Portland small businesses feel squeeze of costs and bureaucracy

State of play: The Portland metro area is home to more than 25,000 small businesses — from micro-businesses with just one employee to larger enterprises with up to 50 workers — per a 2023 report from the Portland Metro Chamber.

• They employ roughly 28% of the workforce, beating the national average and similar cities like Seattle, Austin and Nashville, while paying average wages of more than $64,000.
• Small businesses are an important economic driver in Portland, which is the economic engine of the state. So as small businesses fare, so fares Oregon.

Zoom in: At Rhinestone, Southeast Portland's Vegas-cowboy-coded cocktail bar, manager Trevor Thorpe told Axios they are in a constant battle with rising costs.

• Adding to that is the "very backward approach" the city brings to small businesses, Thorpe said, pointing to small-but-numerous taxes, fees and other charges that add up.
• The city and county charge a combined 4.6% business license tax. There's a corporate excise tax for some types of businesses, along with other permitting fees and charges.
• "From a profitability standpoint, it's kind of a death by a thousand cuts," he said.

Rick Turoczy, who founded the Portland Incubator Experiment in 2009, has mentored and consulted on hundreds of tech startups in Portland over the last few decades.

• Portland is a great place to start a company, Turoczy told Axios, but "it's more difficult to grow a company here in that there just aren't the same kind of resources or investment capital available that there are in other states."
• Turoczy advocated for fewer one-off task forces and business roundtables, and for more permanent pipelines between business owners and elected officials to help shape business-friendly policy.

Derek Hanson started Jacqueline, the renowned Southeast Portland seafood restaurant, in 2016, and enjoyed enough success over the last decade to move into a larger location in the Clinton neighborhood last year.

• Nearly all his costs — utilities, insurance and purchasing — have risen in recent years.
• Payroll represents his biggest expense, but as a former line cook himself, Hanson understands paying his employees a livable wage.
• He recognizes his tax burden here is higher than some other places, but he supports them because "ideally they're doing good things for the people, that I want to see good things happen to," he told Axios, adding that most of his interactions with the city have been "very positive."

Between the lines: Portland's reputation as a high-crime city struggling with homelessness and mental illness has also created new hurdles for business owners.

• At Jacqueline, Hanson relies on tourism for a good chunk of his business, and "the national perception of the city has taken such a big blow, that's really hard for us," he said.
• Turoczy said he hears similar concerns from people contemplating starting a company here and that the city needs to be less "aggressively humble."
• "In times like these, we need to forego a little of that humility to actually step up and tell the story of what an amazing region we live in."

The latest: In a move to ease the tax burden, city leaders have recently pushed a measure that would double Portland's business license tax exemption from $50,000 in gross receipts to $100,000 by the 2027 tax year.

• That means businesses bringing in less than the threshold would be exempt from the city's license tax.

The bottom line: Despite mounting challenges, Portland retains a culture that welcomes small businesses — something owners say is hard to find elsewhere.

• "I love this city," Thorpe said. "This is home, and I got to do business where home is."