2016 Thumbtack Small Business Friendliness Survey

Economy & Finance

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  • Small Business Friendliness Survey 2016 By Lucas Puente, Economist, Thumbtack
  • 2Thumbtack Small Business Friendliness Survey | 2016 TABLE OF CONTENTS Executive Summary 02 Small Business Friendliness Survey: Public Policy and the Skilled Professional 03 Policy Priorities for the Skilled Professional 04 In Five Major American Cities, Regulation Is a Top Policy Priority 05 Who Is the Skilled Professional? 06 Meet the Skilled Professionals 07 Case Study: Atlanta 09 Case Study: Austin 10 Case Study: Boston 11 Case Study: Minneapolis 12 Case Study: San Francisco 13 Connect with Thumbtack 14 Executive Summary Conducted since 2012, the Thumbtack Small Business Friendliness Survey is the largest continuous study of small business perceptions of government policy in the United States. The 2016 study reached 12,169 skilled professionals nationwide, including electricians, music teachers, wedding planners, wellness professionals, and others operating in a variety of industries. These entrepreneurs graded the state and local public policies that affect small businesses. In the fifth year of the study, skilled professionals signal clearly that governments must make regulations straightforward and easy to follow—especially those surrounding licensing, taxes, and employment. Small businesses see these types of regulations as their biggest impediment to starting, growing, and sustaining a thriving business. Simplistic fixes such as lower tax rates don’t make a big difference in overcoming these challenges.
  • 3Thumbtack Small Business Friendliness Survey | 2016 Small Business Friendliness Survey: Public Policy and the Skilled Professional Across the U.S. economy, business establishments are getting smaller and leaner, and automation is replacing many routine jobs that once provided a stable middle-class income for millions of people. But enterprising skilled professionals in fields from photography to plumbing are adapting to broader economic transformation by starting their own businesses. The number of professionals who develop and use specialized skill sets in nonroutine trades has grown 34 percent in the past 15 years—and this trend is accelerating: Small firms have accounted for 60 percent of net new jobs since the recession. Unfortunately, the path of the independent skilled professional isn’t always easy: Small businesses consistently cite “finding new customers” as a top concern, searching for new leads every day. Thumbtack addresses this challenge by applying technology to connect skilled professionals to customers seeking their services to get things done. Still, complicated regulations and obscure bureaucratic processes can discourage talented entrepreneurs from starting a business or curb existing businesses from expanding their workforce. To better understand these issues, Thumbtack has fielded a comprehensive survey every year since 2012 about the policy factors that help and hinder small businesses. This report provides unique data to local policymakers on what they can do to help skilled professionals succeed and thrive in a competitive marketplace. In honor of the survey’s fifth year running, this special report showcases the top policy factors that have surfaced throughout the years we have run this survey. The report also includes five case studies of cities that have had varying levels of success providing a friendly business climate for skilled professionals. The case studies reveal that small business owners typically care much less about the policy initiatives many local governments have prioritized—such as tax breaks and downtown revitalizations—and much more about regulations, training programs, and government websites that impact their day-to-day operations. We encourage cities to learn from each other how best to support the individuals who will become the new middle class and power the future of the American economy. To read the formal report and methodology, visit https://www.thumbtack.com/ survey. http://www.bls.gov/opub/mlr/2012/03/art4full.pdf https://thumbtack.com/blog/beyond-the-gig-economy/ https://www.stlouisfed.org/on-the-economy/2016/january/jobs-involving-routine-tasks-arent-growing http://sbecouncil.org/about-us/facts-and-data/ https://www.thumbtack.com/survey https://www.thumbtack.com/survey
  • 4Thumbtack Small Business Friendliness Survey | 2016 LICENSING More than any other issue, skilled professionals are affected by licensing requirements—forms and fees needed to start and run a business. For many, the occupational licensing experience (obtaining and complying with rules) can be another hurdle. TAXES On the local tax level, tax regulations are the top priority for skilled professionals; they hold their local leaders more accountable for these rules and for their tax complexity than they do for their tax rate. LABOR REGULATIONS Labor regulations on hiring and employment are key for skilled professionals looking to expand. They want to see policies that make it as easy as possible to hire new workers. HEALTH & SAFETY Health and safety regulations range from insurance rules for employees to safety codes affecting business operations. They particularly affect small businesses in home improvement and wellness. ZONING By making the process of complying with local zoning policies and acquiring building permits more straightforward, policymakers can make it much easier for skilled professionals to start and run their businesses. TRAINING Training and networking opportunities—offered by chambers of commerce, local government agencies, and organizations such as the Small Business Administration—are valuable to skilled professionals looking to hone their craft, run their business better, or meet industry colleagues. ENVIRONMENTAL RULES Environmental rules affect skilled professionals across a range of industries, especially home improvement, moving, landscaping, and even event planning. Such rules can be seen as a burden by some of the small businesses they touch. WEBSITE Government websites often help small businesses comply with regulations on their business or provide information about operating in the community. Governments that offer informative, easy-to-use website experiences tend to be rated more highly. Policy Priorities for the Skilled Professional What makes small businesses rate their governments as friendly? The following measures of government policies toward and support for small business are listed in order of their influence on this year’s grades and rankings. This is the skilled professional’s policy priority list.
  • Thumbtack Small Business Friendliness Survey | 2016 5 In Five Major American Cities, Regulation Is a Top Policy Priority We examined five cities to better understand how policy preferences compare across different parts of the country. These cities—Atlanta, Austin, Boston, Minneapolis, and San Francisco—don’t just represent different regions; they also represent the full spectrum of performance on our survey. Atlanta and Austin were among the highest-rated cities by their skilled professionals, while San Francisco was among the lowest, and Boston and Minneapolis were close to the average. Despite these differences, small businesses in these cities had similar policy priorities. In each of the five, regulations were a near ubiquitous concern. Cities deemed to have friendly regulatory regimes also earned high overall scores. And in all five cities, respondents who had good experiences with government resources such as training programs and government websites tended to rate their cities as more friendly to small businesses. 1 11 B- Minneapolis A Atlanta B Boston A- Austin F San Francisco
  • 6Thumbtack Small Business Friendliness Survey | 2016 Who Is the Skilled Professional? Diverse, technology-savvy, and specialized. Compared with American small businesses overall, the skilled professionals who use Thumbtack are more diverse across race and gender and more likely to own a business at a younger age. They are also tech-savvy: 81 percent use mobile devices to build client relationships. Active duty 2% Veteran 10% Never served 88% Moderate Liberal Do not affiliate Conservative 14% 24% 31% 31% Home improvement 42% Personal services 18% Events & weddings 17% Professional services 12% Wellness 6% Lessons 5% Under 25 6% 25–34 25% 35–44 27% 45–54 25% 55–64 14% 65 and over 3% 60% Men 40% Women 60% 21 or more 2 to 5 11 to 20 6 to 10 1 (I work alone) 2% 2% 5% 31% Less than 1 year 1–2 years 3–4 years More than 5 years 23% 23% 16% 38% High school or GED 29% 4-year degree 30% Advanced degree 16% No high school 1% Associate's degree 24% 67% White or Caucasian 14% 10% 7% 14% Black or African American 10% Hispanic Latino or Spanish 7% Other 2% Asian EMPLOYEES POLITICAL AFFILIATION AGE INDUSTRY GENDER YEARS IN BUSINESS ETHNICITY EDUCATION LEVEL VETERAN'S STATUS
  • 7Thumbtack Small Business Friendliness Survey | 2016 Meet the Skilled Professionals Entrepreneurs in every zip code, across 1,100+ categories. Skilled professionals are using new technologies to build thriving businesses and do what they love. Most of them are building full-time businesses, not earning side income. While traditional work is increasingly outsourced and automated, skilled professionals resist these trends because they offer specialized, nonroutine skills. They are the future of the middle class. Here, five skilled professionals from a range of industries and cities share how local government has impacted their business. Computer Service Provider Thumbtack pro since 2014 Location: Atlanta, Georgia Bruce Parks “ I was able to register my business, get zoning approval, pay fees, and get my business license in a couple of hours. I went during the middle of the week and had no problem getting my business license that day.” Photograph by Paul Ward Marketing and Media Consultant Thumbtack pro since 2013 Location: Austin, Texas Christian Ray “ We moved our business from Los Angeles to Austin because of how friendly the state and city are to what we do. From starting a business to paying taxes and hiring people, Austin is the place to be.” Photograph by Alex Fitch
  • 8Thumbtack Small Business Friendliness Survey | 2016 Home Organizer Thumbtack pro since 2015 Location: Boston, Massachusetts Melanie Cerio “ SCORE is a phenomenal resource, both the mentorship program and the workshops. Boston’s innovation centers, i.e., Harvard I-lab and District Hall, have offered informative and excellent opportunities to network with other entrepreneurs and potential clients.”Photograph by Bethan Brome Wedding Planner Thumbtack pro since 2014 Location: Minneapolis, Minnesota Katherine Minks “ Local chambers in Minnesota could be more referral-centric to small businesses. There could be more local networking groups that refer internally and use each other.” Photograph by Liam Flahive Fitness Trainer Thumbtack pro since 2015 Location: San Francisco, California Alicia Ruth “ I primarily use public spaces for outdoor fitness training. The city maintains beautiful public parks and neighborhoods that I work in. I’ve used the SCORE and Renaissance Business Centers for workshops and education.” Photograph by Kevin Malmgren
  • 9Thumbtack Small Business Friendliness Survey | 2016 ATLANTA https://www.thumbtack.com/ga/atlanta/ Not applicable Friendly Neutral Unfriendly 8% 49% 17% 26% rate health & safety regulations as "unfriendly" 7%42% 39% 11% 8% Used one; it was "difficult" to use Used one; it was "neither easy nor difficult" Used one; it was "easy" to use Never used one 40% 54% Too high About right 6% Too low Not applicable Friendly Neutral Unfriendly 10% 42% 15% 33% HEALTH & SAFETYLICENSING REQUIREMENTS WEBSITE EXPERIENCE TAX REGULATIONSTAX RATES Atlanta earned an A+ for tax regulations, with 42% of locals finding the regulations friendly. Only 4% said they are “very unfriendly.” Health and safety regulations earned another A+ for Atlanta. About 48% of local businesses found these rules “friendly,” beating the national average by 25%. Approximately 40% of Atlanta’s small businesses said their tax rate is too high, 19% fewer than the national average. 54% said their rate is “about right.” In Atlanta, 58% of respondents said they have used government websites, rating the experience a B+. One- third of those users went online to register a new business. Licensing regulations in Atlanta earned an A+. Locals were 26% more likely to find licensing rules friendly than in other U.S. cities. Atlanta Report Card The five most important factors in Atlanta’s Small Business Friendliness grade. Atlanta’s overall score was heavily influenced by business owners’ ratings of their licensing requirements, website experience, and tax rates. A Georgia’s largest city earns top marks for its business friendliness. Skilled professionals rank Atlanta among the country’s top cities for small business, calling it “business-friendly” and its policies “helpful.” This year, the city received its highest grade since 2012, earning exceptionally strong ratings on every regulatory metric we studied. Its A grades were a marked improvement from last year, when it scored no higher than a B+ on these measures. Small businesses said Atlanta can still improve its training programs. Fewer business owners in Atlanta knew of training or networking events; those who had participated rated them less favorably. • 18% want easier access to credit • 52% are aware of helpful training programs • 42% are required to have a license or permit • 69% say licensing compliance is well-enforced • 48% say they’d like more networking opportunities OVERALL GRADE https://www.thumbtack.com/ga/atlanta/
  • 10Thumbtack Small Business Friendliness Survey | 2016 AUSTIN https://www.thumbtack.com/tx/austin/ 25% 28% 17% 30% Not applicable Friendly Neutral Unfriendly Friendly Neutral UnfriendlyOther 35% 19% 7% 39% Friendly Neutral UnfriendlyNot applicable 35% 9% 20% 36% Not applicable Friendly Neutral Unfriendly 7% 42% 21% 30% rate labor regulations as "friendly" 33% LABOR REGULATIONSHEALTH & SAFETY LICENSING REQUIREMENTS ENVIRONMENTAL RULESTAX REGULATIONS Austin earned a B- for environmental rules, and 17% of local businesses found these rules unfriendly to their business, compared with a national average of 15%. Austinites were 30% less likely than the national average to say labor, employment, and hiring rules are “unfriendly." The regulations earned a B+. With an A-, Austin’s tax regulations were seen as 9% more friendly than the national average, and only 19% of Austinites found these rules unfriendly. Licensing rules are considered friendlier in Austin than in other U.S. cities and were rated B+ by locals. Approximately 42% said these rules were friendly. Health and safety rules, perceived as mostly neutral or friendly, earned a B. While 8.5% said these rules are “unfriendly,” that’s 32% less than the national average. A- The capital of the No. 1 friendliest state for small business earns consistent high marks. Skilled professionals in the Lone Star State’s capital call Austin “an easy place to do business” and “a great place for startups.” For five years in a row, Austin has rated among the top cities in the United States in Thumbtack’s Small Business Friendliness Survey, thanks to above-average ratings from business owners on regulations and training programs. Though Austinites are generally pleased with their city’s policy environment, they expressed some frustration with local government websites for registering new businesses, calling them “confusing” and rating them among the worst in the country. Their advice to policymakers: Focus on informing and supporting businesses in addition to providing a strong regulatory environment. • 30% want policymakers to lower or simplify taxes • 62% are aware of training programs • 29% are required to have a license or permit • 40% want business development trainings • 64% say licensing compliance is well-enforced Austin Report Card The five most important factors in Austin’s Small Business Friendliness grade. The top policy priorities in Austin revolved around regulations; a B grade on the primary concern—health and safety regulations—dragged down the city’s overall strong score. OVERALL GRADE https://www.thumbtack.com/tx/austin/
  • 11Thumbtack Small Business Friendliness Survey | 2016 BOSTON https://thumbtack.com/ma/boston/ rate tax regulations as "friendly" 32% Friendly Neutral UnfriendlyNot applicable 34% 27% 12% 27%Not applicable Friendly Neutral Unfriendly 21% 39% 14% 26% Not applicable Friendly Neutral Unfriendly 28% 26% 21% 25% Not applicable Friendly Neutral Unfriendly 30% 24% 20% 26% Locals gave tax regulations a B. They were only slightly more likely than the national average to say that local tax regulations are “friendly.” Bostonians were 14% more likely to report that local zoning policies are “unfriendly” and 14% less likely to say zoning is “friendly” vs. the national average. Bostonians were 35% more likely to say that local environmental rules are “unfriendly” than other cities, giving the city a C- on this metric. Only 34% of small business owners in Boston said licensing requirements are “friendly,” which is 12% lower than the national average of 39%. About 39% of Bostonians called health and safety regulations “friendly,” on par with the national average. These rules earned a B from local businesses. ZONINGHEALTH & SAFETY LICENSING REQUIREMENTS TAX REGULATIONSENVIRONMENTAL RULES B Massachusetts capital earns highest-ever score but draws mixed reviews. Skilled professionals gave Boston mixed ratings; some called its policies “straightforward,” others “inefficient.” Still, the overall B grade it earned this year is its highest-ever score: Its previous high watermark was a C. Positive scores for Boston’s health and safety regulations and tax regime offset below-average scores on other regulatory measures, such as licensing requirements, environmental rules, and zoning. Locals were also less enthusiastic about the training programs and government websites in their community than the national average. • 31% want policymakers to lower or simplify taxes • 57% are aware of helpful training programs • 35% are required to have a license or permit • 75% say licensing compliance is well-enforced Boston Report Card The five most important factors in Boston’s Small Business Friendliness grade. Boston’s overall B rating was driven most by business owners’ ratings of the city’s regulatory regime—most importantly, its health and safety regulations. OVERALL GRADE https://thumbtack.com/ma/boston/
  • 12Thumbtack Small Business Friendliness Survey | 2016 MINNEAPOLIS https://www.thumbtack.com/mn/minneapolis/ Not applicable Friendly Neutral Unfriendly 11% 34% 26% 29% rate tax regulations as "unfriendly" 31% rate labor regulations as "unfriendly" 22% Friendly Neutral UnfriendlyNot applicable 36% 14%19% 31% Not applicable Friendly Neutral Unfriendly 23% 29% 18% 30% More respondents in Minneapolis said that the tax code and related regulations are “unfriendly” than “friendly.” In other U.S. cities, the opposite is true. Although more locals said licensing regulations are “friendly” than “unfriendly,” the city was less positive on licensing than the nation overall. Environmental rules in Minneapolis are seen as slightly less friendly than in other cities. About 29% of locals said rules are “friendly,” while 18% said they’re not. Locals gave a B- to health and safety rules: 14% of small business owners called them “unfriendly,” which is 13% more than the national average. About 23% of Minneapolis small businesses said labor rules are “unfriendly,” which is 40% more than the national average, earning the city a C. LICENSING REQUIREMENTSLABOR REGULATIONS HEALTH & SAFETY TAX REGULATIONSENVIRONMENTAL RULES B- OVERALL GRADE Minnesota’s capital earns average scores from small businesses. Skilled professionals in Minneapolis offered diverse feedback: Some called local policies supportive, but others lamented “burdensome” rules and higher-than-desired tax rates. Concerns over regulatory policies led to a B- for Minneapolis for the second year in a row (compared with an A in 2014). The city drew average or below-average ratings on the six regulatory policies that we measured: Most regulations earned C grades. The city’s training programs and useful government websites lifted its score somewhat. Far more businesses in Minneapolis used these resources—and benefited from their experiences—than the national average. • 38% want policymakers to lower or simplify taxes • 60% are aware of helpful training programs • 71% have used a government website • 60% of website users found them easy-to-use • 64% say licensing compliance is well-enforced Minneapolis Report Card The five most important factors in Minneapolis' Small Business Friendliness grade. Skilled professionals’ ratings of regulations—especially those related to labor and health and safety—drove the city’s overall B- grade. https://www.thumbtack.com/mn/minneapolis/
  • 13Thumbtack Small Business Friendliness Survey | 2016 SAN FRANCISCO https://www.thumbtack.com/ca/san-francisco/ F Friendly Neutral UnfriendlyNot applicable 23% 17% 36% 24% rate zoning as "friendly" 21% rate licensing regulations as "unfriendly" 35% Not applicable Friendly Neutral Unfriendly 25% 26% 20% 29% Not applicable Friendly Neutral Unfriendly 26% 29% 18% 27% ZONINGLICENSING REQUIREMENTS LABOR REGULATIONS ENVIRONMENTAL RULESHEALTH & SAFETY Only 23% called environmental rules “friendly,” which is 26% lower than the national average. And 17% said they are “unfriendly,” which is 10% more than the national average. Zoning earned a D+ from small business owners. Respondents in other U.S. cities were 33% more likely to call their rules “friendly” than those in San Francisco were. Locals gave the city a D+ on health and safety rules. They were 45% more likely to call these rules “unfriendly” than the national average. About 20% of San Franciscans reported that labor, employment, and hiring regulations are “unfriendly,” which is 22% more than the national average. Approximately 27% more locals called licensing rules “unfriendly” than “friendly.” In other U.S. cities, licensing was 60% more likely to be seen as “friendly” than “unfriendly.” • 26% want policymakers to lower or simplify taxes • 56% are aware of helpful training programs • 55% have used a government website • 42% of government website users found them easy-to-use • 42% are required to have a license or permit The city by the bay was rated among the least friendly nationwide. Skilled professionals in San Francisco complained of bureaucratic hurdles, costly fees, and substandard online resources for small businesses. The unfriendliness of licensing forms, requirements, and fees was the primary concern for this community: Many complained specifically about high licensing fees. As a result, San Francisco’s rating on this dimension was the second worst in the country. San Francisco did receive glowing reviews on its training programs. Use rates and reviews of these programs were both far above the national average—and that’s particularly true for business development programs. San Francisco Report Card The five most important factors in San Francisco's Small Business Friendliness grade. Skilled professionals’ ratings of regulations—especially those related to licensing, labor, and health and safety—drove the city’s overall F grade. OVERALL GRADE https://www.thumbtack.com/ca/san-francisco/
  • Thumbtack Small Business Friendliness Survey | 2016 14 Connect with Thumbtack About the Author Lucas Puente Lucas Puente is the Economist at Thumbtack, where he studies Thumbtack's marketplace dynamics and the policy challenges facing small service businesses. Passionate about using data to better understand the American economy, Lucas’ previous research topics include decision-making at the Federal Reserve and the role of technology in the contemporary labor market. He has master's and doctorate degrees from Stanford University and is a graduate of the University of Georgia. Acknowledgments This report was made possible by more than 12,000 Thumbtack professionals who responded to the 2016 Small Business Friendliness Survey to rate their local government policies and voice their opinions on how local governments can support entrepreneurship. We are particularly grateful to the five skilled professionals featured in this report and to the independent photographers who captured them at work. Jon Lieber, former chief economist at Thumbtack, provided insight and expertise that greatly assisted the development of this study. To learn about results for your local state or city government, visit https://www.thumbtack.com/ survey and click your location on the map. You can read the full methodology at https://www.thumbtack. com/blog/2016-friendliness/. Thumbtack connects people who need to get things done with the right skilled professionals to help them complete their projects. More than 230,000 professionals in almost 1,100 unique categories—ranging from handymen and housekeepers to tutors, photographers, wedding planners and more—use Thumbtack to connect with millions of customers, collectively generating more than $1 billion in annual business revenues for professionals across all 50 states. For more information, visit https://www.thumbtack.com/. https://www.thumbtack.com/survey https://www.thumbtack.com/survey https://thumbtack.com/blog/2016-friendliness/ https://thumbtack.com/blog/2016-friendliness/ https://www.thumbtack.com/