The Barberia Charly has been open for only two months but demand for the hairdresser's speciality cut -- a military style known as the corte ingles -- looks pretty healthy, with up to 30 hard-looking young men passing through the premises each day.
The barber himself, Carlos Vafiegas, a dapper former army sergeant, says setting up his own salon has been easier than he expected, mainly because of the way the local council in Tegucigalpa, capital of Honduras, has been slashing red tape.
"It took a few hours to do all the paperwork," says 30-year-old Mr Vafiegas, who opted to go it alone after eight years learning the trade. "I don't think we would have opened had it been like it was."
Obtaining formal status for his business made it easier for Mr Vafiegas to borrow funds to equip the shop. A 40,000 lempira. ($2,000) loan has been used to buy clippers, razors, hairdryers and two state-of the-art barbers' chairs. And Mr Vafiegas is not the only small trader to benefit.
Over the past year or so, the mayor's office in Tegucigalpa has reformed an antiquated registration process, reducing the number of procedures to obtain an operating licence from 180 to just 25.
Entrepreneurs such as Mr Vafiegas formerly had to fill in 35 forms. Now they can be up and running with just three.
Obtaining a municipal operating licence used to take more than a month but can now be done within a day.
Since the start of last year, more than 8,000 restaurants, workshops, grocers and other businesses have been registered in the city, increasing the number of those formally registered from 22,000 in 2005 to 34,000 today and making an appreciable dent in Honduras's sprawling black economy, which accounts for more than 50 per cent of economic output and is one of the biggest in any developing country.
Myrna Salmeren, a 44-year-old former cleaner, opened her small Cafeteria Adonis just over a year ago and managed to register the business quickly at the mayor's office round the corner. She serves about 100 lunches a day - simple meals of beans, rice, fried plantain, grilled chicken and neatly diced cabbage and tomatoes for $1.50 - to low-income customers who live or work nearby.
Now formalisation has opened the prospect of expansion. Armed with her registration papers, Ms Salmeren has been able to take out a bank loan to buy a second-hand mini-bus, from which she hopes to start a home delivery service. At home, her increased income has helped buy a small computer and cover some of her oldest daughter's university costs. "None of this would have been possible without the changes," she says.
Alba Sagario, 43, who sells cheap fashion items, stationery and novelties from two rented stores in the downtown area, has also benefited from the improvements. Spending less time on administration has given her more scope to think about opening a second floor for her Lady's Collection boutique from where she plans to start selling shoes. "When I began in 2005 it was so difficult. They sent us from one corner to another," she says.
Under previous rules, small businesses were forced to take their applications through the same tortuous procedure as the biggest and most risky businesses. It was virtually impossible without the involvement of tramitadores -- independent agents -- who earned a 10 per cent commission for guiding applications through the process. "It was completely out of control before. Complete chaos, in fact," says Jorge Alberto Velasquez, one of the surviving agents, who now makes a living working for those who are too old, ill or simply too busy to come to the town hall.
The contrast today could not be greater. Even for bigger, more complex businesses, the rules are simpler. Visitors to the mayor's offices are greeted by posters advertising the council's slogan of "atiende, entiende, resuelve", which might most accurately translate as "we pay attention, listen and sort things out".
The atmosphere on the second floor, where would-be small entrepreneurs are applying for operating licences, is one of orderly calm. A queuing system has been introduced and friendly staff - wearing neat white uniforms advertising the same slogan - seem to be getting through applications quickly. Those waiting watch European football or soap operas on TVs. Downstairs the mayor has leased space to a popular local bank so that funds can be obtained quickly.
The Honduran experiment is one of a number under way in developing countries. The idea that governments should do more to alleviate poverty by capitalising on the growth potential of the informal economy first surfaced in the 1980s. The International Finance Corporation (IFC), the private sector arm of the World Bank, which has advised the Honduran government and local authorities, has been working intensively on the issue for more than a decade.
Doing Business, a report the IFC publishes annually comparing how easy it is to open and close businesses, pay taxes or resolve legal disputes across the world, was first published in 2003. It provides a benchmarking system that permits comparison between governments and now measures annual progress in 10 separate areas: starting a business or closing one, dealing with licences, employment rules, property registration, credit, investor protection, ease of paying taxes, cross-border trading and contract enforcement.
More recently, noting that many of the biggest blocks are at municipal or state level, the IFC has begun to work with 184 local governments in 10 Latin American countries, including three of the poorest, Bolivia, Nicaragua and Honduras. Again, a score chart helps mayors and governors measure their progress against peers.
Many pitfalls remain but for the moment at least momentum seems on the side of reform. San Pedro Sula, a rapidly growing northern city that is a centre of the country's maquiladora industry -- which assembles imported parts for export -- has already introduced many of the same reforms as Tegucigalpa, tripling the number of new businesses registered to 6,915 between 2006 and 2007.
Five other smaller cities are set to follow suit. Perhaps significantly in a country traditionally hamstrung by chronic clientelism, both main political parties are backing reform. Mayors from the left-of-centre governing Liberal party and the more conservative National party that runs Tegucigalpa are backing the changes.
"The logic is simple," says Ricardo Alvarez, the Tegucigalpa mayor. "If you have a permit it opens doors. You can get credit. At the end of the day you can grow."
Though it may have become easier to license a business, register property and borrow money in Honduras, yet the country still has some way to go if it is to become truly friendly to business.
It costs the equivalent of 60 per cent of average annual per capita income to set up a business, not as much as in some parts of Africa, but far more than the 0.1 per cent required in New Zealand the country at the top of a ranking compiled by the International Finance Corporation (IFC), the private sector arm of the World Bank.
Officials admit this is mainly because of the extensive involvement of lawyers and public notaries in many stages of the registration process, a failing that Honduras shares with most Latin American countries. The power of the Colegio cle Abogados, the local lawyers' association, is a powerful constraint on change, concedes Virgflio Umanzor, competitiveness minister. "It is difficult to make the association aware of the need for change," he says.
Restrictive labour laws are also a problem.
Moreover, some benefits of formalisation depend on easy access to credit. Highly liquid local banks have been expanding lending quickly, with rates much lower than even two years ago: the problem is that this could change quickly if Honduras's economy, highly dependent on the US, were to slide into trouble. (Under syndication arrangement with FE)
