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Karen Kerrigan, CEO of the Small Business Entrepreneurship Council, discusses the regulatory compliance landscape for small businesses. She also talks about common mistakes, best practices, and how to get involved with regulatory reform.
Greg: Hi, I’m Greg Corombos. Our guest this week is Karen Kerrigan. She is President and CEO of the Small Business Entrepreneurship Council, and for the next several minutes we’ll be talking about the impact of regulation on small business, how significant it is, how to plan for it, and what can be done about it, if it were to become too onerous. Karen, thanks so much for being with us.
Karen: Great to be here, Greg. Thanks for having me.
Greg: For new entrepreneurs and business owners thinking of a litany of different factors that they have to keep in my mind as they get ready to open their doors—or in the case of an online business, to get things off the ground—explain how regulations really impact small businesses?
Karen: The government at all levels sets the rules of the road for business—when [a business] opens its doors, to how it hires people, to how it operates in the marketplace. Entrepreneurs need to be looking at what those rules and regulations are. It really begins when you first open your business, when you want to register the business, when you’re trying to get a license—that can be pretty onerous in some locations and some states, and it can be easy [in some] states. Beyond that, there are rules and regulations when you start the business, as you grow the business, when you hire employees. And particularly for small businesses, it can be pretty onerous, and put you at a competitive disadvantage. You really need to know what those are.
Greg: Obviously the regulations can vary from type of business to type of business, but in general, which are the regulations you find your clients dealing with are and are frustrated with?
Karen: You’re right, it does really vary, depending upon the size, depending upon the sector. I think that when it comes down to our members generally, that we have as part of our organization and small business owners, it is those human resource related issues, when you start bring on people, HR, compliance from payroll and benefits, hiring processes, compliance with a variety of different labor and workplace laws, [workers’] compensation, a lot of forms to fill out, a lot of things you have to provide the government on a regular basis. It always seems that the states, the federal government, are looking at ways to make that more difficult and more complex. So those are the ones that most of our members find very difficult; they tend to be very complex, and they can be tricky at times.
Greg: Karen, you’ve been focused on small business and helping small business owners for about a quarter of a century now. How would you describe the current regulatory landscape, and compare it to what we’ve seen in the past. Is it getting better, is it worse? Where do we stand?
Karen: You know, it’s gotten much better, particularly at the federal level. Over the past six to eight years, it was a very difficult environment for small business owners and entrepreneurs. New regulations that were coming online, things that were in the pipeline on a regular basis, over 3,000 rules and regulations in the last year alone in 2016. The climate has changed dramatically. We’ve gone from the rules and regulations being pumped out of Washington to now an administration looking at what they can do to pare those back, that can make the regulatory system more friendly for all businesses, streamline stuff, get some outdated things off the books, and entire reform packages moving through Congress that would make an outdated system (that is how they make the sausage) a little more transparent and small-business friendly.
So it’s changed dramatically. Certainly, there is some uncertainty in terms some of the old rules that were moving forward from the Obama administration—like the overtime rule—that’s going to go. But for the most part it really is a new day from a regulatory perspective.
Greg: What are some of the ones that make you want to slam your head against the desk. Are there some specific examples? Of course there are some regulations that make sense and are necessary to keep things functioning smoothly. But what are some that perhaps came out in the past several years, where you cannot believe that business owners need to focus on this when they have so many things that could be focused on.
Karen: The big one really, right now, the regulations that are really smothering, are the healthcare system. Obamacare is one that is driving small business owners crazy now, largely because of the cost. When the Affordable Healthcare Act (Obamacare) was moving through and being debated, a lot of the supporters said, “Oh, this is not going to affect small businesses. You don’t have to worry about it.” But, my gosh, it really was a huge regulatory bill that is driving up costs for small businesses, 40, 50, 60 percent, taking choices away from the marketplace. There’s a lot of regulatory things they have to do to comply with it. And right now small business owners are pulling their hair out. They of nowhere to turn in terms of a new option for their employees. So, they want more choice in the system, they want more affordability. They want to provide healthcare, but the Obamacare approach was not the way to do it. They want a whole new framework, if you will, that will give them more choice that will allow to pick a plan that works for them, their employees, as opposed to having the federal government doing it, and doing it in a way that costs them a lot of money. So, I would say that’s the big one right now.
Greg: We’re talking with Karen Kerrigan. She is President and CEO of the Small Business Entrepreneurship Council. Karen, whether the regulations make sense or don’t, what advice do you have to manage or keep on top of these different regulations because the only thing more annoying than having to comply with some of these things is to get caught not complying with them. So, what’s the best way to keep on top of it all.
Karen: You’re right. That’s what businesses have to do. I know there are a lot of things they’d rather be doing, but they have to stay aware of this. We provide that information (SBE Council), they can sign up for our e-news. But certainly if they’re in certain industries or certain sectors—there are resources out there, the restaurant association, building and contracting industry, they’re providing this information to their members on a regular basis. The best thing to do is stay on top of this, so you’re not getting hit later by something you did not know about, and have to pay a big fine on top of everything else. Staying on top is critical.
I would say the other big thing is use technology as much as you can, because there really is an app for that, there’s technology for that, for being able to comply more easily with these rules and regulations. And finally, if you can, outsource this stuff, because it can be a little expensive, but staying on top of it and having an expert do it for you is better, again, than being hit with these big fines that could put your business under.
Greg: Karen, you’ve offered so much good advice right there. Perhaps it’s already the answer to my next question—that would be, what are some of the common mistakes that small business owners make, and how to correct them. I guess, embracing technology and finding help when you can realize for yourself that you’re not the best person to deal with this stuff, are those the best ways to avoid making big mistakes?
Karen: They are. And the common mistakes are in the details, a lot of the paperwork violations, a lot of little things you miss along the way. And again, technology, apps, a lot of tools are out there right now, really make that a lot easier for you to comply and just to stay on top of it. Do not wait until the end of the month, or two months or three months. The more you stay on top it—that way you can check your mistakes. But again technology is allowing businesses to comply a lot easier. Even though we’re working very hard to get rid of these rules and regulations, or streamline the process, technology has been the answer for many of these businesses that found it difficult when it was just a whole paperwork system before.
Greg: From streamlining the process the focusing on healthcare regulations, those are some of the areas you’re clearly spending your time on. Any other major reforms you’d like to see in the near future?
Karen: We’re working on a lot of reforms. The President had put forward a couple of executive orders where he was making the agency do outreach to groups like us and to small business owners looking for areas where they can streamline existing rules, get rid of outdated rules and unnecessary regulations. But there are some major reform packages that have moved through the House, and now the Senate is considering them. I’m happy to report that a Senate committee passed a bunch of these bills through. But one that we’re really focusing on is called the Small Business Regulatory Improvements Act. And this would make agencies do cost-benefit analysis, reach out to small business owners, give them a voice in the process, be more transparent, and actually look at whether there is a problem in the marketplace to solve before they regulate. So, it’s very simple things we’re asking agencies to do that are incorporated in this small business bill that we think will make a big difference for small businesses.
Greg: You said the bill would give small businesses a greater voice. What can they do right now to make their voices be heard by folks in Washington, or their state capitols, or anybody else who is charge of changing the rules, potentially.
Karen: Get engaged. With groups like us, we’re keeping you updated, where to weigh in on legislation, and contacting you member of congress. But there is also an effort underway, a government-wide effort, where small businesses can weigh in. For example, the Office of Advocacy, small business advocacy at the Small Business Administration has a platform, and you can find it through our website sbecouncil.org where they’re actually looking for specific rules and regulations that they can feed up to the White House and to the administration as suggestions and ideas for streamlining, getting rid of, or modernizing rules and regulations. So that platform, if you go to sbecouncil.org, you can weigh in right now on any agency, any rule, any regulation that you have an idea or a solution for making the system work better for small business. Visit our website. These executive orders that President Trump has is a great opportunity to get involved and to provide ideas. If you get engaged, you’re going to be heard. Your voice does matter, so that’s what we’re asking business owners to do, particularly now, you can make a big difference given where the administration is headed on these issues.
Greg: Karen, it’s a big issue, across the board, and we really appreciate your expertise and your time today. Thanks so much.
Karen: My pleasure, Greg.
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