Small Business Red Tape: Stupidity of Enforcing Broken Rules
Red Tape is dutifully maligned by most pro-business types since avoiding regulatory hassles and focusing on profits rules the modus operandi of entrepreneurs. In Canada, and elsewhere, we want small, private enterprises to thrive as they employ and innovate, while nurturing the community in which they’re based.
The following anecdote is tragic for Canadians who believe we have the right to own and operate a free enterprise. This frustrating tale of municipal bilaws gone awry aptly highlights the problems governments create for small-business owners, and how abolishing these barriers to operational success can lubricate the wheels of commerce and improve the economy.
The Scene: Bricks and Mortar
Our anecdote centres around a Spa and Salon (‘the Spa’) that provides traditional hair/beauty services to customers in a distant suburb of Toronto, Ontario. The Spa is located on busy suburban corner (very power-centre-like retail set-up with many shops: food, clothing, gas/groceries and various other services nearby).
The building design of the Spa is frequently seen in modern suburban development: 2-story townhomes containing an Upper (Pleasure) and Lower level (Business), where several units are physically linked together to form a ~75 meter work/live avenue. The portion facing the busy street serves as the business outlet, while each individual unit offers modern living quarters above their respective shop. Many of the existing tenants operate their business from the ground floor and enjoy the luxury of living immediately above.
The Tragedy: Rigidity and Waste
Recently the Spa was confronted by the City regulators and informed their business may infringe on operational guidelines mandated for this specific development. Namely, businesses within this 75m artery are prohibited from employing anyone that doesn’t reside within the dwelling. No live, no work — despite an inspection of the building certifying it as safe and compliant, the Spa would have to dismiss its 2 employees if it wanted to stay open.
Safe building, legal and legitimate business kneecapped by bilaws prohibiting a successful service provider from EMPLOYING people. In 2011-2012, in the midst of a generational lull in employment and economic activity this cannot stand as acceptable regulatory or governing practice. No business deemed safe and non-hazardous should be limited to whom they hire.
Since the staffing needs of this growing business are incongruous with the restrictive bilaws the Spa will likely be forced to close shop entirely. The costs of unwinding the business, relocating, liquidating, taxes, fees etc, will all be borne by the small business owner. A horrific fate for anyone let alone a legitimate entrepreneur whose success and growth precipitated a tragedy of regulatory overbearance.
Innumerable will be the hidden costs of the subsequent vacancy and sale on the adjacent boutiques and community. The skeleton of the displaced business will haunt the area itself until the detritus is cleared and replaced by an equally voyeuristic and ambitious entrepreneur whose willingness to take risks and create wealth will be tempered only by limiting their imaginations. Oh, and the Bilaw guys…