Overcoming the odds: Surviving as a small business in Washington

Did you know, according to Entrepreneur magazine, the state of Washington is the worst state to grow a business? According to an article from June 2024, small businesses in Washington fold quicker than the Seattle SuperSonics. Businesses crash harder in Washington than in any other state. Nearly 25 percent of all small businesses fail in Washington during the first year, 45 percent by the end of the second year and 58 percent after three years. For the record, Massachusetts was the best on the list.

Why do businesses have such a rough time in the Evergreen State? The list is looooong:

▶ For starters, Washington has an awful program called the Business and Occupation tax, a gross receipts tax on jobs performed by businesses in a municipality. Rates can vary per town, city, village or county. Delaware, Nevada, Ohio, Oregon, Tennessee and Texas also levy a form of this tax.

▶ Washington has the fourth-highest sales tax in the country.
▶ Currently at 53 cents a gallon, Washington has the third-highest fuel tax in the country.
▶ Washington has one of the highest estate taxes in the country.
▶ Washington has the fourth-highest capital gains tax in the country.
▶ Washington’s cost of living is 34 percent higher than the national average, while housing is 53 percent higher, according to apartment search website RentCafe.com.
▶ At $16.28 per hour, Washington currently has the highest minimum wage.

When you add in these factors — and many more we will talk about later — you have to wonder why Elliott Hahn decided to start Bigfoot Pest Management in Olympia in 2021. “I was a tech for two other companies that got bought out,” Hahn explained. “As a tech, I was tired of doing $300,000 per year for someone else.” He was also tired of missing family dinners and working on Saturdays. “I was sick of other people dictating my hours,” he adds. “Why can’t I work 50 hours per week for myself and double my income?”

So, despite the challenges of running a company in Washington, he says it is still worth it: “One-hundred-and-ten percent! I am very happy I made up my mind to start my own business.”

Changing plans

Hahn is a 41-year-old father of Russell, age 7, and Lucy, age 10. He has been married to Brittanie for over 11 years. Despite the struggles of running a company in Washington, his personal life is pretty sweet. He and his wife were raised in Olympia, and both his parents and in-laws live within a stone’s throw of their home. The bespectacled exterminator takes advantage of Washington’s gorgeous scenery and does a lot of hunting, fishing and baseball coaching.

Fourteen years ago, after graduating with his law degree from Central Washington University, he felt the climate in Washington wasn’t favorable toward the “men in blue.” At the suggestion of a friend, he gave pest control a shot.

Bigfoot offers mostly residential quarterly services. He stays away from mole work, which is usually pretty lucrative in Washington, and he doesn’t do wildlife services. He also shies away from bed bug work, but I am trying to coax him into including this valuable service.

Over the past few months, Hahn and I have been working on pricing, key performance indicators (KPIs) and creative marketing (yard signs and direct-mail postcards). But, each session, he would lament the problems he was having running a business in Washington.

Making it work

While the state of Washington doesn’t have a state income tax (yet), it still has a laundry list of things it taxes on each paycheck, including Federal Income Tax, Social Security, Medicare, Worker’s Comp insurance, Family and Medical Leave insurance, Long-Term Care insurance, Federal Unemployment Tax Act (FUTA), Washington State Unemployment Insurance (WA SUI) and the Washington Employment Administration Fund (WA EAF).

Other roadblocks to running a pest control company in Washington include the Family Medical Leave Act (FMLA), which takes a portion of the employee’s earnings each paycheck (hurting the worker) and up to 12 weeks off (for either parent) for childbirth, which hurts the employer. Washington requires 40 continuing education units (CEUs) that licensed techs must account for every five years. And they have to retest every five years! Compared to other states, like Illinois — which only requires nine CEUs every three years — or Wisconsin — which has no CEUs but requires a mandatory retest every five years — this can be cumbersome for smaller companies.

Then you have to add in the incredibly high sales tax that Hahn has to collect from his clients and the skyrocketing cost of housing. In late July, as I write this, Zillow.com estimates the average price for a home in Seattle is $880,401. The average cost for renting an apartment in Seattle is nearly $2,200. So, you can see why small businesses are being crushed in Washington.

Despite these obstacles, Hahn is making a go of it and is seeing good growth. His revenues were $291,000 in 2023 and $354,000 in 2024. His goal is to hit $400,000 in 2025.

Schopen is the founder of Schopen Pest Solutions and RV There Yet Pest Consulting, Bartlesville, Okla. You can email him at rvthereyetpest@gmail.com.