In a report called Barriers to Business, the Institute for Justice (IJ) analyzed 20 US cities for how easy it is to open five different types of businesses. To cover a range, those businesses included a restaurant, a retail bookstore, a food truck, a barbershop, and a home-based tutoring business.
Entrepreneurs who want to start a restaurant, for example, have 13 different fees totaling $5,300, on average across the 20 cities. In San Francisco, those fees reach $22,648.
Remember, these costs and regulatory hurdles are all in addition to the normal costs and work of opening a restaurant.
The IJ also looked at the number of regulatory steps, and the number of government agencies it took to open a business. On average, across the 20 cities, it took 55 steps and eight government agencies just to open a barbershop.
And as if the cost and time burden wasn’t enough, the report found that in many of the cities, it was not even clear what all the requirements were to start a business.
For example, the report analyzed if a city gave entrepreneurs a “one-stop-shop” to open a business.
That means a website which clearly lays out the requirements, and allows the owner to complete most forms in one portal. IJ also looked at whether the portal is user-friendly and allows the business owner to track progress and organize their information from one online account.
None of the cities received a 5/5 for the one-stop-shop, while Birmingham and Des Moines received a 0. But Atlanta, Detroit, New Orleans, New York, Pittsburgh and San Francisco came close, with a 4/5.
And that shows that simply looking at one factor is not enough. Sure, San Francisco may make it relatively easy to navigate the process, but that doesn’t make up for the enormous cost.
And in Raleigh, it may only cost about $1,300 in fees to open a restaurant, but the city meets only 1/5 one-stop-shop criteria.