Let's Shine A New Light On Small Businesses

Posted: Jun 08, 2017 12:01 AM
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Let's Shine A New Light On Small Businesses

Here is a proposal for a new reality show that could not only help President Trump do his job, but could help millions of other Americans gain or keep theirs.

I'll tell you how in a minute. But first, some background:

For a small-business entrepreneur to be successful, he or she must not only come up with an idea and execute it, but then navigate the paperwork and bureaucratic processes involved in getting a business off the ground. It's not enough to make and sell your product and service. You also have to acquire business licenses, open bank accounts, lease space, hire employees, pay taxes...the list goes on and on.

U.S. entrepreneurs are not alone in facing such challenges.

According to the World Bank's 2017 "Doing Business" rankings, the United States ranks 51st in the world in the category of "Starting a Business," dropping six places in the past year. New Zealand ranks number one, followed by Canada, Hong King, Macedonia, Azerbaijan, Singapore, Australia, Georgia, Armenia and Ireland.

The United States ranks 8 for "doing business;" 2 for "getting credit" and 5 for "resolving solvency."

According to the World Bank website, "Economies are ranked on their ease of doing business from 1-190. A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm."

New Zealand ranks No. 1 in ease of doing business, starting a business, dealing with construction permits and registering property, but 34 for getting electricity. Singapore, Denmark, Hong Kong, Republic of Korea, Norway and the United Kingdom all beat the United States in their overall scores.

The World Bank based the ratings on work by Peruvian economist Hernando de Soto Polar. He conducted an experiment and set up a shirt factory to determine how long it takes to set up a business. He found out it took multiple trips and 11 permits from seven ministries.

"It would take you at least 278 days working 8 hours a day ... to open your little factory," said de Soto.

Armed with evidence that the rules and ministries posed major barriers, de Soto began working with the Peruvian president to make it easier to start and run a business.

And he did it publicly. A problem was identified and taken to the president. "The president would say 'Well, this is terrible,'" recounted de Soto on NPR's "Planet Money." "

He [the president] would say, 'Who is the head of the office who would ultimately be responsible for this?' And then my guy would tell him 'Well, it is office such and such.' [The president would respond] 'OK, well, if he doesn't solve it in the next five days, he's fired.' And then he signs a little decree. A guy with a nice blue shiny uniform takes it into his hand, gets on a motorcycle, a TV camera follows him and he delivers it to the political appointee who is told he has five days to solve it."

The early "reality" TV show worked, the system became simpler to navigate.

Clearly, the United States has a lot of progress to make to improve its business environment, especially for small businesses that don't have large staffs and infrastructure to handle the rules, regulations and paperwork.

According to the Small Business Administration, 28.8 million small businesses employed 56.8 million people last year -- nearly half of the nation's workers. Reducing paperwork and regulations would greatly improve the small businesses' ability to succeed and would thereby help millions of Americans.

While accelerators and incubators are popping up across metro areas in the United States, these can help only a limited number of individuals and firms. What we need is a complete overhaul of our system -- surely we can do better.

And we have just the man to do it. Just imagine a new reality TV show focused on the barriers of creating a business or keeping one afloat. Trump being briefed on the holdups, and issuing challenges to the agencies responsible to make the system work better and faster. The result would not only be must-watch TV, but an easier, more inviting country in which to start a business.

America works best when Americans are working -- and we need to make sure that it's easy for Americans to start a business and get to work. Trump's experience in making deals combined with his experience in drawing an audience could help make that happen.