'Sweet Home Chicago' Not So Sweet For Entrepreneurs

New study says Chicago makes life too hard for small businesses.

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We have some data on the best and worst states to start a business. But local and municipal laws are often more important than state laws. So what about the best and worst cities in which to start a business? I'm not aware of any studies that compare the various business regulations of cities across the board. But a recently released study from the Institute for Justice makes an interesting case that if there were such ranking, the city of Chicago would be at or near the bottom.

According to the study, "the overlapping rules of the city of Chicago and the state of Illinois create a matrix that is so confusing and nonsensical that it often seems designed to stop entrepreneurs in their tracks."  What are some examples of these byzantine regulations?

-Many certain types of businesses, like child play centers or barbershops, have special rules that apply to them that make it more expensive and time-consuming to get off the ground.  But businesses without special rules still must pay a $250 business license fee every two years, or suffer penalties from $200 to $500 a day if they operate without licenses.

-Businesses can be fined for not providing off-street parking in a lot.  That would seem to against the honor the city of Chicago recently won from the National Building Museum for "going green."

-Home-based businesse are particularly difficult to start in Chicago: only one person in a home can be working on the business.  If customers are coming to the home to purchase goods, only two customers can be served at a time and only ten can be served a day.

-Street vendors are not allowed to run their businesses outside major, tourist-filled landmarks such as the Art Institute, and are arbitrarily prohibited from selling some goods such as flowers.

The full report has much, much more, as well as examples of specific Chicagoan small-business people hindered by the laws.

Is Chicago the worst city in America to start a business? My hunch is that it is not, and if one investigated other cities with as much detail as IJ has investigated Chicago, one would find similar burdens on entrepreneurs.


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small business

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