SEATTLE—Dennis Ballen has embodied the American Dream, growing from entrepreneur to businessman with his Blazing Bagels chain. The “best bagels west of New York City” are now found throughout the Seattle area. But Seattle’s business licensing requirements made his dream harder to pull off.
“You can’t go on a Tuesday, and you can’t go on Thursday, and you have to go before nine o’clock on the opposite days. You can’t stand in line. You must have an appointment. It changes all the time.”
Dennis’ struggles are common—regulatory processes for Seattle entrepreneurs are long and complex, making it harder for entrepreneurs to create new businesses and jobs. A new report by the Institute for Justice (IJ) examines what entrepreneurs in Seattle and 19 other cities must do to get to opening day. Barriers to Business: How Cities Can Pave a Cheaper, Faster, and Simpler Path to Entrepreneurship reveals the costs, delays and complexity Seattle imposes on entrepreneurs, and provides workable solutions to make it easier to start a business.
“Seattle’s regulatory labyrinth that aspiring small-business owners experience not only frustrates entrepreneurs and makes compliance difficult, but also deters some residents—daunted by the prospect of dealing with city rules—from even starting at all,” IJ Activism Associate and report co-author Andrew Meleta said. “Cities should avoid forcing entrepreneurs to invest time in unnecessary regulatory compliance that could otherwise be devoted to getting their business ventures off the ground.”
Seattle’s business license requirements do not simply make it more difficult to officially open one’s business: They also limit the types and scope of businesses one can legally operate at all. Mobile food vendors cannot operate within 50 feet of a brick-and-mortar food service business, reducing the number of places food trucks and other food mobile vendors can legally sell their products. Home-based businesses are limited to using 500 square feet of their home, restricting the ability of entrepreneurs to use their homes for business.
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 Seattle include:
• It is more expensive to start a business in Seattle than in all but one of the cities we studied. Restaurants pay $7,466 to get started, with $3,662 in building permits and $1,616 for a food permit making up the bulk of the cost.
• Seattle scored a two of five on our one-stop shop analysis because it uses separate portals for different license and permit applications.
•Restaurants must complete 63 steps and fill out 16 forms to open. Their mobile counterparts must complete 45 steps and 15 forms to start up and must interact with 9 different agencies, adding to the length of time it takes to get up and running.
“Small businesses are the backbone of the American economy,” report co-author and IJ City Policy Associate Alex Montgomery said. “Cities should lead the way to make opening one easier, not unnecessarily difficult.”
Barriers to Business proposes Seattle lower fees required to start a business, particularly for expensive building and health permits, and integrate agency websites in a proper one-stop shop, among other policy recommendations included in the report.
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 their lessons learned to cities and towns nationwide, organizing entrepreneurs at the grassroots level and pursuing needed policy and legislative change.