Making diners happy is easy for Atlanta chef Joey Ward. The hard part was satisfying City Hall when he opened Southern Belle, a restaurant that serves farm-to-table cuisine in a historic building with a speakeasy nestled inside.
The startup process was so complicated that even agency officials lacked clear answers. When Ward called for help, they told him to talk to an attorney. So Ward’s wife, Emily, a full-time lawyer, assisted. But even then the couple found that navigating the regulations involved in starting a restaurant in a historic building would be a full-time job.
To handle the burden, the Wards hired two teams of specialists—one to manage local permits and the other to manage liquor approvals with the state. “It was so frustrating not knowing what to do other than to hire somebody to make things magically happen,” Joey Ward says. “If you have to hire expediters, that means the system is broken.”
Other Atlanta entrepreneurs face similar challenges. “Barriers to Business,” a new report from the Institute for Justice, shows a complex and often opaque application process for aspiring business owners. The study analyzes city codes and startup requirements for five common business types in 20 U.S. cities, including Atlanta.
When diagrammed, the number of steps involved is staggering. Opening a hypothetical restaurant, for example, is a 76-step process in Atlanta. Even worse than the quantity, the Wards say, is the ambiguity.
Restaurateurs who try to open brick-and-mortar establishments must figure out parking requirements, historical preservation rules, fire codes and other procedures—and they never know exactly when and how to do each step. Those who attempt the feat must fill out 20 forms, complete at least 12 in-person activities, interact with 10 different city and state agencies, and pay 14 fees totaling $5,308.
Other types of brick-and-mortar businesses are not much easier to start. Atlanta barbershops cannot open until the owner completes 68 regulatory steps. Launching an Atlanta bookstore involves 46 steps. Some entrepreneurs, hoping to avoid the hassle, choose a mobile or home-based business model. But they still must pay fees, obtain city tax certificates and clear other hurdles.
The process to open an Atlanta food truck, for example, involves 44 steps. Home-based business owners have a shorter path to get started, but once approved they cannot conduct sales from home or have more than a single employee. The city also imposes square-footage caps that limit growth.
Regardless of the type of business, compliance is difficult. Many Atlanta entrepreneurs must prove their Fulton County residency and pass multiple background checks, which can be invasive and redundant. Certain city-level business licenses are contingent upon the applicant having a clean criminal record, which blocks formerly incarcerated citizens from earning an honest income in their chosen endeavor, despite having paid their full debt to society.
Similar issues abound nationwide. Some cities are friendlier than others for small-business owners, but going from concept to grand opening is challenging everywhere. The report likens the process to death by a thousand cuts. No single step is fatal in isolation, but the cumulative effect can be overwhelming. Aspiring entrepreneurs with fewer resources and limited access to capital suffer the most. Some must choose between giving up altogether or operating in the informal economy.
Fortunately, the report offers suggestions to make the startup process cheaper, faster and simpler in Atlanta. First, the city should streamline the number of business license categories—currently 82—and simplify the process to obtain building and zoning permits. Atlanta should also lower late fees for annual renewals, eliminate unnecessary background checks, and reduce the number of times an entrepreneur must make trips to agency offices to complete paperwork.
The reforms would benefit everyone. Small-business owners provide for their families, but they also contribute to their communities. They create jobs, serve customers, pay taxes and drive innovation. The Wards do all this with a smile. Their goal is to show Southern hospitality to everyone who comes through their doors. Business applicants should receive similar treatment at City Hall—minus the coconut-braised collards, dry-aged ribeye and roasted scallops. Rather than stifle economic growth, Atlanta should embrace its entrepreneurs and treat every business applicant like a VIP guest.
Alex Montgomery is a city policy associate and Daryl James is a writer at the Institute for Justice in Arlington, Va.
