NEW YORK—New York entrepreneurs face significant regulatory hurdles to getting their businesses off the ground. While the city does a good job helping entrepreneurs navigate the requirements, those requirements can be unnecessarily burdensome—especially in such an expensive city. A new report published by the Institute for Justice (IJ) details solutions and reforms that can fix these problems and make it cheaper, faster and simpler for entrepreneurs to start their businesses.
Barriers to Business: How Cities Can Pave a Cheaper, Faster, and Simpler Path to Entrepreneurship reveals the costs, delays and complexity imposed by cities on entrepreneurs seeking to start small businesses. The report contains key takeaways for how New York needlessly complicates entrepreneurship, and provides specific, workable solutions to help New York become an easier place to start a business.
The report finds that New York entrepreneurs must navigate a web of high fees, long wait times and complex paperwork—collectively creating something akin to death by a thousand cuts—before reaching opening day, and before they have made a dime or had the chance to test the viability of their ideas.
“You shouldn’t need a pile of cash and a law degree to start the small business of your dreams,” said IJ City Policy Associate Alex Montgomery, one of the report’s co-authors. “These high price tags and burdens most harm those with the fewest resources at their disposal. New York officials should make it cheaper, faster, and simpler to get up and running so that all entrepreneurs have the opportunity to earn an honest living—especially during these challenging economic times.”
The report provides a first-of-its-kind, in-depth analysis of regulations governing small businesses in 20 U.S. cities and the real-world process of starting five common business types from the entrepreneur’s perspective. Key findings for New York include:
- It takes 56 steps to start a barbershop in New York, 12 of which must be completed in person. Making so many visits to various city agencies significantly slows down the startup process.
- The cost of opening a New York restaurant starts at $2,882 and opening a bookstore costs $3,385, mostly driven by the $2,960 fee for the zoning board application to receive a conditional use permit.
- Most information and applications are available online and easily accessible. New York also provides a business wizard that can provide applicants with the requirements they must fulfill to get their business started. However, some online resources suffer from having too many webpages explaining parts of the same process, making it difficult to piece together the requirements an entrepreneur may need to complete. Overall, New York scores four out of five on the one-stop shop rubric used in the report.
“New York can do more to support entrepreneurs than simply providing them with workarounds to complicated processes—and they can do so at little to no cost. New York must invest in small businesses by removing barriers that are already on the books,” said IJ Activism Associate Andrew Meleta, the report’s other co-author. “When thinking about easing the cost of doing business for entrepreneurs, many policymakers focus on federal and state-level reform efforts. But by pursuing our targeted recommendations for local reform and following best practices from across the country, city officials can make a truly impactful difference for New York entrepreneurs.”
Two years into the COVID-19 pandemic, America’s downtowns and small-business corridors continue to struggle with reduced hours and vacant storefronts. “It is hard enough turning an innovative idea into a successful small business, but local regulatory hurdles further complicate an entrepreneur’s startup journey,” Montgomery said. “This forces many aspiring small business owners to choose between operating in the informal economy or giving up altogether.”
By removing the legal and regulatory obstacles that make it challenging for small businesses to open and operate, officials can bolster—rather than hinder—entrepreneurs who are seeking to revitalize beloved city blocks and neighborhoods. This report provides specific guidance to cities seeking to better support their entrepreneur communities by pinpointing specific barriers to small-business ownership and identifying best practices and policy solutions to lower the cost of doing business, cut down on regulatory delays, and streamline requirements for license and permit applicants.
The release of this study marks the launch of Cities Work, an initiative dedicated to making it cheaper, faster and simpler to start a small business in cities across the country. The initiative builds on years of IJ’s work in Washington, D.C., and Chicago, collaborating with city officials to enact regulatory reforms that support aspiring small-business owners. The Cities Work team will expand the lessons learned to cities and towns nationwide, organizing entrepreneurs at the grassroots level and pursuing needed policy and legislative change.