take care of administrative issues – and settle most fines and violations.
“New York City’s economic growth depends on the ability of its small businesses to start up, scale up and create new jobs,” said Kathryn Wylde, president and CEO of the Partnership for New York City, a nonprofit organization – made up of about 300 New York City CEOs – aiming to enhance the city’s economy. “The de Blasio administration is taking an important step toward eliminating barriers to small business success by making it easier for entrepreneurs to understand, navigate and comply with city regulations,” she said.
New York is not exactly known as a bastion of small-business friendliness. In a 2014 survey by Thumbtack, the state received a D+ for its overall friendliness to small businesses, with its tax code and regulations scoring a C-. One in 10 US small-business owners cite government regulations as a top concern, according to the latest Wells Fargo/Gallup small-business survey.
With his new plan, de Blasio aims to ease the burden on small-business owners, increase compliance with city rules and, thereby, reduce fees.
Thanks to the reforms, the city is on target to reduce fine revenue by $5m, which will return “directly back into the pockets of small business owners, allowing them to reinvest their hard-earned money,” according to Department of Consumer Affairs commissioner Julie Menin.
Those fines have already been on the way down for bars and restaurants, which are responsible for about a quarter of a million jobs in New York City. Some $1m of the fines associated with New York’s restaurant grading system collected in its first year – from July 2010 to July 2011 – were for restaurants’ failures to display their grade cards. As restaurants became more accustomed to the current system, those fines have dropped.
When he campaigned for mayor, de Blasio also promised to lower fines associated with restaurant health inspections. In May 2014, the city’s health and mental hygiene department reduced its projected revenue from $34.1m to $30m. The drop was partly due to a 15% reduction in fines, according to the Wall Street Journal. At its peak in 2013, the city collected $52m in annual fees from food and drinks establishments.
The majority of the food and drinking establishments in New York - 93% - have fewer than 50 employees and therefore qualify as small businesses.
If de Blasio’s plan succeeds, government officials in other cities could take a page out of his book.
In Chicago, small-business owners have been calling on local officials to reduce regulations that they say stifle growth. For example, those who run their businesses from home cannot legally hire more than one “non-residential” employee, even if the employees work remotely. In other words, if you want to hire more employees, you have to get an office. Another ordinance prevents Chicagoans from making products at home and selling them at retail outlets, writes Elliot Richardson, CEO of the small business advocacy council in Chicago, in Crain’s Chicago Business.
Small businesses are one of the main job creators in the US economy, providing 55% of all jobs, according to the US Small Business Administration. One in five small business owners plan to take out a loan to hire additional employees (pdf), according to a Bank of America report. It seems like a little help – in the form of reducing the headaches and cost of running small businesses – could go a long way towards reducing unemployment and boosting the economy.
