Appendix A: Methods

Appendix B: Source Notes

Appendix A: Methods

Data collected in this report are current as of November 1, 2021. Local and state government agencies can add, remove, or alter processes, websites, fees, and forms at any time. Agencies should always be consulted as primary sources of information. Nothing in this report should be considered legal or non-legal advice on how to start a business.

City Selection Process

We started with the 115 cities in the United States with a population greater than 200,000 people. We did this to avoid including small cities and municipalities, which are not the focus of the study. At the time of city selection, in February 2020, the largest city was New York City, with a population of 8,601,186, while the smallest city was Grand Prairie, Texas, with a population of 200,699.

From here, we moved our cut off point to 300,000 people. This eliminated 45 cities with fewer than 300,000 people. Five exceptions were made for cities that were the largest in their state. Those cities were: Birmingham, Alabama (210,999); Des Moines, Iowa (217,446); Boise, Idaho (231,773); Newark, New Jersey (283,756); and Anchorage, Alaska (297,832). These were not removed from the list, leaving us with 70 cities.

In our list of 70 cities, 21 cities were in California and Texas. To ensure these states were not overrepresented, we randomly selected two cities each from California and Texas. The cities selected were San Francisco (897,536) and Anaheim (356,308) in California, and San Antonio (1,565,929) and Fort Worth (913,939) in Texas. Eliminating the rest of the California and Texas cities left us with a sample of 53 cities.

We then handpicked our final 20 cities. We did this based on several factors that would allow us to arrive at an optimal and researchable list of cities, including:

  • Population diversity
  • Geographic diversity
  • Innovation in the entrepreneurship space, where a city shows a focus on supporting entrepreneurs, business owners, and the greater community
  • Efforts on licensing reform, where a city is currently working on efforts to make it easier to start a business
  • Researchability
  • Opportunities for future grassroots activism

Overall, our goal was to have a diverse selection of cities that came from all major geographic areas of the country, were both large and mid-sized, and had enough grassroots and research opportunities to make meaningful, long-term impacts after the publication of this report. The final 20 cities are:

  1. Atlanta, Georgia
  2. Birmingham, Alabama
  3. Boise, Idaho
  4. Boston, Massachusetts
  5. Des Moines, Iowa
  6. Detroit, Michigan
  7. Indianapolis, Indiana
  8. Jacksonville, Florida
  9. Minneapolis, Minnesota
  10. New Orleans, Louisiana
  11. New York City, New York
  12. Newark, New Jersey
  13. Philadelphia, Pennsylvania
  14. Phoenix, Arizona
  15. Pittsburgh, Pennsylvania
  16. Raleigh, North Carolina
  17. San Antonio, Texas
  18. San Francisco, California
  19. Seattle, Washington
  20. St. Louis, Missouri

Originally, Cleveland, Ohio was one of the selected cities, but we soon learned that it would become prohibitively difficult to research due to a lack of information online, in its city code, and over the phone with city staff. We replaced Cleveland with Des Moines to add another smaller-sized mid-western city.

Metrics for Business Start-Up Analysis

Below we describe how we calculated the six primary metrics used to measure the cost, delays, and complexity of starting the five business types featured in the report:

  • Cost: The total dollar amount of fees an entrepreneur must pay to start a particular business type. This can include the cost of corporate registration (incorporating an LLC), trade name registration, business licenses, food and health permits, building permits (including mechanical, electrical, plumbing, sign, and construction permits), inspections, occupational licenses, zoning permits, street and vending permits, and various other fees.
  • Number of fees: Each time a fee needed to be paid, it was included in the total number of fees tally.
  • Number of steps: Steps were totaled by counting up all the actions that an entrepreneur needed to complete to make it through the business start-up process. This included filling out and submitting forms or paperwork, attending meetings with government agency officials, attending public hearings, scheduling and undergoing inspections, and getting documents notarized. We did not include higher-order steps such as making decisions about what type of business structure to choose when incorporating. Our assumptions in our analysis for each business type account for these types of decisions.
  • Number of forms: Each time a form had to be filled out, it was included in the total number of forms tally. Forms include paper forms that must be printed out and mailed to an agency, PDF or paper forms that must be printed out and filled out or are fillable on a computer that must be emailed to an agency, online-based forms that are completely fillable on a website and are submitted online, and forms that require creating an account with a city website and can be filled out and submitted online.
  • Minimum number of in-person activities: Any time an entrepreneur must complete a step by physically going to a city agency office, attending a public hearing, getting a document notarized, or being present for an inspection is considered an in-person step. We qualify this metric with the use of “minimum” since it is possible for a variety of reasons that an entrepreneur would need to complete steps in person more frequently than the minimum number of instances we tabulate.
  • Number of agencies involved: The number of agencies that are involved in the business startup process. Each agency that controls a part of the process was included in this metric. This is not the aggregate number of times an entrepreneur needs to interact with city agencies. Examples include agencies at all levels of government, such as the IRS, a state health department, or a city taxing authority.

Building Permit Process and Analysis

Building permits from city to city are highly variable and depend greatly on the type of construction work being performed. To reasonably estimate the cost and complexity of building permits for each city, we limited their inclusion to the following types of permits. We analyzed the cost, number of steps and agencies, in-person requirements, and forms involved for each type of permit:

  • General building permits: authorize general construction work and renovations completed by the applicant’s general contractor.
  • Mechanical/HVAC permits: authorize any type of work related to air conditioning, heating, elevators, dumbwaiters, etc. They are issued to a licensed mechanic who is typically hired by the applicant’s general contractor.
  • Plumbing permits: authorize any type of plumbing work. They are issued to a licensed plumber who is typically hired by the applicant’s general contractor.
  • Electrical permits: authorize any type of electrical work. They are issued to a licensed electrician who is typically hired by the applicant’s general contractor.
  • Sign permits: authorize any type of sign work. They are often only issued to a licensed sign contractor who is typically hired by the applicant’s general contractor. For our analysis, we assume that the sign in question is an unilluminated wall sign.

Plan reviews were incorporated into our analysis when we assumed that alterations and renovations would be substantial enough to require a plan review. Plan reviews generally had a fixed cost and were assessed separately from building permit fees. In some cases, they were part of an overall building permit cost assessment.

Inspections were included whenever final inspections were required as the last step of the building permit process. Other clearly defined inspections were also included. We did not assume additional inspections as part of an applicant’s process of acquiring building permits, but the reader of this study should not assume that our analysis was inclusive of every possible inspection a typical applicant might have to go through. Additionally, fees for inspections were included where fees were assessed, and inspections were considered an “in-person” step in our analysis. Finally, we considered scheduling an inspection and undergoing that inspection as two separate steps.

Business-Specific Assumptions

For the purposes of estimating building permit costs, we researched typical renovation costs for the business types and industries we analyzed in this report.

Restaurants

  • We assumed the size of the restaurant was 1,000 square feet, with 600 square feet for seating and 400 square feet for the kitchen, prep areas, and storage space. The estimate is based off an average of 15 square feet per seat for a full-service restaurant where the restaurant has 40 seats. See: https://bizfluent.com/how-5707504-calculate-seating-capacity-restaurant.html and https://smallbusiness.chron.com/calculate-seating-capacity-restaurant-39808.html.
  • Most building permit costs in our analysis are determined by the value of work being performed. The value of renovation work was assumed to cost $180,000, based on our research of typical industry renovation costs. For specific permits, we assumed $25,000 of work for mechanical, electrical, and plumbing work.
  • The restaurant was assumed to be permitted by right, meaning it would not need to obtain additional zoning approvals.

Retail bookstore

  • To showcase zoning processes, we assumed our bookstore would need to get a conditional use permit and would open in an area that it cannot open in by right. This means that the bookstore would have to receive special zoning approval from the city to open.
  • The bookstore would also need a sign permit. No other building permits were included in the bookstore analysis.

Food truck

  • No building permits were assumed for the food truck since it is a mobile vending vehicle and does not require such permits. Food truck-specific permits, such as street vending permits, were included in our analysis.
  • We assumed that the truck would want to vend in a downtown corridor, so we included any special permits that a city might require vendors to obtain to vend in the city center.

Barbershop

  • We assumed the size of the barbershop was 1,000 square feet.
  • Most building permit costs in our analysis are determined by the value of work being performed. The value of renovation work was assumed to cost $75,000 based on our research of typical industry renovation costs. For specific permits, we assumed $10,000 of work for mechanical, electrical, and plumbing work. See: https://www.evergreenbeauty.edu/blog/how-much-does-it-cost-to-start-and-operate-a-beauty-salon/.
  • The barbershop was assumed to be permitted by right, meaning it would not need to obtain additional zoning approvals.

Home-based tutoring

  • The home-based business is a home tutoring business. This is an important distinction because most cities regulate the type of businesses that can be run from the home.
  • We assumed that clients would visit the home. This is an important distinction because cities have varying rules on what kind of approvals are needed for home businesses that see clients at home.
  • No building permits were required for the home-based tutoring business.

Appendix B

Atlanta

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

Starting a Business: By the Numbers

Birmingham

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

  • N/A

Starting a Business: By the Numbers

Boise

Business Licensing

  • Boise Development Code § 3 – Licenses and Permits.

One-Stop Shop Score

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

  • N/A

Starting a Business: By the Numbers

Boston

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

Starting a Business: By the Numbers

Des Moines

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

Starting a Business: By the Numbers

Detroit

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

Starting a Business: By the Numbers

Indianapolis

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

  • License terms: Indianapolis Revised Code § 801-209.

Starting a Business: By the Numbers

Jacksonville

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

Starting a Business: By the Numbers

Minneapolis

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

  • Fee proration: Minneapolis Code of Ordinances § 261.40.
  • Emerging Small Business Pilot Permit: Minneapolis Code of Ordinances §§ 352.10–.60.

Starting a Business: By the Numbers

New Orleans

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

  • N/A

Starting a Business: By the Numbers

New York

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

  • N/A

Starting a Business: By the Numbers

Newark

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

  • Business license background checks: Newark Code § 8:12-3.
  • Restaurant criminal history certification: Newark Code §§ 8:12-1 to 8:12-15.
  • License terms: Newark Code §§ 8:12-1 to 8:12-15.
  • Home-based business regulations: Newark Code § 41:4-6-6.
  • Food truck certificate: Newark Code § 8:7-2(c).
  • Food truck restrictions: Newark Code § 8:7-6(d).

Accommodations for New or Small Businesses

  • N/A

Starting a Business: By the Numbers

Philadelphia

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

  • N/A

Starting a Business: By the Numbers

Phoenix

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

Starting a Business: By the Numbers

Pittsburgh

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

  • N/A

Accommodations for New or Small Businesses

  • N/A

Starting a Business: By the Numbers

Raleigh

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

  • N/A

Starting a Business: By the Numbers

San Antonio

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

Starting a Business: By the Numbers

San Francisco

Business Licensing

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

  • N/A

Starting a Business: By the Numbers

Seattle

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

Starting a Business: By the Numbers

St. Louis

Business Licensing

One-Stop Shop Score

Notable Barriers and Roadblocks

Accommodations for New or Small Businesses

  • N/A

Starting a Business: By the Numbers