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3 Myths on Starting a Small Business in San Francisco

July 27, 2015
Small Business
3 Myths About Starting a Small Business in San Francisco
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Starting a small business in San Francisco can be an exciting prospect. Who wouldn’t want to be an entrepreneur in the beautiful bayside city where such storied companies as Twitter, Salesforce, Uber and Airbnb got their start?

But San Francisco is also known as a place where a small-business owner needs very deep pockets and enormous patience with red tape to survive.

Yes, starting a small business in San Francisco can be challenging, but some members of the business community say some of the criticisms of the city’s entrepreneurial climate are based on myths.

Here are three of them:

Myth No. 1: San Francisco is hostile to small businesses

“The mythology is that San Francisco is arguably the most hostile city in the country to be a small-business owner,” San Francisco entrepreneur Mark Dwight tells NerdWallet.

Hostile? No. Occasionally inhospitable? Probably, says Dwight, president of the San Francisco Small Business Commission and CEO of Rickshaw Bagworks.

He points to San Francisco’s minimum wage of $12.25 an hour, now one of the highest in the country, and also to the city’s many and complex business regulations.

But “there’s myth and there’s fact,” he says. “The reality is, it’s a very expensive city to do business. The question is, can you do business here? Well, a lot of businesses are. You just have to [find] your niche.”

Myth No. 2: Tech companies have ruined the city

San Francisco is home to a growing number of technology giants and startups. This has at times led to friction with longtime residents who resent what they term a tech invasion that has led to soaring rents and growing economic inequality.

“The myth is that somehow the tech companies are ruining the city and making it inhospitable for residents and businesses alike who can’t afford to be here,” Dwight says. “The idea is that the barbarians have broken through the gates.”

But he points out “the flip side,” noting how the wave of tech companies in San Francisco can be a boon to small business. “If you can tap into tech, if you can tap into tourism,” he says, “you can stay in business.”

Myth No. 3: Bureaucratic hurdles are impossible to navigate

“San Francisco is a very attractive place to do business, but it’s also a very challenging place,” says Dee Dee Workman, vice president of public policy at the San Francisco Chamber of Commerce.

That’s largely because the city is “very regulation-heavy,” she says, but city officials have been working to change this. And she says they’ve succeeded in making things easier for small businesses.

For example, San Francisco recently unveiled a new website, San Francisco Business Portal, to assist small businesses with issues such as city permits, regulations and financing.

San Francisco small-business owners “are notoriously optimistic and notoriously tenacious. They don’t give up easily.”

— Mark Dwight, president, S.F. Small Business Commission

When it was unveiled in December, Mayor Ed Lee called the website “the first step in a broader effort to streamline the city’s permit process and make it easier for small businesses to do business in San Francisco.”

Streamlining the process is important, Workman says, because “for some businesses, if they wait nine to 12 months, they’re never going to open their doors.”

But many entrepreneurs work hard to open their doors and to keep them open. San Francisco small-business owners “are notoriously optimistic and notoriously tenacious,” Dwight says. “They don’t give up easily.”

A group of business and city leaders, including Mark Dwight and Dee Dee Workman, will speak at a forum on small business in San Francisco on July 29. The event, sponsored by the San Francisco Chamber of Commerce and NerdWallet, will be held at NerdWallet headquarters at 901 Market St. from 5:30 to 7:30 pm. If you wish to attend, RSVP at the San Francisco Chamber of Commerce website.

Benjamin Pimentel is a staff writer at NerdWallet, a personal finance website. Email: [email protected]. Twitter: @benpimentel

For related information, visit NerdWallet’s resources on how to start a business. For free, personalized answers to questions about starting and financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.

Image via iStock.