Study Finds that Federal Regulations Could Cost Small Businesses

By Adam Robinson,
November 19, 2014

As we all know, small businesses are a huge part of the working world with their creation of new jobs, ideas and developments. According to Sensible Regulations, small businesses create two-thirds of the new jobs annually, employ more than half of the private-sector and produce nearly 50 percent of annual gross domestic product.

Franchisors and franchisees have to deal with local, state and federal law regulations each and every day, which can hinder growth opportunities. According to the House Small Business Committee, small businesses pay 36 percent more regulatory compliance costs than large businesses and roughly pay $7,000 per employee every year to fulfill federal regulations. This cost is 60 percent greater than costs sustained by larger businesses.

Here are some eye opening facts on just how much the federal regulations are hurting small businesses:

  • 21 percent of small business owners claim regulations are their single most important problem.
  • 72 percent of small business owners believe that larger businesses and consumers are over regulated.
  • 67 percent of small business owners do not have plans to hire in the next six months due to the regulations.
  • 62 percent of small business owners say that the United States laws, regulations, rules, taxes, and fees negatively impact their business more than their foreign competitors.
  • 90 percent of small business owners would like to change the regulatory process.

California is one state that has already started to try and make changes to the federal regulations that are affecting small businesses. In August 2014, the California Senate passed the bill SB 610. The SB 610 bill gives fast food franchise owners more rights than they previously had, making it difficult for the franchisors to end their contracts.

‘Franchising remains the most viable way to own and operate a small business for many Americans, and provides small business owners with a chance to build equity for themselves and their families,’ said California Governor, Jerry Brown.  

With new regulations popping up all of the time, it is important for small business owners to be aware of what is coming and how to deal each of them. Franchisors and franchisees can implement a hiring platform such as Hireology, into their business model to ensure their employees receive equal employment opportunities like the small business workers do in California.

About the Author

Adam co-founded Hireology with the mission to help growing companies make better hiring decisions through data and better technology. Adam is passionate about entrepreneurship, donating time to a number of organizations that support the entrepreneurial cause. Adam completed his undergraduate study at the University of Illinois at Urbana-Champaign, and received his MBA from DePaul University in Chicago, IL.

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