New business owners generally recognize the importance of government regulations, but they would greatly benefit from the opportunity to weigh in when new rules are being written and object when red tape begins deterring risk-taking, according to a pair of successful entrepreneurs who spoke on the Hill on Wednesday.
“The problem, in my view, is that there is no effective safeguard in the system to make sure that regulations are written and enforced in a way that minimizes the burden on honest, well-intentioned entrepreneurs,” Hall told lawmakers in his testimony. “One approach I would encourage the committee to look into would be for the government to adopt a partnership approach to regulation … rather than adopting an adversarial attitude that leads to costly fines for mistakes that were made in good faith and that had no impact on public health and safety.”
Hall, who helped launch the barbecue sauce and spice rib company in 2009, said owners of small companies like his often believe government has a “gotcha” attitude toward regulatory enforcement, “lying in wait to penalize” business owners for often trivial violations. The threat of such penalties and fines, he added, can be enough to make entrepreneurs think twice about risking their neck on a new venture.
“It is the entrepreneur who has taken all the risk and invests his or her time and money into their endeavors with no guarantee of return,” said Hall, whose company now has products in more than 3,000 stores nationwide and recently opened its first restaurant in Alexandria. “If small businesses are not allowed to enjoy the benefit of success when it happens, they will never take the risk of failure.”
Small and new businesses have recently spent plenty of time at the center of the conversation on the Hill, with the House Small Business Committee introducing a number of contracting reform proposals, the House passing (and Senate mulling) the JOBS Act to ease SEC regulations, and on Tuesday, House Majority Leader Eric Cantor (R-Va.) introducing a new bill that would reduce small business tax rates.
Still, the climate for business creation remains extraordinarily difficult, according to Committee Chairman Sam Graves (R-Mo.), and more policy changes are needed to help entrepreneurs start companies, especially those with the potential to grow quickly and create jobs.
“The trend in entrepreneurship is up, but an entrepreneur’s ability to hire is down,” Graves said in his opening remarks. “The recession’s high unemployment rates may have encouraged people to start sole proprietorships, but there are many obstacles in the way of growing a company to create jobs.”
Honest Tea’s Goldman voiced his support for a healthy dose of regulations, noting that his company recognized the importance of licensing its bottling plants and suppliers and even benefited from the government’s introduction of USDA Organic labels. The program, he said, established a quality standard that helped distinguish his tea from competitors but didn’t create any unnecessary rules or large bureaucracy.
But for the most part, Honest Tea, which now employs about 200 people and brought in $47 million in revenue in 2009, succeeded because the federal government stayed out of the way.
“In terms of supporting the development of more companies like ours, I would say the best policy is to let entrepreneurs and investors continue to take well-informed risks,” Goldman said in his testimony. “By definition the work we do is challenging — if it were easy or obvious, the big companies would have already done it.”
Which regulations are the most burdensome on your business, and are there others from which your company has actually benefited? Please share your thoughts below.