Los Angeles is home to many world-famous attractions. From the Santa Monica Pier to the San Gabriel Mountains, the L.A. basin beckons to dreamers of all types as a place where anything is possible. But one area where the L.A. region is falling far short of its potential is in creating an environment where small-business owners feel welcome.

Thumbtack.com, a consumer service that introduces individuals to service professionals who can help them accomplish personal projects, recently released its third annual survey of small-business owners, asking nearly 13,000 of them nationwide to rate their local governments across a variety of metrics meant to measure how accommodating a city is to small business. And, like the rest of California, the L.A. region was shown to be far behind other areas when it comes to welcoming these small service businesses.

Thumbtack’s survey is the only one of its kind that has a nationwide reach and attempts to hear directly from business owners what they think makes for an environment where they can thrive. And according to these small-business owners, Los Angeles earned a “D” for its overall friendliness toward them, with low scores across the 11 metrics in the study. Small-business owners said that Los Angeles makes it difficult to start a business, and that various regulations, though well-intentioned, are too confusing and inconsistently enforced.

Cutting hassle

Eliminating the hassle associated with dealing with government is a consistent theme in the responses we received – business owners told us that they want to spend their time building their businesses and serving their clients. Time they had to spend understanding complicated rules imposed by different arms of the local and state governments is a major distraction from this core focus. And professional licensing rules, like California’s rule that landscapers must have 1,460 hours of training and pass two state exams in order to develop landscape systems, are considered the most burdensome.

The difficulty of complying with licensing rules mattered so much to the small service businesses in this survey that the complexity of these rules was twice as important as the difficulty of complying with the tax code when it came to forming impressions of overall business friendliness. Nationwide, the time-cost associated with professional licensing rules proved to be a significant overall drain on service professionals with limited time and limited resources to put toward compliance, and cities that make this harder did much worse overall than cities with rules that are easier to follow.

An entertainer based in Torrance described one of the problems with licensing perfectly: “The big problem where I live is that I have to worry about the city and county regulations more than the state ones. Meaning that if I perform in the city of Manhattan Beach, I need a business license for that city; if I am in Redondo Beach, I need another; and they all have differing regulations and fees for them.”

In addition to creating unnecessary barriers to small-business success, Los Angeles also did poorly when it came to direct support offered to service pros. The city earned a “D+” for the availability of training and networking programs for business owners. These programs are especially critical to the 54 percent of L.A.-based entrepreneurs in our study who are running their own business for the first time. Support from the city, county or local civic agencies to help new business owners understand the various rules and learn how to succeed in their businesses mattered more than any other government-controlled factor in forming impressions of business friendliness, and cities that did well in this metric tended to do well overall.

As a general matter, cities that make it easy to comply with regulations, and that create, and consistently enforce, simple rules for businesses did better in the survey than cities that instead pile on time-consuming regulations. But simplifying these regulations, not eliminating them, is a critical ingredient for friendliness. Many survey respondents in Los Angeles want their industries to be well-regulated to protect their customers against unscrupulous service providers, but frequently those regulations go too far and are too hard to understand.

One contractor complained, “The legal construction business faces big competition from illegal contractors and illegal workers. Code enforcement agencies are not doing enough to protect legal businesses.”

Thumbtack’s survey results provide an insight into the minds of the owners of very small businesses nationwide. And although this group of small businesses isn’t likely to spawn the next major employer in the L.A. area, creating an environment that is welcoming to them can help the region withstand future economic downturns, provide alternatives to traditional careers and empower individuals to serve their communities while working for themselves. And Los Angeles could be serving them better.

Jon Lieber is the chief economist of Thumbtack.com of San Francisco.