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Created

June 23, 2010

Only 35 applications stand between you and your new small business

A couple days ago in Minneapolis, my co-presenter John Miri (a Senior Fellow at Governing’s Center for Digital Government) threw out a provocative statistic. In one state (which I won’t name), an entrepreneur could have to file up to 35 different permits, applications, or licenses across 14 different agencies to start new restaurant. This is just state agencies. It doesn’t include interactions needed for city, county, or federal regulations. As you might imagine, this can be quite a burden on both small businesses and the agencies themselves to ensure compliance.

I don’t want to suggest it’s a problem unique to the above state. In fact, there has been a fair amount of work done to try and understand how regulation and compliance affects businesses and agencies worldwide.


For example, the World Bank publishes an annual index (here) that ranks countries by how easy it is to do business (Singapore was #1 in case you were wondering). The index incorporates factors like the number of procedures, costs, and time needed to comply across different aspects of the red-tape businesses must navigate (employing workers, filing taxes, getting construction permits, etc). Unfortunately, the burden of this red-tape falls more heavily on small businesses than large. According to the SBA (in this report) it costs 45 percent more per employee for small firms to comply than larger firms. Which means (unsurprisingly), red-tape hinders one crucial engine of most economies — small business growth.

To help reduce the red-tape that business must deal with, many governments have been consolidating services across agencies and making them available online. This makes it easier for businesses to understand compliance needs and streamline the application process. One example is New York City who offers an online wizard to find necessary permits and licenses (see the wizard here). Another is Australia’s business.gov.au who successfully moved many of their permits and forms online across the federal, state, and local jurisdictions–saving time and money for businesses and government (see here for more info). And at a broader level, the EU’s Service Directive mandates that each member state put in place online one stop shops to help open up the EU market. These online portals are intended to allow foreign businesses to electronically find all information about compliance obligations and then apply online from any EU member state to open their business. This certainly gives each EU government an incentive to make it easier for business to deal with red-tape so they can better compete for and attract foreign business investment (to see the EU portals go here).

These are just a few examples of governments looking at ways to reduce regulatory red tape for businesses. What are some good examples you have seen where governments are innovating to improve business services?