Case Study: Washington, D.C.

Situated across the river from IJ’s headquarters, Washington, D.C. is primarily famous for its monuments and government buildings. But it is also home to a thriving entrepreneurial community eager to create new opportunities for District residents. To help them achieve those dreams in our own backyard, IJ’s Activism Team launched its District Works project in 2019. ¹

D.C.’s regulatory environment for small and new businesses had profound opportunities for improvement, as requirements for starting up were costly, complex, and difficult to understand, posing barriers especially for residents in economically distressed parts of the city.

District Works began by starting where any advocacy or reform effort on behalf of entrepreneurs should begin: by talking with entrepreneurs and local leaders to find out where the greatest needs and opportunities were.

After hosting roundtable events with entrepreneurs, going door to door in D.C.’s business districts, and meeting directly with leadership at the city’s Department of Consumer and Regulatory Affairs (DCRA)—the District agency responsible for the business start-up process—it became abundantly clear that small businesses needed a cheaper, faster, and simpler path to start up than the current regulatory environment provided.

We also learned that almost no one, including city officials themselves, had a real sense of all the steps required to start a business in D.C. That discovery led to the development of a detailed flowchart mapping out each individual step, including the many roadblocks that can stop an entrepreneur in their tracks.

One such “stop sign” to opportunity is called “Clean Hands,” a D.C. policy (though different versions exist in many cities) that prevents anyone with $100 or more in outstanding debt to the city from obtaining virtually any kind of license. ² This extremely low threshold means a simple parking ticket can prevent someone from starting a business, or even obtaining their driver’s license, and the types of debt that can count against a D.C. resident include late or missing water utility bills.

The good news is that local leaders in D.C. are listening, and policymakers in other cities can learn from their efforts to modernize and streamline the business creation process.

In 2019, DCRA updated a previously dysfunctional website and collapsed 128 categories of business licenses into 13 simpler groups ³ Meanwhile, D.C. Council removed an arbitrary revenue cap on cottage food producers and allowed them to sell their products in stores and online. ⁴

In 2020, District Works participated in a DCRA-led working group, with the goal of finding ways to improve small-business regulations during the pandemic. After months of advocacy with DCRA leadership, the team’s recommendations were largely adopted by the agency: Officials agreed to tie up remaining points of confusion on their website, create a more comprehensive guide on how to start a business in D.C., and lower fees for acquiring occupational and business licenses, among other improvements. ⁵

In 2021, the District Works team released a report, Blueprint for Business: Cutting Red Tape and Supporting DC Entrepreneurs, to highlight the importance of continuing to make it cheaper, faster, and simpler to start a business in the District. ⁶

To further streamline requirements with the report’s recommendations in mind, the coalition worked with D.C. Councilmember Brooke Pinto to write legislation that would remove outdated rules in the D.C. Code, permanently retire duplicative license categories, and simplify fee schedules to lower costs for smaller-scale businesses. ⁷ As of January 2022, the Business and Entrepreneurship Support to Thrive Act is still under consideration by D.C. Council. ⁸

D.C., like every city, still has plenty of opportunities to improve, and through targeted research, grassroots activism, legislative advocacy, and policymaker engagement, the District Works team will continue to work with city and business leaders to remove the stumbling blocks preventing D.C. business owners from realizing their dreams.