Three Approaches for Untangling the Knots of Local Business Regulations

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Oh, what a tangled knot cities can weave with local business regulations. Whether it’s the dizzying application paper trail at city hall, inexplicable permitting or licensing requirements, or an arbitrary approval timeline, this is a government problem that is ripe for a solution. Thankfully, a number of cities are creating a path forward on regulatory reform.

The scope of this problem, although difficult to fully quantify, is substantial for both business owners and local governments. In a recent Thumbtack Small Business Friendliness Survey, the top frustration reported by business owners is a complicated regulatory process. The time spent navigating the current broken system translates into lost income and delayed openings for new businesses.

Meanwhile, the economic health of cities suffers when local business owners and entrepreneurs cannot open their doors quickly, or even worse, decided to locate elsewhere that is more business-friendly. The US Chamber of Commerce Foundation’s Regulatory Climate Index recommends streamlining permitting and licensing as a necessary reform for encouraging entrepreneurship, job creation, and overall economic growth.

Cities are taking three approaches to untangling the knots of local business regulation.

Reviewing existing regulations, eliminating ones without a purpose. First, many cities are making sure their local business regulations are actually serving a purpose. Regulations can sometimes be superfluous (for example, an “open flame” permit to place votive candles on restaurant tables) or contradictory to county or state guidelines.

To help cities confront this issue, the Ash Center for Democratic Governance at Harvard Kennedy School launched a regulatory reform framework that provides guiding principles to understand the origin and purpose of a regulation and how to streamline permitting and licensing (side note: it also shares information on using predictive monitoring to prioritize inspections where they are needed most).

Mayor Rahm Emanuel appointed a new commissioner to modernize Chicago’s entire municipal code and eliminate unnecessary regulations, and also signed licensing reform legislation that reduced the number of business licenses by 60 percent. The Seattle Restaurant Reform Initiative program formed a team of city, county, and state representatives to tackle regulatory inefficiencies for the local restaurant industry. Kansas City’s Dead Letter Office website is crowdsourcing ideas for regulations that are impractical and no longer serving a valid purpose.

Improving interdepartmental coordination and customer service at city hall. Opening a business often requires paperwork from separate city offices, and these applications can get passed around to different departments like a game of pinball. No wonder the process is frustrating.

Cincinnati reduces this administrative headache, and more quickly process permitting and licensing requests, by using “jump teams” of key staff from across the necessary departments to support the application process from start to finish. Kansas City created the KCBizcare office to offer in-person support and encouragement for business owners navigating the regulatory process. The KCBizcare team serves as an advocate for business owners who are working with city departments, and helps monitor the progress of applications. The one-stop-shop Small Business Center in Chicago has an express lane that streamlines specific types of requests (for example, updating account information or printing a new license) and provides assistance in 15 minutes or less.

Making the regulatory process more transparent and easily accessible. Business permitting and licensing process works better when expectations are clearly communicated, information is easily accessible, and the application process is available online.

The San Francisco Business Portal is a comprehensive website with “starter kits” by industry on how to start a business in the city. New York City also has online “starter guides.” The Seattle Restaurant Success Initiative developed an infographic that serves as a roadmap for starting a restaurant.

Lastly, some cities are moving towards putting the actual permitting and licensing application process online. Boston, Kansas City, and Denver have all secured contracts to move from paper to an online interface. The ultimate goal is to enable business owners and entrepreneurs to apply for all permits and licenses quickly and efficiently, and track their approval status, through one streamlined city website.

By working on one or all of these reform approaches local governments can create a regulatory environment that allows small businesses and entrepreneurs to spring into action, instead of getting tangled along the way.

Robbins_small (2)About the author: Emily Robbins is the Senior Associate, Finance and Economic Development at NLC. Follow Emily on Twitter: @robbins617.