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What makes a neighborhood, a community, city or state vibrant, alive and a great place to live? What gives a place that special flavor or what makes it unique and a good place to work and raise a family?
In large part, local small businesses give a community its character, sense of growth and optimism.
This is especially true in South Dakota. The most recent data show just how important small business is to South Dakota families.
According to the Small Business Profile for the States and Territories by the Office of Advocacy of the U.S. Small Business Administration, small businesses added 7,200 net new jobs in 2004, the latest period studied.
But, as they say in the infomercials, “that’s not all!”
The updated profile also shows that in 2006 South Dakota had an estimated 79,100 small businesses, 24,000 of which were employer firms.
Further, diversity of business ownership is bringing more of the state’s minorities and women into the economic mainstream. The data document that South Dakota has 300 Asian-owned firms, 100 black-owned firms, 400 Hispanic-owned firms, 1,300 American Indian-owned firms, and 10 native Hawaiian and Pacific Islander-owned firms.
Women-owned firms totaled 15,600 and generated $1.5 billion in revenue in 2002, the latest year available.
The 2,003 new firms with employees in 2006 showed just how optimistic South Dakota’s entrepreneurs are about the future. More importantly, those firms are driving the economy. Office of Advocacy research has shown that new-business creation is key to the state’s ability to increase gross state product, state personal income and total state employment.
Unfortunately, because the businesses are small and individually don’t appear to be important, policy makers tend to overlook them when implementing regulatory, tax and economic proposals. Because they are overlooked, some do not understand how the programs, rules and regulations can harm small business.
The result is that small business faces an uneven playing field. According to Office of Advocacy research, complying with federal regulations costs the nation’s smallest firms $7,647 per employee each year. That is 45 percent more than the per-employee costs of their larger counterparts.
The total annual federal regulatory burden on the economy has grown to enormous proportions. Complying with all federal regulations costs our economy $1.1 trillion per year. That’s more per household than the cost of health care.
It’s time to help lighten that load by streamlining and updating outdated and ineffective regulations.
The Office of Advocacy’s new Regulatory Review and Reform initiative (r3) does just that. The initiative encourages small-business stakeholders to identify rules that are outdated or ineffective and recommend targeted reforms.
The result will be an annual Top 10 list of regulations that are ripe for reform. The advocacy office will work with federal agencies to make sure they understand the impact of those regulations on small business. In addition, we will provide them with training in how to review and reform outdated and ineffective rules.
We are calling for nominations of federal rules and regulations in need of review and reform, and we need your help to make r3 a success.
Nominations are due by Dec. 31. You can make them by visiting the r3 Web site at www.sba.gov/advo/r3, sending an e-mail to
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or calling Keith Holman at (202) 205-6936.
Henderson is regional advocate for the Office of Advocacy of the Small Business Administration
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