In February, researchers at the Institute for Justice published a study analyzing barriers to starting small businesses. “Too often, entrepreneurs struggle with local regulatory burdens, finding themselves trapped by high fees, long wait times, and complex paperwork,” the report begins. “These burdens amount to a death by a thousand cuts, unless aspiring business owners can successfully navigate them before reaching opening day.”
The study analyzed the steps required to open a business in 20 large and mid-sized U.S. cities, and their findings were stunning. Opening a restaurant in Boston involves a staggering 92-step process. In Detroit, it’s 77 steps. In Atlanta, it’s 76.
Such complicated bureaucratic processes and local regulations can stunt a city’s economic growth, and leave residents from disadvantaged communities behind. The City of Kansas City, Missouri, provides a model for how other municipal agencies can address barriers to starting a business in their cities.
For nearly five years, I’ve been running the city’s office of small business, KC BizCare, helping support more than 2,000 entrepreneurs a year in starting new businesses. As a free business resource, advocacy and information center for new and existing businesses operating within the city, we work to assist local entrepreneurs through the regulatory process for starting a business in the city. By creating, or enhancing, similar “one-stop shops” in cities of all sizes, we can invest in our entrepreneurs and their dreams.
The first part of the challenge, as you can imagine, is the process itself. It’s imperative that all cities assess and streamline that process as much as possible. Government should champion new businesses, which expand the local economy, tax base and job opportunities – not stand in the way. We work, for instance, to “de-silo” government departments that impact the regulatory process for businesses (i.e., permits and clearances) and identify ways to streamline (via a checklist) or partner to improve response times to the process.
Take zoning clearance for the purpose of the business license. KC BizCare initially didn’t process zonings, but we found that they were a major source of delay. Now, with our technology, we handle about 40% of all zoning requests for the purpose of a business license, which are otherwise done by our Planning Department. (We do not do rezonings or residential zonings.)
The second part of the challenge is navigating that process. That’s the primary focus of KC BizCare. We assist businesses that are starting, expanding and relocating, but the vast majority of our work is assisting new businesses. As part of our mandate, we advocate streamlining initiatives to remove barriers to entry and systemic issues that impede a business’s ability to grow in Kansas City. We are also working towards inclusive procurement initiatives to create more contract opportunities for small businesses and use our purchasing power to help grow and support small businesses doing business with the city and local public agencies.
KC BizCare is located on the first floor of City Hall, and that’s key to enhancing the effectiveness of a one-stop shop: Ensure that its location is both convenient for the public and near other related services. The office is co-located with the business license team within the finance department. When assisting an applicant, we can walk that person next door to apply and pay for a business license.
We have also created a virtual one-stop shop, offering a customized checklist tool that can be personalized to an individual business. It provides links to relevant applications online in proper sequencing, plus contact information for city, state and federal government resources.
We have also built a network of partners – primarily nonprofit entrepreneurial support organizations (ESOs) – to which we can refer entrepreneurs for technical assistance. Those ESOs provide assistance to small businesses in refining business plans, for instance, and preparing to seek needed funding. Ensuring that ESOs are prioritized locally and have sufficient capacity themselves is extremely vital to creating a one-stop shop and a strong ecosystem.
In collaboration with that network and others, we find still more ways around barriers. We listen to frustrations that ESOs or their clients experience in any aspect of the startup process and address them.
In that context, we work with national organizations including the National League of Cities and Right to Start. The National League of Cities has been a partner with us through its City Inclusive Entrepreneurship Network. Through this network, KC BizCare is working to expand our outreach to Hispanic businesses and create access to start-up capital by introducing microlending platform Kiva to Kansas City. Through Right to Start, a nonprofit championing entrepreneurship as a civic priority, we advocate removing barriers to entrepreneurship nationwide.
A growing focus of all of our work is data collection, so that we can more fully understand the demographics of the local entrepreneurial community. One typically thinks of a one-stop shop as being focused on one direction: helping small businesses that need assistance. But we must continually understand the comprehensive entrepreneurial landscape in order to reshape it.
Our office has been working with a software developer called Qwally that creates accessible, cloud-based, business engagement and procurement software. It enables us to collect data that will provide a full picture of the local landscape and thereby better focus our efforts where they are needed most. The software has helped our office create the customized checklist, highlight local resources, and produce data dashboards to capture and communicate that information.
Today, young businesses create nearly all job growth in America. That means facilitating small business growth is vital to strengthening America’s economy, as well as to creating flourishing local economies. One-stop shops like KC BizCare are crucial to realizing that potential.
Nia Richardson is managing director of KC BizCare in Kansas City, MO.