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To Accelerate New Business Creation, Government Must Streamline Registration

Nearly three-quarters of entrepreneurs agree: government regulations on businesses are complex and hard to follow. And while many regulations often serve a necessary public safety purpose, others are needlessly restrictive, often having the effect of stifling competition. In a moment where America badly needs the innovation and good-paying jobs that entrepreneurs create, policymakers would be well-served to ensure the status quo isn’t creating undue barriers to entry, killing ventures before they ever have a chance to succeed.

Indeed, while the challenges to growing and funding a business are well-documented, simple registration has proven a challenge for many — with regulations often weaponized by big corporations who benefit from an uneven playing field.

This reality is perhaps most troubling for business owners of color, an outsized share of whom lack traditional business networks to help them navigate the process. Meanwhile, immigrants often face language barriers at the outset — another way in which the status quo works against new business owners, particularly those underrepresented in entrepreneurship today.

Global Entrepreneurship Network, a member of the Start Us Up coalition, has indexed state business registration websites and portals, providing assessments based on the ease with which they facilitate the process for entrepreneurs. On a 10-point scale, just 10 states scored above a 7. Meanwhile, 16 — a mix of both red and blue states — scored below a 4.

The problem is far-reaching and non-partisan.

Solutions come in the form of greater coordination and a legitimate effort to reconcile different sources of information or requirements — the confusing, often-overwhelming leg work that prospective business owners themselves are often forced to do on their own. America’s New Business Plan offers three recommendations:

  • Create a single (translated, public) list of all requirements to start any business and easy-to-understand guides that walk entrepreneurs through the permitting process.
  • Require coordination across agencies to simplify all federal, state, and local procedures, forms, licenses, and permits required to start a business.
  • Create federal and state incentives for local authorities to reduce barriers to starting businesses, even down to the smallest fees and forms.

Much of this work requires neither new budget nor new laws. But any action could be transformative in strengthening the local or statewide new business climate.

In the past month, we’ve seen incredible progress in New York City, which recently announced NYC Business Quick Start, a concierge service that provides “small businesses a sole point of contact to help navigate city regulations.”

The website, which promises to “cut red tape and open sooner,” includes a step-by-step, Q&A process that results in a single custom list of federal, state, and local permits and regulations applicable for any circumstance. It represents an important start, ensuring the complexity of an administrative process doesn’t discourage entrepreneurs out of the gate — and a level playing field for all entrepreneurs.

As New York City Council Member Robert Cornegy, Jr. said, “the challenges of a small business cutting through the bureaucracy … can be insurmountable. As Chair of the Commission on M/WBE, I have seen over and over that this is especially difficult for Black-owned businesses. This new concierge service offers a way to level the playing field.”

Business owners off the coasts need help too — perhaps more so, per the Global Enterprise Registration index.

As America continues its recovery, all states and cities need to ensure prospective entrepreneurs are given a fair opportunity to see their business ideas come to fruition, rather than being snagged in a tangle of red tape and complexity.

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