As DC continues to draw new residents, the growth of the federal workforce is slowing down. Other sectors, like small business, have a huge opportunity to play an important role in the District economy.
To learn about why small businesses are important and the role they play in economic development, Matt Gontarchick sat down with Kate Mereand-Sinha, Program Manager for Technology and Innovation at the District Department of Small and Local Business Development. They discussed how one goes about starting a business, the various types of businesses out there, the challenges small business owners face, and what the future for small businesses in the District might look like. This interview has been lightly edited and condensed for clarity.
Here’s how you start a (brick-and-mortar) business in DC
Matt: What kind of reputation does Washington, DC have right now as a place for small businesses?
Kate: I think that that varies greatly across groups. A lot of the overall economy for DC has had a reputation of being very tied to the federal level, so some people don’t even think about small businesses, including some people who live here. However, once you start digging down into people who are paying attention to small business, there are a lot of people who are very excited about the District being the District.
Matt: How exactly does someone go about starting a small business in Washington, DC?
Kate: The first thing that someone has to do is come up with a sustainable revenue model, so they have to think about an idea, test an idea, and then they actually have to have it function. That in some sense is the hardest part of entrepreneurship anyway, which is just getting a business idea that’s going to stick and that’s going to work. Getting down into the more granular details, including the legal structure and the licensure structure, there are five basic steps you can find on business.dc.gov.
Matt: What are some of the different kinds of challenges [brick-and-mortar] small businesses might face as opposed to others?
Kate: One that people talk about a lot would be restaurants – they probably need to do additional build-out, which means they have to go through the permitting system separately from how they’re doing their business, and if there are any delays in that, and frequently there are when it comes to zoning, so they have to be able to manage the cost before they open and start making money.
You see a similar thing with daycares. We just finished a report done by a public health group out of American University, with a number of students looking at the cost of daycare and why the cost of daycare is so high and if there’s a way to bring that down because with daycare providers. Even if the cost is very high for the consumer, they’re not paying their workers much because they’re not making very much money because these structural costs for these businesses are very high. They have the same licensing questions as restaurants, and the other thing that happens in terms of rent negotiations is that it’s much harder to negotiate a lower rent if you have less ability to move.
High rents are just one challenge facing small businesses
Matt: Do you have any thoughts on how the District could address commercial rent affordability?
Katie: Whenever you talk about affordable housing, affordable commercial space needs to be discussed in tandem, and the reason for that is if you have an affordable space for someone to live, they need an affordable space in which they can either work or they can go buy things.
For instance, you need a grocery store nearby that has similar availability so that you can get to the right costs. So, people are looking at how do they develop grocery stores in Wards 7 and 8, and making sure that they can keep the costs of produce and other things down well enough so that people that live there can actually afford to shop there – and it’s not just food; that’s the most critical.
But, almost anything that you see in a brick and mortar – if their rent costs are that high, then their other costs are going to go up, and then the local community can’t afford to purchase from them. And the same thing if the only businesses that come into that space are national chains because they’re the only ones that can pay the rent, then people can’t shop local, support local, and support keeping the overall profits in their community. And one of the things that we hear from a lot of the community members is that they want to be able to support their own local economy and support that money coming back into their communities.
Matt: We’re a very diverse city, but there are extremely high levels of inequality here. How might inequality affect small businesses, and what might be done to improve equity or help some disadvantaged populations get involved in small business or entrepreneurship?
Katie: So, we have a number of programs that we are starting in pilot mode. We hope that those pilots would be able to become not-pilots and smooth out across the board in both workforce and other programs. One of our pilots is working with returning citizens – those are people that have criminal records.
The last count that I saw, which is years old, is that there are at least 60,000 returning citizens in the District, which is one-tenth of the population. The estimate that we have hear from CSOSA, the Court Services and Offender Supervision Agency, is that half of returning citizens are unemployed or unable to maintain steady work, which has a huge impact on recidivism, and so figuring out ways to support those individuals into entrepreneurship. And as we do that, that population has indicated that they want to hire other returning citizens. Supporting development of these businesses also supports other people coming in, so our program uses workforce dollars and pays them a stipend while they do business development support.
We’re taking that same idea and working with the Summer Youth Employment Program, which has thousands of youth ages 14 through 24 go into work placements across the summer.e’re going to extend that to 12 weeks, and we’re going to include placement within tech and coworking companies as well.
What the future looks like for small businesses
Matt: What kinds of small businesses does the District need most, or would like to see more of?
Katie: The spaces that we think a lot about are neighborhoods where retail corridors are not as developed. There are several food deserts across the District, and being able to make sure that people can actually access food if they have to walk to it.Without a retail sector or space [nearby], it can be hard to get a hold of things like diapers and basic toiletries, and so some people will drive farther out, and when you can’t drive, then you are relying on very small corner stores that often don’t have the full selection that you’re looking for.
Matt: What have you heard from small business owners as specific things that they need help with, or things that they would like to see the District do?
Katie: I think it’s slightly different for stage of business and it’s slightly different for type of business, so we’ll start with a lot of start-ups.It appears that a lot of start-ups just need more business development, business planning, support and training, or that cohort model, or something else. Someone to spend more time with them as they’re developing their business idea, whether that’s provided by the District or private organization. It doesn’t really matter, they just need to be able to find and afford those options to get more intensive business development support. Access to capital support is the hardest question for all businesses.