Small business startups are critical to the growth of the U.S. economy. According to data from the Kauffman Foundation, firms less than five years old comprise less than one percent of all firms in the nation but accounted for all net job growth between 1980 and 2005. But, even as policymakers look to these high potential companies to continue making outsized contributions to job creation, entrepreneurial ventures face complex regulations and disproportionate compliance costs. A study by the Small Business Administration’s (SBA) Office of Advocacy (Advocacy) reports that small businesses spend 36 percent more per employee than large firms to comply with federal regulations.
To ensure that regulatory compliance and public policies do not hinder the success of small businesses, Congress created the Office of Advocacy in 1976. The Office of Advocacy informs policymakers of small business contributions to the economy and represents and advances the concerns of small business startups before legislators. In 2010 alone, Advocacy saved small businesses $15 billion in costs associated with regulation compliance, the lion’s share of which came via $12 billion worth of regulatory changes made by the Environmental Protection Agency.
Henry Sanders, the Regional Advocate for Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin, monitors the impact of federal policies on Midwest-based small business startups and identifies the regulatory concerns of the region’s entrepreneurs. Through roundtable discussions and private meetings with entrepreneurs, Sanders tries to understand how compliance could burden entrepreneurial ventures and how the government can better support their growth. The insights gleaned by Sanders are then incorporated into Advocacy’s public comments, letters, and congressional testimonies. For instance, in 2010 Advocacy published a public letter addressed to the Patent and Trademark Office on a proposed initiative to provide patent applicants with the ability to choose among three tracks for the timing of their application reviews.
Advocacy voiced the concerns that small entities had expressed to Regional Advocates like Henry Sanders; the rapid review option placed startups at a disadvantage compared to applicants with greater financial backing because it came with a hefty fee on top of the standard filing, search, and examination fees that must accompany an application. Since Advocacy’s comments are not vetted by the White House, Congress, or the SBA and since it has a separate budget authority allowing it complete control of its resources, Regional Advocates like Sanders face no constraints on their ability to speak on behalf of small business. In addition to providing input for Advocacy’s public comments on proposed regulatory changes, Sanders meets regularly with federal agency staff to confidentially discuss policy proposals in development. Such interagency communication helps ensure that policymakers take the small business perspective into consideration.
Sanders believes that “job creation starts and ends with small businesses.” In order to make sure young, high growth companies have the opportunity to succeed and create positive economic impact without the extraneous burden of regulation compliance, he needs to hear from entrepreneurs in Northeast Ohio. Henry Sanders will be leading a roundtable discussion in Cleveland in November. If you would like to contact him regarding his visit, email him at henry.sanders@sba.gov.
Leah’s primary focus as JumpStart’s Market Analyst is developing a deep understanding of the key challenges and opportunities facing entrepreneurs and early-stage companies. Using her experience leading research projects and framing problems to identify creative solutions, Leah works to build stakeholder relationships, ensure the growth and success of client and portfolio companies, and drive organizational strategies. Additionally, Leah brings her insights to life through communications and advocates for and connects entrepreneurs to additional capital and service resources beyond those provided by JumpStart.