by Megan Whitman, NJPI Jr. Fellow
Walk down any main street in New Jersey and you’re looking at the heart of the state’s economy: small businesses. New Jersey is home to over one million small businesses, which collectively employ roughly half of the state’s workforce. But small businesses aren’t just the backbone of the economy, they are deeply embedded in our communities and give life to them. Yet, for too long, the policy environment surrounding them has been defined by red tape, rising costs, and uncertainty.
The barriers to running a small business are real. One business owner found that permitting costs alone neared $17,000, a staggering sum for any small business operator. Stories like these are common across the state, and they reflect an unfortunate reality: New Jersey’s current regulatory environment can make entrepreneurship feel like more of a burden than an opportunity. The current trends also paint this story. From 2023-2024, 33,317 small businesses opened and 29,539 closed down, a significant downtick from the 45,577 openings seen between 2021-2022 and an uptick in closings from the 24,347 seen in 2021-2022.
This is why the early signals from Governor Mike Sherrill’s administration are worth paying close attention to. Sherrill has launched a pro-business agenda, conducting a 21-county tour to engage directly with business owners. Her 2027 budget recommendations contain a number of proposals that, taken together, paint a mixed but potentially promising picture for small businesses.
On the encouraging side, the budget invests in additional structural support for new business owners. It funds additional staff at the Business Action Center, a state agency designed to provide guidance in permitting and licensing for business owners. It aims to reduce business registration fees and includes investing $500,000 to expand assistance for minority and women-owned businesses. The budget provides additional funding to the New Jersey Innovation Authority and Division of Consumer Affairs for upgrades to its licensing system, aiming to make the often confusing process clearer and more easily accessible.
However, the budget is not without controversy. Business groups raised concerns over a proposed cap on net operating loss deductions and a new fee on businesses with fifty or more employees whose workers rely on Medicaid. These proposals, critics warn, could increase tax burdens and discourage hiring. The NJ Chamber of Commerce also flagged proposed cuts to the NJEDA’s Manufacturing Voucher Program, a tool known to help smaller manufacturers stay competitive through grants for the purchase of equipment.
New Jersey’s small businesses have carried this state through economic downturns and global disruptions. They deserve more than the occasional recognition; they deserve policy intended to generate their success. That means cutting the red tape that makes opening a business feel like a punishment. It means creating the tax structures that enable them to survive and grow. Governor Sherrill’s agenda shows awareness of what’s at stake. Now is the moment to match that awareness with genuine policy action, because when New Jersey’s small businesses win, the whole state does.
