How to Help Small Businesses

Politicians love small businesses. Almost every campaign stump speech gushes about how important they are for the economy. Never afraid to put our money where their mouth is, politicians even started a Small Business Administration in 1953 to transfer money from taxpayers to small businesses. Today, the SBA’s budget is nearing $1 billion.

Given how much taxpayer money politicians lavish on small businesses, most of elected officials are confident that they are helping, not hurting. They should listen more closely to the consituency they claim to love so much. The Bush-Obama era has been one of ever-increasing spending and regulation. And those hurt small businesses.

Paychex, Inc., a payroll service provider that works with many small businesses, recently commissioned a survey. They asked small business owners their thoughts on the economy, and what the biggest obstacles are to growing their businesses. The most common gripe? Regulation. 47 percent of small business owners say that regulations have “slowed or prevented” their business from growing.

The Rochester Business Journal reports that the types of regulations that most concern small business owners are “tax changes (56 percent), health care reform (39 percent) and state regulations in response to budgetary challenges (25 percent). The research found 61 percent of respondents have seen more government regulation over the past five years.”

If Congress is genuinely interested in helping small businesses while speeding up economic recovery, it’s time for a different approach.

Transferring money from taxpayers to small businesses doesn’t help the economy on net. It actually hurts it. One reason is that the prospect of free money encourages small businesses to redirect their energy from entrepreneurship to K Street. Another is that government largesse tends to be given out according to political interests, not consumers’ interests.

Federal regulation alone costs $1.75 trillion to comply with. Congress should lighten the load. 47 percent of small business owners say that regulation has made their business grow more slowly. Letting that 47 percent grow more quickly would go a long way toward getting the economy growing again.