Level the regulatory playing field for small business

What makes a neighborhood, a community, a city and a state vibrant, alive and a great place to live? What gives a place that special flavor, what makes it unique and a good place to work and raise a family? In large part, local small businesses give a community its character, its sense of growth and its optimism.

This is especially true in New Hampshire. The most recent data shows just how important small business is to New Hampshire families. Here, small business continues to create new jobs. According to the recently released Small Business Profile for the States and Territories by the Office of Advocacy of the U.S. Small Business Administration, small businesses added 7,400 net new jobs in 2004, the latest period studied.

But the updated profile also shows that in 2006 New Hampshire had an estimated 145,900 small businesses, of which 39,700 were employer firms. Those small businesses employed 56.5 percent of the state’s non-farm private workforce (in 2004).

Further, diversity of business ownership is bringing more of the state’s minorities and women into the economic mainstream. The data documents that New Hampshire has 1,500 Asian-owned firms, 500 Black-owned firms, 900 Hispanic-owned firms, 500 Native American-owned firms, and 20 Native Hawaiian and Pacific Islander-owned firms. Moreover, women-owned firms total 31,000 and generate $4.7 billion in revenue (all in 2002, the latest year available).

The 4,703 new firms with employees in 2006 showed just how optimistic New Hampshire’s entrepreneurs are about the future. More importantly, those firms are driving the economy. Office of Advocacy research has shown that new business creation is key to the state’s ability to increase gross state product, state personal income and total state employment.

Unfortunately, because the businesses are small and individually don’t appear to be important, policymakers tend to overlook them when discussing and implementing regulatory, tax and economic proposals. Because they are overlooked, some do not understand how their programs, rules and regulations can harm small business.

The result is that small business faces an uneven playing field. According to Advocacy research, just complying with federal regulations costs the nation’s smallest firms $7,647 per employee each year. That is 45 percent more than the per-employee costs of their larger counterparts. 

As the years have gone by, the total annual federal regulatory burden on the economy has grown to enormous proportions. Complying with all federal regulations now costs our economy $1.1 trillion per year — that’s more per household than the cost of health care.

It’s time to help lighten that load by streamlining and updating outdated and ineffective regulations.

The Office of Advocacy’s new Regulatory Review and Reform initiative – known as r3 — does just that. The initiative encourages small-business stakeholders to identify current rules that are outdated or ineffective and recommend targeted reforms.

The result will be an annual “Top 10” list of current regulations that are ripe for reform. Advocacy will work with the relevant federal agencies to make sure they understand the impact of those current regulations on small business. In addition, we will provide them with training in how to review and reform outdated and ineffective rules.

We are calling for nominations of federal rules and regulations in need of review and reform, and we need your help to make r3 a success. Nominations are due by Dec. 31. You can make them by visiting www.sba.gov/advo/r3, sending an email to advocacy@sba.gov, or calling Keith Holman at 202-205-6936.

By leveling the playing field and supporting small business with regulatory relief through the r3 initiative, we can keep our communities a great place to live for our children and grandchildren. 

Steve Adams, the New England Regional Advocate for the Office of Advocacy of the U.S. Small Business Administration, can be contacted at 617-565-8418 or stephen.adams@sba.gov.