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Column

Kaplan: A lesson in economic development

Bruce Kaplan
Bruce Kaplan

 It has been said that small business is the backbone of our U.S. economy. The SBA Office of Advocacy reported 2015 data, the most recent available, that said U.S. small businesses totaled 30.2 million which represented 99.9 percent of all employers and employed 47.5 percent of the private sector workforce.

Eighty percent of the nation’s businesses did not have any employees other than the owner and most employers had fewer than 20 employees. So much for setting the table on this subject…

Have you noticed all the vacant office and retail spaces in your community? Some have been “lights out” for years. Landlords take the brunt of this situation. Empty spaces and buildings translate to lost revenue which drives down the value of the asset. Real estate taxes are appealed and frequently reduced. The taxing bodies get less to work with.  Market forces are mainly at fault here.

It is costly to start up a business. Competition is vicious, especially from the Amazons of the world. People can work from home or a cozy nook at Starbucks. They don’t need to rent office space. The overall supply of space is high compared to the demand. It is not a pretty picture.

Every time a new business decides to open up in one of our communities, the respective towns put that new business through a certain number of “hoops”. Some towns “throw the book” at the prospective business owner and make him adhere to the letter of the International Building Code (or worse) creating a huge upfront expense which functions as a barrier to entry.

They often require expensive architectural drawings for the simplest of build outs or make the business owner go thru a costly and time consuming special use process to conform to the existing zoning ordinance. Some towns are greedy for sales tax revenue.

They’d rather see the space vacant for years at a time rather than put an office use in a retail zoned strip center. Talk about cutting off your nose to spite your face! What are they thinking? A little common sense would be in order here.

Some towns understand what I am trying to say here. Then comes the towns that think their stuff doesn’t stink (sorry for the crude expression) and they take a position that they won’t allow certain contemporary types of businesses in their retail districts at all, businesses like gun shops, pawn shops, tattoo parlours, cash for gold businesses and the like.

I’m not talking about adult bookstores here! You see virtually all these business types in various towns, just maybe not in your town. Some might think to themselves, “there is nothing good that can come out of these types of businesses located in your commercial districts.” “Gun shops are bad,” "pawn shops attract thieves,” “tattoo parlors invite undesirables.”

I see things differently. From a strictly economic perspective, I say there is nothing good that can come out of one of your residents taking his cash out of your community and spending it in another. Each of these small businesses is an economic entity unto itself and becomes part of the larger fabric of the overall economy in your community.

Each occupies formerly vacant space, each pays rent to a landlord (so he can pay his mortgage), many hire local employees, many turn around and spend their money in other local establishments, many pay sales tax revenue and all provide a product or service which makes it convenient to shop locally versus getting in your car and driving elsewhere.

The economic recession that started in 2008 is supposedly over with and we have seen evidence of improving demand for certain commercial property types. We watched a lot of small businesses go out of business during the last decade, many victims of the bad economy. The concept of ever getting back to normal may only be a fantasy.

I have always maintained it behooves our local governments to seek ways to make it easier (not harder) for new businesses to start up as well as stay viable. Eliminating roadblocks and obstacles and streamlining the process and reducing or eliminating fees or providing economic assistance or incentives are all things that our towns need to be considering and implementing.

If your local officials aren’t thinking along these lines, I’m going to go out on a limb and suggest you replace these folks. They just don’t get it. Let them know how you feel. Hopefully, they will get the message. We all benefit when small business thrives.

• Bruce Kaplan is a Senior Broker Associate with Premier Commercial Realty in Lake in the Hills and can be reached at Brucek@premiercommercialrealty.com.

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