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More than likely people with an entrepreneurial spirit can't afford to rent storefront space. High population density, commerce, and urban renewal has drive up land values to the point where a lot of people can't even afford living space. Occupational licensing has probably also played a major role in inhibiting the entrepreneurial spirit. I'm not sure how bad it is in NY, but here in the south some of the most innocuous jobs require years of education and thousands of dollars in overhead just to do them legally.

You hit the nail on the head. This only hurts the little guys. And yes, trust me, if New York does one thing well it's crony capitalism. We certainly feel it too.