Chart of the Week: What It Takes to Start a Business in America

When it comes to ease of doing business, America is top 10 in the world. But when it comes to starting a business, we’re ranked 46th.

For a country that the most creative, productive, and innovative entrepreneurs call home, this shouldn’t be the case. So why is it so challenging to launch a startup here?  

Every entrepreneur or small business owner faces some red tape when starting or expanding a business, such as:

• Setting up a legal business structure
• Understanding zoning laws and licensing requirements
• Acquiring licenses and permits

Those challenges may translate into time and frustration that can deter entrepreneurs from turning a remarkable idea into a business. 

Check out the chart to see just how much time it takes Americans to discover, apply for, and acquire licenses and permits, compared to entrepreneurs in other countries: 

Here’s the good news: The Obama administration is working with cities across the country to change all that.

Today, we launched the Startup in a Day initiative, a partnership with U.S. cities to develop online tools that let entrepreneurs discover and apply for the local, state, and federal requirements needed to start a business — in less than a day. 

“If you want to start a business, we’ll make it so easy to navigate the license and permitting system online, that you’ll be off and running within 24 hours.”

— President Obama

These are the first steps the Administration is taking to make that happen: 

• The President launched a national call to action encouraging local leaders around the country to adopt simple and affordable technological solutions to digitize, consolidate, and condense licensing and permitting requirements. Eleven mayors — in Boston, Chattanooga, Denver, Fresno, Kansas City, Nashville, San Francisco, St. Petersburg, Salt Lake City, Seattle, and D.C. — have already signed on. 
• The Small Business Administration is announcing a $1.5 million competition to award communities around the country that develop and adopt Startup in a Day goals and online tools. The SBA will also develop a federal tool that will help startups get the national licenses and permits they need more quickly.  
• The National League of Cities, representing thousands of municipal leaders around the country, is establishing a Startup in a Day program to support and coordinate these efforts.

Here is the pledge the President has launched — share this in your community to make sure that we jumpstart innovation across the country:

Our cities and communities are committed to making it easier for every entrepreneur to start a business. We believe an entrepreneur’s time is best spent developing innovative products and services, creating jobs, and growing local economies — not navigating red tape. While fair zoning rules, licenses, and permits are important to ensuring public safety and fair competition, it shouldn’t take more than a day for entrepreneurs to identify and begin to apply, ideally through a single online tool, for the licenses and permits they need to responsibly launch a business. Accordingly, we resolve to:

1. Create a “Startup in a Day” online tool within 12 months: We will develop within a year a website or application that lets most entrepreneurs identify and begin to apply within one day for all requirements to launch a business in our respective communities.
2. Develop a streamlined, business-friendly, online permitting system: Our pledge is a first step in a larger effort to streamline, simplify, and bring online those regulatory requirements that have traditionally been fragmented across multiple agencies and handled through a paper-based process. Our ultimate goal is for small business owners to be able to manage and complete most of their regulatory obligations within a single easy-to-use online system.
3. Share best practices: In an effort to encourage other municipalities to join us in this effort, we are joining a community of practice administered by the National League of Cities, and commit to sharing best practices, publicizing key learnings, highlighting tangible outcomes, supporting smart regulatory simplification, and providing visibility into our actions. 

And stay tuned for the first-ever White House Entrepreneurship Demo Day on August 4 where we’ll announce winners of the SBA’s competition. What’s Demo Day? Find out here.