Monday, January 24, 2011

Los Angeles, anti-small business ?

If you want a rough approximation of hell on earth, try opening a restaurant in the City of Los Angeles. It’s not just the dozen or more government agencies that need to sign off on a project—or the lack of communication between the Building and Safety guy who says that the electrical outlets are fine and the Fire Department guy who says that they have to be replaced. It’s not even the intramural squabbling between the Planning Department and the Area Planning Commission over whether to require six or eight parking spaces. What makes L.A.’s system so horrible—often dragging out approvals for a year or longer—is an institutional disregard for anyone running a business. In this world, bureaucracy is what rules, and if you don’t like it, well, tough.

When a small business owner is held up by nonsensical regulations, the fallout can be considerable, not just for him or her but for the entire L.A. economy. The business loses out on thousands of dollars in potential sales, which means that people aren’t hired, suppliers don’t get work, and the city doesn’t receive tax revenues—no small matter given an escalating budget deficit. If business owners have to pay rent while waiting for all the city permits to clear, they could be hard-pressed to make up for the losses once the operation finally does open. Sometimes the cash runs out before the permits are in hand. Sometimes an owner pulls up anchor and moves to a more accommodating area. “Los Angeles is one of the most hostile cities for entrepreneurship and small business that we’ve come across,” says Michael Bindas

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