Let the Business Owners Pay for It

When it comes to “No taxation without representation,” the rallying cry of our founding fathers, few identifiable population segments are as abused as business owners.

One of my long-time clients is a franchisor, and until very recently I was a franchisee, (although not one of his.) We often compared notes of our perspectives from both sides of that sometime-fractious business relationship. One recent conversation, however, illustrates my claim.

When I purchased my franchise almost 20 years ago, the franchise agreement was about 35 pages long. I marked it up, causing my attorney to note that I was among the 5% of his clients who actually read their franchise contract.

Over the years, I’m sure many of those 95% non-readers ran into problems they hadn’t anticipated. Now the law makes it the franchisor’s responsibility to make certain the prospective buyer has read the agreement. My client has to pay employees to review 181 pages of government-mandated documents with the buyer, and certify that they’ve been fully understood.

Apparently, having the wherewithal to buy a business isn’t considered sufficient qualification to expect that someone will actually pay attention to what they are buying.

finger from cloudScarcely a week goes by  without some owner reciting a new regulation he or she has been burdened with. A contractor who is scrambling for skilled employees in a tight labor market now has to submit forms listing those employees by ethnicity and pay grade to prove that he is paying them equitably.

A manufacturer whose customers sell his product in California must comply with that state’s anti-slavery law by keeping documentation that any overtime worked in his factory was fully voluntary. Another had his plant expansion held up because he was ordered to provide a letter, prepared by a city-mandated consultant (but paid for by the business), certifying that the products he will make there are the same as those he’s been making for the last 20 years.

A retailer has to pay for landscaping along the roadside public property that will screen his establishment from the view of passing traffic. That the desire to be seen is exactly the reason he bought land along a busy street seems to escape the regulators. The same retailer has to certify that the trees on his construction site will thrive for five years after completion of the project, and faces hefty fines if they don’t. The fact that the publicly-owned utility just trenched through the root structure of several of those trees doesn’t alleviate his responsibility.

By some estimates, about 70% of the new laws governing businesses are created by government staff without legislative approval or review. It seems that any effort to protect customers and employees, engineer social welfare or oversee business development comes in the form of a bill empowering an agency to actually make the laws. Their preferred enforcement mechanism is to saddle business owners with the compliance mechanisms.

The Occupational Safety and Health Administration (OSHA) is tasked with making workplaces safe. They do this by inspection, and by following up on complaints. To date, they haven’t required that an owner photograph every new machine installation, submit certification of the height of desks, and send them video of each worker performing his or her job. If that sounds outrageous to you, reread the examples above.

The World Bank ranks the United States as the 7th easiest country in which to do business. Apparently we are that high due to placing 2nd in ease of getting credit and 5th in ease of bankruptcy. (I guess that easy bankruptcy is to protect the people who were unfairly given the easy credit.) Our “ease of” rankings are 33rd in construction, 49th for start ups, and 53rd in taxation, putting us in those respective categories behind the Maldives, Mongolia and Peru.

Those running for elected office are quick to trumpet their support for small business. They might start by giving business owners a say in the flood of regulations that are raining down on us daily.

I’d love to hear what you are putting up with.

Thanks for reading. Please share Awake at 2 o’clock with other business owners.

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4 Responses to Let the Business Owners Pay for It

  1. Maryanne Guido says:

    Working with the City and County we are required to submit certified payroll, ensure our subcontractors submit THEIR certified payroll, and that subs certified they have been paid by us on a monthly basis. If sun fails to do do any of this the GC (we) do not get paid until we “make” each sub comply- or do it for them.

  2. Joani Gill says:

    John thanks for citing a few regulations that hinder business growth for small businesses. I believe our middle market companies suffer the same issues as they fight for their rights to thrive. Just a few years ago, The Association for Corporate Growth, a global organization focused on the middle market, began a grass roots campaign to become the voice on Capital Hill for this business sector. I urge readers to check out ACG.ORG or MIDDLEMARKETVOICE.ORG and see where they can help with this initiative and be heard collectively. CONTACT AMBER LANDIS, VICE PRESIDENT OF PUBLIC POLICY, AT ALANDIS@ACG.ORG.

  3. When is it time to get rid of the red tape and bureaucrats?

  4. Cathy Locke says:

    Since I am a small business and mainly wholesale to small and medium size businesses I honestly don’t feel I have a “snowball in hell” chance of making ends meet or even show a profit. I also feel we need to clean house with the red tape and bureaucrats.

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