Starting Up a Small Business | Small Business Regulations
You've come up with a great business idea. You've started your business and things are going great when out of the blue a great potential customer asks: "What's your export control code?"
Don't know? You're not alone and export control is just one of the seemingly endless regulations that may (or may not) apply to your small business.
Let’s get… regulated!
You’ll find highlights below. Watch the livestream recording or listen to the podcast version on your favorite podcatcher for all the details!
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What's here for You?
I want to help you find ways to identify what small business regulations apply to your specific product or service and implement ways to stay in compliance.
Small Business Regulations
In short, small businesses are regulated by largely the same laws that regulate larger organizations. The only difference is that there may (or may not) be provisions in those laws that allow small businesses to bear a lighter burden in some ways. While there may be some provision for small business in the regulatory environment, it is equally true that small businesses are still required to adhere to regulations that cross a wide variety of areas which we'll cover.
I want to dispel the myth that forgiveness rather than permission is a risk that small business owners should avoid. It is better to ask for implementation than forgiveness... every time.
The Categories of Regulation
If I were to just ask you to start looking into regulation for your product or service you would be forgiven for having a blank look. I would.
Let's put some structure to the chaos so we can start to find ways to become compliant or validate compliance.
There are five (5) categories that I like to talk about when it comes to organizing compliance issues.
- Product Type
- Customer Base
What about human resources? You may be asking (and you'd be right). It's a judgment call but I drop that into the Geography category where we talk about government regulations. If it helps you organize your own thoughts better you can definitely consider it another independent category.
The highest level of small business regulations come at the regional level. Think North America, European Union, etc. These groupings of nations can have consistent labor laws, monetary policy, environmental restrictions, and export control regulations as examples.
Next, you'll look at your own country's government. For us, in the United States, that's the federal government and it covers topics from human resources to export control and everything in between.
Working our way closer to home we have additional factors that affect small business. Regulations enacted at this level generally reflect the values, conditions, and needs of our regional populations and often differ from state to state.
County and city regulations for small business will tie up our discussion of the geographic regulatory environment.
You might be thinking: "Hey... all regulations are going to come from some governmental agency so can't we just stop here?
You could. I've found it mind-numbing to arrive at a comprehensive understanding of regulation by focusing solely on the resources available from the government. That sounds like a dig and it isn't intended to be. It can simply be easier for me to look at business issues from a few different angles to get a better perspective.
The next viewpoint we'll take is to look at the regulatory requirements of our profession. Many professionals have licensing or regulatory requirements placed on them. These requirements may vary from state to state so it's important to understand the licensing needs of your chosen profession in the state(s) in which you do business.
- Massage Therapists
Your product itself can fall into a regulated category. The easy examples of this might be things like:
- High Power Pulsed Electronics
- Anything connected to a wall outlet
Taking a slightly broader view than the product itself, if you supply specific industries you may have regulations whether you produce a regulated end product, subcomponent, raw materials or services.
Finally, even your customer base can place additional regulatory requirements on your business.
- At-Risk Populations (Child Care, Senior Living, etc.)
- Customer's in Foreign Countries (embargos, export restrictions)
In 30 minutes we could barely scratch the surface on this but I hope you have at least taken away the importance of understanding the regulatory environment your business has to operate in.
Pro Tip: Look for the rule... then look for exceptions. Don't trap yourself searching for answers that validate inaction or insufficient action!
How do we get started with compliance?
Let's just get started with an easy one.
Put this in the search engine of your choice: small business regulations for "ENTER YOUR PRODUCT" and "ENTER YOUR COUNTRY"
You can use this as a starting point and change the "COUNTRY" whatever geographic region you need to. Once you have some resources for the geographic regulations you may need to address you simply switch from country searches to market, customer base, and industry to round out the basics. If you do these quick searches and bookmark the most relevant results you can knock this out more quickly than you might imagine.
Based on those results you can refine your searches.
It's time to pick up the phone and call the organizations that regulate your industry or product. At the very least I would call city, county, and state offices and discuss licensing and regulatory requirements with a representative of those offices. Combined with the internet search above, this will give you a good start in understanding the regulatory environment for your business.
If there are professional organizations for your industry or profession, reach out to them to see if they have any resources available to comply with regulations.
Seek Professional Help
When in doubt... seek help out! As I eluded to earlier this is not a "forgiveness rather than permission" situation. Regulatory compliance is something you do not want coming out of the blue. It can increase costs beyond the scope of your business plan or result in legal expenses and fines that put your company at risk.
If you're not sure about the implications of a specific regulatory issue find a professional and get help putting together the right compliance for that situation.
Don't just take my word for it...