SAN ANTONIO—Barriers to Business: How Cities Can Pave a Cheaper, Faster, and Simpler Path to Entrepreneurship reveals the costs, delays, and complexity that cities impose on entrepreneurs seeking to start small businesses. The report contains key takeaways for how San Antonio needlessly complicates entrepreneurship, and provides specific, workable solutions to help San Antonio become an easier place to start a business.
Entrepreneurs in San Antonio face high costs and many steps to start a business. The city reduces barriers to entry for entrepreneurs by not requiring a general business license, but officials can make the process significantly easier for entrepreneurs in other ways. The new report from the Institute for Justice (IJ) shows how.
The report finds that San Antonio 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. San Antonio 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 San Antonio include:
- Permit fees add up. For example, restaurateurs must pay 12 different fees totaling $2,477 just to open their doors.
- Compared to other cities studied, San Antonio uses a high number of business license categories. Officials license 53 different business activities—in addition to requiring dozens of permits for zoning and construction.
- San Antonio’s regulations target certain kinds of businesses. For example, home-based tutoring businesses may only use 25% of their home for their business and are unable to employ nonresident employees or tutor more than two students at a time.
“San Antonio can do more to support entrepreneurs than simply providing them with workarounds to complicated processes. San Antonio 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 San Antonio 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 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.