According to the U.S. Chamber of Commerce, burdensome government regulations are directly responsible for the long-term decline in small business formation. Despite a 40% increase in population, Americans started about 11% fewer businesses in 2013 than 1980. It was never easy to strike out on your own, but it’s even harder today.
Some companies know this better than others. Take Zen Magnets, a Colorado-based magnet distributor run by entrepreneur Shihan Qu. Zen Magnets endured a years-long battle with an overzealous Consumer Product Safety Commission over the supposed risks of its Small Rare Earth Magnets or SREM’s — spherical, high-power magnets that can form a dizzying variety of shapes. The battle nearly bankrupted Shihan’s business, and though he ultimately prevailed, many entrepreneurs facing similar assaults aren’t so lucky.
That’s why it’s so important to understand and get out ahead of the regulations that might apply to your enterprise. Here are five things you can do to improve your compliance position.
1. Contact Your Local Small Business Administration Office.
First, contact your local Small Business Administration office. The SBA is arguably the most business-friendly federal agency around — its sole purpose is to make life easier for entrepreneurs. While the SBA can’t hold your hand through every step of the compliance process, its expert consultants can certainly help set your expectations for what lies ahead, and its regulatory workshops provide valuable insight into regulatory changes.
2. Appoint a Compliance Officer or Point Person.
No matter how small your organization is, it needs a compliance officer or regulatory point person — even if that person is you. Designating one person responsible for all compliance matters reduces the likelihood of oversights and blame-shifting.
3. Subscribe to Industry Publications and Other Reliable Sources for Regulatory Information.
Look for reliable sources of regulatory and compliance information in your industry: trade magazines, legal newsletters, government agency bulletins, publications from business associations, and so on. The more independent sources of regulatory information you collect, the more prepared you’ll be to tackle regulatory challenges head-on.
4. Retain a Qualified Business Lawyer With Experience in Your Industry.
Connect with a qualified business attorney with a proven track record advising clients in your industry. They don’t necessarily have to have litigation experience — though, if you find yourself facing an enforcement action like Zen Magnets did, that’ll come in handy.
5. Automate Straightforward Compliance Processes.
Lastly, automate simple compliance processes that don’t require hands-on attention. For instance, you might set your payroll software to alert you when your hourly workers hit 35 hours worked in a single week — giving you plenty of heads-up to trim the remainder of their hours before they reach the 40-hour overtime threshold.
Is Your Regulatory Burden Under Control?
As an entrepreneur, you have plenty to worry about besides state and federal regulations. But, like death and taxes, it’s not really possible to avoid the regulatory state. That’s not necessarily a bad thing — society needs commonsense laws and enforcement policies, after all. Do yourself and your bottom line a favor and learn the lay of the land in your locality and industry before you make a potentially fateful mistake.