May 20-26, 2012 has been National Small Business Week according to the Small Business Administration. The SBA has been hosting an annual conference in Washington, D.C. since 1963. No doubt the agency’s rationale for staying in D.C. was that they did not want to incur any unnecessary government travel expenses.
The SBA is one of those government agencies that actually promotes and catalyzes the free market economy. But it seems somewhat ironic that the host city for National Small Business Week is the epicenter for the regulatory quagmire that businesses must navigate every day.
It is indeed a testament to the entrepreneurial spirit and determination of the country that small businesses succeed in spite of the obstacles. For whatever reason, business starts have waned since 2008, with the number of first year businesses dropping significantly – the lowest since 1994 – according the U.S. Bureau of Labor Statistics as shown in the chart above.
Is there a correlation between government’s intrusion and interference in business operations and the slowdown of business starts? A peak under the EPA tent might provide some clues. According to a report issued this year by the Texas Public Policy Foundation, EPA rules scheduled to become effective in the next three years could cost more than $1 trillion and destroy hundreds of thousands of jobs. Granted the operative phrases here are “scheduled to” and “could cost”. But the threat alone gives pause to entrepreneurs in business segments that could be affected.
The Littler Report issued in 2011, titled “The Coming Regulatory Avalanche” outlined changes directed at employer – employee relations. “Encouraged by special interests and supported by the plaintiff’s bar, employment law and its practical impact on the workplace is poised to change more in the next two years than in the prior twenty.” The Department of Labor, along with the National Labor Relations Board, the EEOC and a host of other governmental entities are setting arming disgruntled employees, test case employees and just plain crazy employees with the weapons of mass destruction of American businesses. The Littler Report mentioned above is a primer and a must-read for employers, entrepreneurs and even investors.
Regardless of external forces and changes there will always be risk-takers who will take on the odds. The economy alone could most likely claim responsibility for the failure to launch new enterprises. Solo, self-funded start-ups will not engage in research that would dissuade them from going to the courthouse to obtain a “dba”. They get enough of that from the people around them. Their awakening will come when they think it’s time to hire their first employee. Maybe they’ll put that hire off a while longer. Or maybe they’ll fold the tent, get a job and let someone else worry about the “regulatory avalanche”.