The U.S. is in the midst of a period of social and political upheaval. The country’s 28 million small business are among those directly affected by changing government policies and regulations. This is no small matter – addressing regulatory requirements puts a huge financial burden and time-strain on small business owners. The National Small Business Association’s (NSBA) survey of small business regulation estimates that the average US startup spends $83,019 on regulatory costs in its first year. In this uncertain climate, the very same regulatory requirements that small businesses have spent time and money addressing may be altered or, perhaps worse, policies that benefit them may become obsolete.
This National Small Business Week, it is more important than ever that our politicians and business leaders think about how they can foster the continued growth of this sector. Small businesses are hugely important to the overall financial health of our country – accounting for 54 percent of US sales and two out of every three new jobs. In this era of change, it’s time for our government to implement clear policy, legislation and innovation that benefits small business owners.
Supporting global trade.
For small business owners, diversifying across markets makes them stronger – protecting them from domestic risks. It also creates more opportunities for them – giving them the ability to access more customers. Recognizing these benefits, among others, the U.S. has sought to lower global trade barriers for the better part of the past seven decades. It is crucial that these efforts are maintained under the current administration.
Without access to affordable necessities outside of the U.S. or the ability to trade across borders, made possible through policies like the North American Free Trade Agreement (NAFTA), the real risk is that more businesses will shutter their doors, which could lead to devastating losses in job opportunities – after all, small businesses account for nearly 50 percent of private sector payroll. Many small businesses rely on goods imported from other countries, and by imposing taxes or restrictions on these goods, owners would have to significantly reallocate their businesses’ funds, or worse, they may not be able to afford to, neither of which are favorable scenarios. Without access to affordable resources or global markets, many businesses will not be able to adapt fast enough.
Tax reform.
Tax policy that benefits small businesses will help them run more efficiently and effectively. For example, healthcare is one of the most expensive costs a small business incurs. While small businesses are offered a small tax break through the Affordable Care Act today, it is not commensurate with the costs a small business owner incurs managing employee health insurance. Because of this and the complexity of claiming the credit, only a small fraction of the businesses eligible actually apply. There are many areas of the tax code that could be improved for small business owners – giving them the room to expand their businesses, hire more employees and offer benefits in order to be able to attract top talent.
Better technological infrastructure.
For business owners, understanding which agencies they need to file with can be overly complex. Along with the time they waste sifting through business regulations, many end up fearing that they haven’t filed everything correctly and could be penalized for missing even the smallest piece of information.
The NSBA’s small business regulation survey calculates that nearly one-in-three small businesses spend more than 80 hours each year dealing with federal regulation and compliance, and that doesn’t even include regulation at the local and state level. The fact of the matter is, federal agencies’ systems don’t talk to each other efficiently today. The real opportunity is for the government and the private sector to look at standardizing the data they generate or collect and publish it digitally, in turn, automating federal regulation and compliance processes for small business owners.
An improved and simplified government management system would likely offer improvements in efficiency for small businesses. For example, the Australian government implemented a similar initiative after recognizing that the average small business owner spent 11 hours each week on government compliance and reporting. The initiative provided enhanced data-sharing capabilities and automated tedious reporting processes – saving $1.2 billion AUD across 2 million businesses in 2016 alone.
When a small business is successful, the benefits are manyfold – not only are these entrepreneurs able to pursue their passion, but they also create employment opportunities in their local community and beyond. By implementing policy with small businesses in mind and partnering with business leaders to leverage the latest technology to simplify processes, our government will make it easier for entrepreneurs to maintain compliance, trade globally, support their employees and, in turn, thrive.