Kansas City Regulations Unintentionally Stifle Small Businesses

A Patchwork of Regulations

Regulations are intended to safeguard public health and ensure fair business practices, but oftentimes, they unexpectedly burden the very small businesses they aim to protect. In cities across America, including Kansas City, small business owners face a thicket of challenges in the form of occupational licenses, questionable health regulations, building codes, taxes and additional red tape. It’s a litany that has unintentionally hindered entrepreneurial growth in the region.

The household image of corporate executives battling against heroic activists for business liberty may provide thrilling plotlines for Hollywood, but in reality, the depiction fails to mirror the true nature of regulatory impacts. Instead, small business proprietors, who account for 55% of total net job creation in the last decade according to the U.S. Bureau of Labor Statistics, shoulder the brunt of these burdens.

Revealing Study on Regulatory Obstacles

The Institute for Justice’s nonprofit project, unveiled a 2022 report entitled Barriers to Business. It spotlighted the real-world impediments faced by entrepreneurs in several American cities. The revelations from this pioneering study were startling. For instance, launching a restaurant in San Francisco involved 17 different fees amounting to over $22,000. Boston and Newark required food truck operators to make seven in-person visits to various agencies before they could start business operations. To open a home-based tutoring business in Phoenix entailed wading through 21 different regulatory steps.

Though Kansas City was not on the assessment list for this report, there is little doubt that local entrepreneurs confront similar challenges.

Proposing Astute Reforms

In collaboration with local entrepreneurs, the same team from Institute for Justice introduced a tailored policy report for Kansas City, highlighting substantial regulatory obstacles hindering potential disruptors in the commerce landscape. The report advocates for alleviating compliance costs, streamlining permit and license procedures, reimaging regulations and enhancing accountability in business inspections.

Given the invaluable contribution of small entities to local economies, city administrations ought to re-evaluate their policy priorities. These establishments represent 46% of private-sector employees and deliver 39% of private-sector payroll, as reported by the Small Business Administration. Such a significant stake warrants a shift in focus from larger corporations to smaller businesses and innovators.

The Irony lies in Unintentional Barriers

Despite cities’ zeal for greater business contributions in the form of taxes and job creation, the regulatory barriers often end up working against the very businesses they intend to court. Small startups with innovative ideas, unwavering zeal and transformative products are invariably sidelined, receiving neither the carve-outs nor the subsidies extended to their larger counterparts. This status quo underscores the importance of shifting focus to nurturing the potential Sam Waltons rather than only attracting the Walmarts.

The sweeping reforms proposed by the Institute for Justice’s City Works Playbook present a promising starting point. Re-imagining the business landscape without the constraints of unintentional barriers could lead to an economic renaissance powered by thriving small businesses and inspired entrepreneurs.