In our last post, we discussed what small businesses think about their taxes (rates aren't always a problem, but compliance can be). This time, we'll focus on licensing. Thumbtack -- a consumer service that links individuals to business professionals who can help them accomplish personal projects -- surveyed thousands of American small businesses and found that licensing can be a major challenge. From painters in New York to photographers in Los Angeles, personal trainers in Chicago to home cleaners in Houston -- there are countless small businesses across the country that spend more time than they should handling licensing, and less time doing what they love -- serving their customers.
Licensing a business should be easier.
A significant factor in our Small Business Friendliness Survey was the complexity and time-cost associated with licensing requirements. A photographer in Winter Springs, Florida said, "It is not clear if you are meeting all requirements as you have federal, state, county and some city requirements...none of them talk to each other, so sometimes you can be misled to think you met requirements; only to learn later that another government agency has some [other] requirement."
It's no surprise that small businesses are confused. In fact, half of the service professionals who responded to our survey reported that they are required to be licensed at one level of government, and a full quarter of that group said they were licensed at four levels of government -- city, county, state, and federal -- all for the same work.
This makes a difference in how small businesses view their governments. Of the licensed professionals we surveyed, nearly 60 percent said that licensing rules for their profession were "somewhat" or "very" easy to comply with. These professionals were also the most likely to say their governments were "very" or "somewhat" supportive. Pros who said the licensing rules were "somewhat" or "very" difficult to comply with were, on the other hand, more likely to say their governments were "very" or "somewhat" unsupportive.
Most small businesses understand the importance of licensing -- they realize that consumers benefit from being able to distinguish between trained and untrained professionals -- but many are frustrated that they might be required to obtain one license to do business in a city or county, and a different license to do the same work only a few miles away. To help small business professionals, policymakers certainly don't need to slash all licensing requirements, but they do need to put more effort into harmonizing licensing rules and requirements that are already on the books.
In our final post on the Small Business Friendliness Survey, we'll discuss how big of a role small businesses want their governments to play in their professional lives. Stay tuned.