The past five years have been a frustrating and challenging economic period for corporate America. Following the evolution of business during this era has provided interesting lessons on commerce either adapting or falling by the wayside.
The monitoring of business licensing at the municipal level provides a significant economic indicator for local city management. Businesses that have found their niche have weathered the storm, while other capital ventures have met misfortune.
Much can be learned from monitoring the volume, substance and types of business license applications. Inherently, the business license process keeps track of significant economic data. Businesses must fill out an application, submit the request for review and ultimately gain approval.
Whether the company is a multi-national Air Force contractor, regional sit-down restaurant or a one-person home business, every business is required to go through the process to obtain a business license.
As such, the type of commerce being conducted and the number of businesses applying for that privilege can be telling of economic conditions. For instance, it is common during an economic downturn to see an increase in the number of home business licenses.
The typical business license application asks for information about location, contact, type of business being conducted, corporate structure and so on. The different categories of business licenses being sought are telling as to what types of industries are active.
It is also common during a downturn to see more local retailers expanding and fewer national retailers looking for new locations. This was particularly true during the most recent recession.
While much can be gleaned from the business license processes, one must also be cautious about reading too much into the data. It is not uncommon to find that some cities require existing business to reapply for a license if they change location or ownership. Other factors can also skew the data away from purely new businesses applying for licenses.
Business licensing is just one process to help determine local economic conditions. Permit requests for new housing and for remodeling, property tax valuations and other information collected at the municipal level can help to better understand the current state of the market.
While many economists use elaborate models and formulas to analyze and forecast market conditions, it is often basic city government processes that describe how a local economy is faring.
Steve Curtis has worked as a business consultant and communication specialist. He is currently mayor of Layton. He can be reached at email@example.com.