Sen. Charles Mathias (R-Md.) urged business leaders yesterday to get more involved in the regulatory process from the start "rather than hollering when you get hurt."

He told the annual meeting of the Better Business Bureau of Metropolitan Washington there is a widespread recognition that government regulation of business is not satisfactory, but there is little idea of how to make it more effective.

Mathias called on business - especially small business which is particularly burdened by government regulation - to take a positive creative role instead of just opposnig legislation.

In his annual report retiring BBB President Waldo H. Burnside said the staff managed to settle almost 78 percent of the 6,000 complaints it received in the year ending this April. In 1972 the BBB began making available a binding arbitration program to handle merchant customer disputes that could not be solved by the two parties. In 1978 there have been 21 cases thus far brought to arbitration, or nearly double the number in preceding years.

More businesses are taking advantage of arbitration as an alternative to going to court or dropping charges. The largest increase has been by those in the automotive field - gas station owners, dealers - and the home improvement field, such as roofing. Most of the disputes involve sums between $100 and $200.

Burnside, the new president of Woodward & Lothrop, will be succeeded in his BBB office by Charles Huntley of Sears, Roebuck & Co. Huntley, who has been with the company for 30 years, is manager of 12 appliance catalogue stores in the Washington-Baltimore area.