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California’s small businesses are trapped in a costly ‘vicious cycle,’ local leaders say
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Another big issue: California’s legal and regulatory landscape – business owners are being targeted by what Georgopoulos describes as “shakedown” lawsuits related to wage and hour laws, being forced to settle or spend six-figure sums on what he calls frivolous claims; and law-abiding owners face draconian health inspections and permit requirements, while illegal, unlicensed vendors operate “with impunity” in the same areas.
“The laws are very favorable in California to allow these law firms to do this. So what is being done has a cumulative effect, right? A given restaurant can spend $100,000 in one year facing lawsuits … These lawsuits are killing us,” Georgopoulos noted. “And the laws that go on are just… too taxing… There’s a hundred illegal hot dog vendors operating in the city of San Diego. They shouldn’t be there. They don’t have permits. They don’t even have one. [outdoor bug] screens. They don’t even have hand washing facilities. They crossed those people to shut me down while those guys were working.”
“Traditionally, access to capital has been difficult, taking weeks to months to plan and execute the application process,” Tehrani highlighted the regulations. “What we have tried to do is to make that process easier and more flexible to allow the business owner to be able to have an opportunity and be able to achieve that. [operational funding] in hours or days.”
As Californians continue to grapple with the Golden State’s financial crisis, community leaders in Los Angeles County are advocating for political change to rescue struggling locals under financial pressure.
While the data suggests a bleak future for California’s average businesses, Tehrani believes the survival of the US economy depends on the “problem solvers” currently being pressed in the Golden State. For him, the current problem is a forced return to the new roots of entrepreneurship.
“Small businesses are powerful. They are the strongest and perhaps the reason why the US economy is as strong as it is; it relies on small businesses to be successful. There is no place on Earth where this small business environment exists except in the United States,” said Tehrani. “Having said that, these challenges require business owners to go back to their roots. They’re innovators. They’re builders. They’re adaptable, and they’re problem solvers. And that’s what it really takes to meet these challenges. And so there’s $8 a gallon gas prices, [but] I bet it’s the small businessmen who invent their own way out of those problems.”
For Georgopoulos, the top advice for struggling peers – “move to Texas” – is a joke that carries a heavy weight of truth. However, he chooses to double down on his situation, even if it means fighting against a system he says makes him “less fond of it.”
DeLuca’s Italian Restaurant owner Robert DeLuca discusses running a small business in New York, citing policy shifts, rising labor costs and the impact of tax cuts on ‘FOX Business In Depth.’
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“We didn’t get into this business to get rich. It’s not a get-rich business. You’re in the restaurant and hospitality industry because you love what you do. You love to host people. You love to have people in your place of business and show them a good time. We’re starting to love you a little bit. And eventually, you’ll have all the cookie-cutter restaurants if we’re not careful,” Georgopoulos warned.
But even with the “sticker shock” of the domestic solar bill and the labor exodus, he’s not gone yet.
“California has given me everything. I’ve worked for it, it didn’t come easy. So I still believe we can make it work. We just bought a new local company called Ballast Point that we have left here in San Diego. It would be very cheap for me to get it out of the way. We’re going to get a lot of profit from that. Soon, things will change in our favor.
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