Local Lessons

This is an article about some of the things that small business has to deal with just to be able to serve their clients.  I have been involved for several years on the political side of the constrution industry (as has one of my fellow board members who was featured in this article) to try to bring some balance to some very unnecessary regulations that do nothing but drive up the cost of doing business.  One of our current efforts is to reform the municiple tax collection system here in Ohio as you can read about in the article below.
Thad Claggett

By Adam Wren

All politics is local, the old saying goes. And local politics are most certainly a fact of life for small business owners, who understand better than anyone the power municipal politicians wield.

Want to put up a new sign? You’ll need to secure a permit from the city sign committee. Thinking about expanding your store to the vacant spot next door? Talk to the board of zoning appeals first. Completing a service job in a neighboring county? Make sure you understand its unique municipal tax structure.

While small business has its issues with federal government intrusion, it’s the cities and counties that hold the most influence on everyday business decisions such as these. And just like the federal level, navigating local government structures can suck your time and energy, and redirect precious resources that could otherwise be spent on growing your business.

Take the nightmarish experience of NFIB member Jack Buschur, an electrical contractor in Minster, Ohio. Last year, Buschur had to file 41 different municipal income tax returns—10 of which were for less than a dollar, one for as little as 20 cents—at a cost of up to $300 per filing. All that due to the unique intricacies of each municipality’s different tax classifications, definitions, deadlines and penalties.

“Over the last five years, [I’ve realized] you better accept the fact that if you’re going into business, you better expect to get into politics,” especially at the local level, to influence the outcome, says Buschur, who is helping build a consensus for municipal tax reform in his area.

When wading through local politics, experts and experienced owners agree that local lobbying comes down to four steps: Build relationships before you need them, be able to tell a compelling story, hire help when you need it, and when all else fails, enlist the help of business organizations.

Build Relationships Before You Need Them

Small business owners already have their hands full as they wrangle with the rush of regulations coming out of the federal government—but at least there’s only one Washington. At last count, the United States has 89,004 local governments, municipalities and townships, each with its own set of rules and regulations. But that’s also 89,004 potentially beneficial relationships to be cultivated.

At least, that’s the sunny view held by Becky McCray, who owns a small liquor store in Alva, Okla.; she also co-authored the book, Small Town Rules: How Small Businesses and Big Brands can Prosper in a Connected Economy. McCray says relationships with local officials are crucial to influencing the outcome you want for your business. It’s an approach that’s yielded her relatively few bureaucratic bumps in her time as a business owner. She’s also gained wisdom from being on the other side of the equation: In addition to being a small business owner, she’s worked as a city administrator in a neighboring municipality.

“Starting with the assumption that we can work things out in a friendly manner always seems to help,” McCray says. “You know you never want to make an antagonist.”
Consider how she handled this potentially contentious situation as a city administrator. A local restaurant owner was notorious for not paying his liquor license fee. One day, McCray crossed paths with him in the community and kindly broached the subject by reminding the owner that he hadn’t paid his license fee. Just days later, he squared up—despite not having paid it for the previous two years.

In her role as a business owner, McCray understands how important it is to have friendly interactions with local officials. In her small town with a population of roughly 5,000, the same person fills the jobs of building inspector, zoning official and town code enforcer. A soured relationship with that official could bring her business to its knees. That’s one of the reasons why she intentionally developed a friendly rapport with the official over the years.

But recently, a new person assumed this role, so she’ll have to begin the relationship anew. Her strategy? “You kind of take the small town approach: Meet him outside of his official capacity first,” she says. “It’s never good to build a relationship when the starting point is, ‘We have a problem.’”

When you’re developing a relationship with a local official, meet at a local Chamber of Commerce gathering, for instance, or invite them for a cup of coffee. Follow up at least once a month to keep the channels of communication open. That way, you’re not talking only when there is a problem. And remember that relationship building requires consistent upkeep.

“Administrations come and go,” says Anthony Figliola, vice president at Empire Strategies, an economic development and government relations consultancy in New York, and former deputy supervisor of economic development for the town of Brookhaven. “Whether a business is planning on expanding or needs permit approval, they should make it a point to reintroduce themselves or their project to the person [in their local government] who can be of the most help to them.”

To build her relationships, McCray does simple things such as visiting city hall once a month to pay her utility fees in person and put in face time with anyone else she might run into. It gives her a chance to learn how the city operates, interact with the players and understand how to work the levers of power.

“Having been on both sides of the counter, [I’ve learned that] it will help if you can get an understanding of why the city is doing what it is doing,” McCray says.

Sell Your Plan with a Story

When you’re dealing with a big-picture issue—such as expanding your business or launching a new project that will have far reach across your community—it’s important to approach local leaders with your project packaged in a good story.

“If you can show an area or a region or a small city government a value-add, something that you can truly bring to the community as a whole, something that can be really beneficial for the area,” you’ll sell your idea, says Todd Goldstein, a Cleveland entrepreneur.

Goldstein and his business partners, Sam Krichevsky and Dar Caldwell, convinced the city of Shaker Heights, Ohio, to turn a dilapidated, asbestos-filled, bank-possessed car dealership into a small business accelerator.

The city purchased the property from a bank in 2005, and had plans to demolish the building. But the three partners had something different in mind: LaunchHouse, a public-private partnership with the city that would invest up to $25,000 per company into new businesses, in exchange for the city keeping a small percentage ownership in the businesses. So far, LaunchHouse and the city have accumulated a portfolio of more than 40 businesses, investing a total of $400,000. (LaunchHouse has funded $130,000, and the city has invested the balance.)

How did the 30-year-olds get city officials—including the mayor, the town’s economic development director and seven city councilors—to help bankroll the proposition?

First, they went to the mayor. “We talked about changing the perception of Shaker Heights from a bedroom community to a place where businesses want to come—more of a work-live community,” Goldstein says. Next, they met with the city’s economic development official, who helped them hammer out a bulletproof case that she would later present to the council.

The result? The plan to turn the property into a public-private business accelerator passed unanimously, just three months after they first presented the idea to the mayor—lightning speed for local government.

Selling your plan as a story that focuses on positive outcomes to your local government helps allay its fears, and also gives council members a story to tell to their constituents. It’s a lesson any small business owner would do well to learn, says Tania Menesse, the economic development official who presented the idea to the council.

“The first thing they did really well is they had great enthusiasm for what they were doing. They really believed in their mission,” Menesse says. “They also had a track record [for investing in startups], which is really helpful. They were able to put that in writing. They were able to help me tell the story.”

Hire a Pro

Sometimes, local government-related tasks can be too tall to take on alone. In those instances, it can save you time, hassle and money to hire a professional to solve those problems on your behalf. In the fall of 2011, Ray Cox, president of NFIB-member company Elite Beverages in Indianapolis, faced such a situation.

Cox wanted to put up a new sign in front of one of his five liquor store locations. But this particular location is situated in a historic district, complicating the already tedious process of dealing with sign ordinances. Rather than trying to scour the local code book to find his way through its maze of clauses and sub-clauses, he hired a professional permit processor to help him.

In the end, Cox spent close to $4,500, including the professional’s fees, to put up a $3,000 sign. But he considers it a worthwhile trade-off, compared with the time it would have taken him to do the deal by himself. His advice to other owners: Get to know the local process before you hire someone.

In some extreme cases, when trying to work the levers of local power in your favor, you can reach dead ends. You’ve tried the friendly approach. You’ve reached out to officials, but they’re not budging. You’ve researched your options. And you’re still running into a dead end.

That’s the predicament in which Brian Williams of NFIB-member business Northwest Roofing and Waterproofing in Dixon, Calif., found himself last fall. He and his father, Norman, put in the lowest bid—$55,328—on a project with the city of Suisun, which involved roofing the community’s senior center. Normally, the lowest bid would have won them the project.

But in this case, a small part of the multi-page bid document mentioned the need for the winning contractor to have a Class B contractor’s license, a broader credential that a typical roofer like Williams wouldn’t need. The area roofers’ union caught wind of the issue, and filed a complaint, charging that Northwest’s bid wasn’t valid. The city awarded the bid to the next highest bidder, a union outfit that bid $55,900.

Frustrated, Williams went to the state license board. The board sided with him, saying the job didn’t require a Class B license. He took its ruling back to the Suisun City Council, which refused to reconsider its decision. “They can label it anything they want, so the union can do whatever it wants,” he says.

For its part, the council claims it was adhering to the law. “We followed the rules of the road,” the city’s public works director said during an open council meeting in October. But Williams has lost about 80 business hours dealing with the issue, not to mention other roofing jobs that came and went during the months-long fiasco. “Why even pass these [bidding] laws protecting people from the city employees [from] doing whatever they want?” he says.

Williams concedes the situation would probably have gone smoother had he built relationships with city councilors beforehand. “It would be easier if I had relationships and did business with the city,” he says. “If we knew those guys, they would have listened more.” But there are logistical obstacles to that, he recognizes. “You can’t build a relationship with every city council [in your area of business].”

Williams plans to continue his fight in the court system. By his estimation, the situation is now beyond his expertise. He’s done everything he can. Now it’s time for a pro—in this case, an attorney—to take over.

Engage Business Organizations

Filing a lawsuit isn’t the only other course of action Williams is considering. An NFIB member, he also asked for help from the California state office, which is looking into the issue on his behalf.

“While NFIB/CA is mainly focused on helping our members with state issues, there are times when we are able to be a resource for members facing challenges locally,” says John Kabateck, NFIB/CA executive director. “Members should never hesitate to call us with any business issue they may be facing, and if we don’t have the answer we will find out who does.”

Recall Jack Buschur, the Ohio electrician who was burdened with several dozen different municipal income taxes. He contacted NFIB/OH, and is now part of the state office’s effort to pass statewide reform of the municipal tax system. “It’s extremely burdensome and inefficient,” Buschur says of the system.

He has told the same story to local and state lawmakers, who seem poised to take up the issue soon. NFIB is supporting House Bill 601 in the Ohio Legislature, which, among other reforms, brings uniformity to the system. “NFIB is making ground,” he says, but recognizes it’s a process and will take time.

Other organizations can help, too. “See if there’s a strong chamber of commerce or local development community in your area,” says Menesse, the economic development director in Shaker Heights. “They already have the relationships [with officials who can help you] in place.”

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