It’s Hard Being Small

The Administrative Burden on Small Business

In June of 2023, Outgrow Your Garage filled out the paperwork to become a federally certified Woman Owned Business. Theoretically, this was a free and easy way to make it easier for our government and non-profit clients to hire us. As a bonus, the SBA is legally required to approve the application in 90 days. 

Ten months later, our application has disappeared from the system twice and we just received notification that actually, we need to submit additional documentation before our application can be marked complete. Also, the 90 day approval window doesn’t actually start until our application is marked complete. In our case, I also have no idea how to create the requested documents (minutes from a board meeting I didn’t have because we have no board and a stock ledger showing that I have never issued any stock to my sole employee.) 

Despite legally being a corporation, functionally, we’re a small business. And this process is yet another example of what I like to call the administrative burden on small businesses. Every business I know has a plethora of examples of their own. New restaurants can’t get the commercial lease without the loan to cover the renovation costs, but the loan won’t go through unless they have a signed lease. Paying taxes, applying for permits, and meeting code is a whole skill unto itself, and one that most business owners don’t have a background in. Worse, the waiting time for approvals or sitting on hold is time that businesses can’t spend actually doing business.

Many of these issues are small. Yesterday, I spent fifteen minutes putting together the next steps for my women-owned business certification. My lawyer will build the documents and I’ll send them next week. Last week, I spent an hour on hold waiting for the IRS to answer a question. But cumulatively, these small things add up, especially when the process is unfamiliar.

Before I spent my hour on hold with the IRS, I had to spend a full day getting transferred to different departments and calling new numbers before I finally got to the place I needed to be because the number on the notice from the IRS was incorrect. The state of Colorado has a variety of different business portals depending on whether you’re paying your unemployment premium, navigating sales tax, or filing a business form. The City of Denver has an “Occupational Privilege Tax” whereby any employer who does $500 worth of business in the city has to pay a small tax on their employees. Once you sign up for an account, you have to file a form every quarter, whether you work in Denver or not. 

Everytime I talk to a policy maker, a politician, or a small business advocacy group, they always ask the same question: what can we do to support small businesses in our communities? My most common answer is to stop adding to the administrative burden of small business owners. 

Small businesses are a hot topic when it comes to policy – as John Oliver pointed out several years ago, they are the backbone of our economy. In real terms, we covered how vital small businesses are to workforce development last week, and how they account for nearly 50% of the workforce. Organizations like the Small Business Majority and the Small Business Administration exist solely to support small business success on the national level, and there are countless local and regional efforts as well. I firmly believe that every one of these organizations (and the people who work in them) care about small businesses and want to help. I also think they aren’t sure how. 

The question is complex, but there are some starting points we can use. For example:

  • In your organization or area, is there a central point of information that business owners can access for resources? If you run a website, is information easy to find and clearly marked on it? 
  • Delegate a person as “the one who knows things”. Part of their job is keeping track of resources and practices that business owners need to know. What forms need to be filled out? How do the questions need to be answered for the form to be accepted and approved?
  • Create connections between types of resources, and make sure client-facing staff are aware of additional resources. For example, if a business owner goes to the library to find out how to start a business, does the library staff know that the local SBDC offers a class on entrepreneurship? 
  • Get local government involved. I recently heard the expression “pink tape” to mean an area of bureaucracy where there is less red tape so that entrepreneurs can test out ideas more rapidly. Can your area make navigating health code requirements easier for entrepreneurs wanting to start a food truck? What about food trucks wanting to move to a permanent space? 

Most importantly: ask the local business owners what they need. They know the answers, and they know exactly where their administrative burden is highest. I talked to Kami Collins last week about my experiences as a small business owner in Colorado. She’s one of the Rural Development Directors at Colorado’s Office of Economic Development and International Trade, and she said “I’ve heard the same experiences and frustrations from 5 other business owners this week.” We know the problems, and we’re here to help find solutions. Let’s work together to create thriving business communities across the nation.

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