“This is our third round trying to put our sign up,” said Tanner Hock, co-owner of coffee shop Perennial, in a September interview.
“Our business is suffering because we don’t have a sign that lets people know what we do inside, but we can’t put one up because it’s still in the permitting process,” he said.
Hock said that Chapel Hill’s business regulations are hindering growth because small businesses lack the knowledge, capital and energy to meet such requirements.
“Every time I satisfy their requirements, it almost seems like they invent new ones for me to satisfy,” Hock concluded.
The coffee shop raised its sign mid-October, nearly two months after opening.
Perennial is just one of more than 870,000 small businesses in North Carolina, according to a 2017 U.S. Small Business Administration study.
A small business – as recognized by the U.S. Small Business Administration – is typically defined as a privately owned business with less than 5,000 employees or $7.5 million in annual receipts, though that criteria changes based on the business’ industry.
Though small businesses account for over 99 percent of all businesses in the state, Chapel Hill owners – like Tanner Hock – are facing regulatory roadblocks as they aim to get their businesses off the ground.
Chapel Hill Mayor Pam Hemminger said she believes the nearly 150 independently owned businesses operating in downtown are the backbone of the town.
“We count on them,” Hemminger said. “They are part of the community, so we want to be supportive and collaborative with all that they are doing.”
Complying with regulations
Hemminger acknowledged that some small business owners have experienced difficulty complying with town regulations.
“We’ve been working really hard to figure out how to do a better job with that,” she said, “looking for ways to make people go through the process successfully instead of putting up roadblocks.”
“The town is learning how it can better support small businesses,” Hemminger continued, “how it can get them the resources they need to be successful, because when they are successful we all are successful.”
According to 2016 town data, 60 percent of independently owned businesses in downtown Chapel Hill have been in operating for more than a decade. The majority of those long-standing small businesses are restaurants.
An estimated 43 percent of North Carolinians visited independently owned restaurants, bars and pubs on Nov. 25, making dining services the state’s most popular small business industry during the eighth annual Small Business Saturday, according to the 2017 Small Business Saturday 50-State Survey.
Small Business Saturday is an American shopping holiday – established by American Express in 2010 – that encourages shoppers to support independently owned businesses on the Saturday following Thanksgiving.
Over 108 million consumers participated in this year’s Small Business Saturday, spending a total of $12.9 billion at independent businesses across the nation, according to the 2017 Small Business Saturday Consumer Insights Survey.
Hemminger said she expects to know the economic impact of Small Business Saturday on Chapel Hill within the next few weeks.
Even a successful report would not resolve the issues some small business owners continue to face due to current regulations.
The sign ordinance is not the only regulation giving Chapel Hill small business owners difficulty.
Rick Coombs, owner of Trolly Stop Hot Dogs, reflected on his experience opening a Chapel Hill storefront for his Wrightsville-based restaurant over three years ago.
“Everything has its place, but the interpretations of some of the building codes can be quite difficult to work with,” Coombs said.
Coombs said complying with regulations in Chapel Hill was more difficult than other North Carolina towns he has opened shops in.
Not all Chapel Hill small business owners experience difficulty as they launch their business.
Parking rules pose threat
Lori Burgwyn, owner of Franklin Street Yoga, said the process of opening her business was seamless.
“Everything went like clockwork,” she said.
Instead, Burgwyn said she believes the town’s parking rules pose the biggest threat to her business.
“The only thing that hinders small business growth is the fear of being towed if you park on Franklin Street,” Burgwyn said. “I think people are finally adjusting to having to pay to park.”
The town temporarily eliminated that fear by providing free parking downtown on Small Business Saturday, though that was not a long-term solution.
For the Chapel Hill-Carrboro Chamber of Commerce, parking, building codes and permits are not new issues.
Aaron Nelson, president and CEO of the Chapel Hill-Carrboro Chamber of Commerce, said the chamber and town have been collaborating to address such issues.
“We’re working to improve the sign ordinance which is helping businesses attract customers,” Nelson said, “and we’re working to improve parking regulation, pricing and hours.”
He continued, “I think the town is working to improve the regulatory environment to make it easier for small businesses to thrive, and we support those efforts.”
Businesses in downtown Chapel Hill have not experienced that improved environment yet.
In 2016, Franklin Street experienced more business closures than openings for the first time in over a decade, according to Chapel Hill town data.
Still, Nelson said he doesn’t think there’s any cause for concern.
“In general, there is some regular turnover but not extraordinary turnover,” he said. “The vacancy rate is very low in downtown.”
“Throughout our community we’re trying to figure out how to remove barriers, make it easier to grow jobs and to grow places for additional retail,” Nelson concluded.
Meg McGurk, executive director of the Downtown Chapel Hill Partnership, a non-profit organization aiming to foster economic development, said she believes such efforts have successfully impacted the small business environment in Chapel Hill in recent years.
“In the last five plus years, the Town of Chapel Hill has had a very strong and positive focus on economic development,” McGurk said.
McGurk listed job growth, quality of life, ease of processes and public transit as key ways Chapel Hill has positioned itself as a business-friendly town.
In the past, the perception of Chapel Hill was that the town and community were not open to development, McGurk said.
“Part of that was definitely earned, but that is not the case anymore,” she said.
McGurk said Dwight Bassett – the town’s economic development officer – has had a clear mission and vision to improve the town’s small business environment.
After entering the role in 2007, Bassett worked with the town manager and a council committee to establish the economic development strategy that was adopted in 2008.
The strategy focused on conducting market research to establish a benchmark for future economic goals.
“In order to successfully compete for jobs, we saw a need to get entitlement for office and retail so that it could be built,” Bassett said.
Bassett spent the next five years working with the council to approve building plans for over one million square feet of office space and almost one million square feet of retail space.
Bassett then focused on creating the town’s commercial development strategy, establishing a vision to make Chapel Hill nationally-recognized for research and development.
Livability ranked Chapel Hill third on its 2017 Best Cities for Entrepreneurs list, citing high-wage job growth, household income growth and educational attainment as key competitive advantages.
Bassett also helped establish an entrepreneur council to ensure the private sector has a voice in building a healthier entrepreneurial ecosystem.
“I spend a lot of time in the innovation and entrepreneur scene in Chapel Hill, working to make sure we capture early growth companies that begin here,” he said.
Bassett acknowledged that Chapel Hill entrepreneurs still face challenges, stating, “It is difficult for young businesses to navigate the bureaucracy of entitling property for development and our inspections systems.”
The town has called attention to such issues multiple times in the past decade, Bassett concluded.