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CityFixer

L.A.'s Boost to Small Businesses

A new online portal will guide entrepreneurs through layers of bureaucratic red tape.

Fashion retailers negotiating in downtown Los Angeles. (Hector Mata/Reuters)

The designer Mario De La Torre grew up in south central Los Angeles, where he dressed in clothes he made himself. “I got the bug at a really young age,” he  said in a video. Now, having founded a self-titled women’s fashion line, De La Torre credits the city of Los Angeles as his creative lifeblood. “You can go out and get any kind of fabric you can think of,” he said.

As far as inspiration goes, De La Torre said, resources in L.A. are unlimited. But when he decided to set up a label several years ago, De La Torre, like many small business owners in Los Angeles, found himself at a bit of a loss. “I didn’t even have a business bank account,” he said.

L.A. is often touted as a hub of small business growth. The 2016 Kauffman Index of Startup Activity, which tracks entrepreneurship in metro areas across the U.S., ranked L.A.’s rate of growth third, behind only Austin and Miami. Census data shows that one out of every 196 residents in the area of Los Angeles, Long Beach, and Santa Ana calls themselves an entrepreneur.

But starting a small business in L.A. is by no means easy. In conversations with De La Torre and other new entrepreneurs, the Los Angeles Mayor Eric Garcetti heard the same thing, over and over again: the bureaucratic side of it all is incredibly daunting. “You have to navigate so many different jurisdictions,” Garcetti says to CityLab. “It’s knowing what information to put down for the city, the county, the state, and the fed—and within each level of government, there are multiple agencies to navigate.”

To streamline it all, Garcetti launched an online portal this month to provide a resource hub for potential new business owners. There are three components to the L.A. Business Portal, Garcetti says: a startup assistance tool, a reference library, and a business preparedness guide. When users visit the Portal the first time, they answer a series of straightforward questions about their venture, and are given a roadmap directing them through the entire startup process. “It’s custom-tailored access to resources,” Garcetti says.    

Last summer, L.A. was awarded a $250,000 grant towards the open-source platform through through a competition sponsored by the federal Small Business Administration. The Portal is intended to be replicable in other cities, Garcetti says. In designing it, L.A.’s Bloomberg Philanthropies-funded Innovation Team worked closely with the City of San Francisco, which launched a similar venture in 2014.               

Amanda Daflos, the director of L.A.’s Innovation Team, says the Portal is one of nine projects the team has undertaken in the last year. Around 20 cities across the country are participating in the Bloomberg program, which asks each team to use data to tackle an overarching issue. L.A.’s team, Daflos says, was tasked with developing solutions to guide the city through a time of transition; one of the team’s other projects, the Los Angeles Index of Neighborhood Change, compares demographic metrics across the city’s zip codes.

In developing the Business Portal, Daflos and her team looked to the data. More than 80 percent of the businesses in L.A. have under 20 employees, Daflos says, “which is pretty telling about the kinds of businesses that thrive here.” But the team also took to the streets, doing what Daflos calls “corridor walks” through business hubs and chatting with local business owners. Their feedback mirrored what Garcetti heard: working with the city to set up a small business was a headache, and even if they’d already managed it, the prospect of trying to expand was intimidating.

A shopper at Vintage on Venice during last year’s Shop Small Saturday in Los Angeles. (Jordan Strauss/AP)

The Portal guides business owners through location scouting, permitting, and accessing capital; it also convenes owners of similar businesses to share experiences and knowledge. “So say you’re opening a cheese shop, and you have no idea how to deal with the county’s Health Department,” Garcetti says. “The portal can connect you with another cheese shop owner who can walk you through the process.” That business-to-business sharing, he adds, “is more valuable than any resource we can put online.” Though the portal is still in the early phases, Daflos says the site is drawing traffic; each day sees about 400 visitors.

While the L.A. economy is currently riding an upswing—the unemployment rate has dropped around 5 percent in the past three years—Garcetti sees the portal as “a recession-proof strategy for job growth.” The city has added over 100,000 jobs since Garcetti took office, according to data from the UCLA Anderson Forecast, but “if tough spates come, it should be possible for someone who’s laid off in the next downturn to become tomorrow’s next great entrepreneur,” Garcetti says. “It’s a way to keep the economy humming and make this a city of new initiatives and new companies. That’s what I want L.A. to be known as.”

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