How Regulations Can Hinder Business Growth

When you start a business, you usually don’t think about the cost of regulations and the impact they could have on the growth of your organization. Instead, you’re usually worried about hiring employees, growing your organization, and making a profit.

Nevertheless, research from the 2017 NSBA Small Business Regulations Survey reveals that within the first year, small-business owners start to realize the costs and headaches associated with regulations. With the burden of regulations weighing down on the owner, it can impact the growth of the organization and hinder business investments. Read on to find out just how much of an impact regulations truly have.

A Rough Start

Starting a business is no easy feat, and regulations make it even more difficult for small-business owners. When small-business owners were asked how big a concern they thought regulatory costs and compliance were when they started their business, here’s what they said:

  • 23 percent said it was a very big concern.
  • 26 percent said it was somewhat a concern.
  • 31 percent said it was not a very big concern.
  • 20 percent said it wasn’t a concern at all.

In fact, more than half of small businesses said they became worried about regulations within the first year of business.

Perhaps the most frightening statistic is how much money start-ups have to pay to comply with all the regulations. On overage, the regulatory start-up costs for small businesses is $83,019.23. That’s a lot of money for a brand-new organization to have to shell out in their first year.

Growing Pains

The impact of regulations goes beyond the wallet; it also attacks organizations’ ability to grow and invest.

53 percent of small businesses said regulations have made businesses hold off on implementing growth strategies, 52 percent said regulations have made them hold off on hiring new employees, and 50 percent said regulations have made them hold off on giving salary increases.

The uncertainty of regulations also has been a hindrance to the growth and expansion of small businesses. 39 percent said new regulations make a very significant impact, 37 percent said the expectation of new regulations make a very significant impact, and 29 percent said existing regulations make a very significant impact.

A Necessary Evil

Even though dealing and complying with regulations is time-consuming, expensive, and sometimes frustrating, it’s a necessary part of running a successful organization. It may not be the most fun way to spend your valuable time and money, but it is something that must be accomplished to avoid major fines. While some regulations are seen as necessary and helpful, they could be doing more harm than good in the eyes of business owners. 60 percent of small-business owners believe that regulations covering their industries are not necessary, which means they either don’t see how they are helpful, or there are too many regulations for small businesses to comply with. Check back later this week to see if there really are too many regulations, and if they are increasing or not.  

Is the burden of regulations hindering your organization from growing?



James Campbell

James Campbell is a District Sales Manager for Oasis, a Paychex® Company. By removing administrative obstacles, he allows growing companies to focus on what they do best. With the use of tailored technology and HR solutions, his clients operate their businesses more efficiently and cost effectively.


April 24, 2017

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James Campbell