“Entrepreneurial Empowerment: Breaking Through the United States Red Tape by prof.melias

Running Head: BREAKING THROUGH U.S. RED TAPE

“Entrepreneurial Empowerment: Breaking Through the United States Red Tape”

By: Andrea C. Sosa

A Graduate Thesis Presented to the Design and Media Management Program in partial fulfillment of the requirements for the degree of

MA in Design and Media Management

Miami International University of Art and Design June 2019

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Table of Content Page List of Tables......................................................................................................... vii List of Figures ........................................................................................................ ix Dedicatory ............................................................................................................. xii Acknowledgments ................................................................................................ xiii CHAPTER 1 ............................................................................................................. 2 Introduction ............................................................................................................. 2 Background ............................................................................................................. 4 Layering of Power .............................................................................................. 4 And then, one more layer. ................................................................................... 7 To regulate or deregulate, that is the question. ................................................... 8 The Study .............................................................................................................. 10 Purpose of the study .......................................................................................... 10 Design of the Study........................................................................................... 10 Research Objectives .......................................................................................... 11 CHAPTER 2 ........................................................................................................... 15 Review of Literature.............................................................................................. 15 Consequences of regulatory accumulation ....................................................... 16 Inhibiting fair competition and Small Business birth and growth. ............... 16 Endangering Labor Security.......................................................................... 21

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Deterring Entrepreneurship ........................................................................... 25 Limiting Innovation ...................................................................................... 27 Deteriorating Americans’ Living Standards ................................................. 28 Government Initiatives to Deregulation............................................................ 29 Presidential Oversight of Government Regulatory Policy ............................ 29 Legislative Initiatives for Deregulation......................................................... 32 Then, who is to blame? ................................................................................. 34 The Administrative Burden Costs on small businesses .................................... 35 Opportunity costs .......................................................................................... 36 Economic Costs ............................................................................................. 37 Time Expenditure .......................................................................................... 38 Law Groups that impose the most burden on Small Businesses ...................... 39 Tax Law ........................................................................................................ 39 Labor Law ..................................................................................................... 40 Industry-specific Regulations – Food Industry ............................................. 41 CHAPTER 3 ........................................................................................................... 43 Methodology ......................................................................................................... 43 Qualitative Research Study Design .................................................................. 43 La Cocina – Exploratory Case Study: Practicing Entrepreneurs. ................. 43 One-on-one Interviews: Insight from Professionals...................................... 46

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Quantitative Research Study Design ................................................................ 52 Probable Sample Survey: Aspiring Entrepreneurs. ....................................... 52 Content Meta-Data Analysis: What the web says. ........................................ 54 CHAPTER 4 ........................................................................................................... 58 Results Interpretation and Discussion ................................................................... 58 Result Interpretation – Qualitative Research .................................................... 58 Active Entrepreneurs Survey ........................................................................ 58 Active Entrepreneurs Survey – Key Takeaways. .......................................... 79 Professional’s Interviews. ............................................................................. 80 1. Ms. Fedline Ferjuste ............................................................................... 82 2. Ms. HPS .................................................................................................. 83 Professional’s Interviews – Key takeaways. ................................................. 85 Result Interpretation – Quantitative Research .................................................. 86 Aspiring Entrepreneur Survey....................................................................... 86 Aspiring Entrepreneur Survey – Key Takeaways. ...................................... 108 Content Metadata Analysis. ........................................................................ 109 Discussion of Findings ........................................................................................ 113 CHAPTER 5 ......................................................................................................... 117 Conclusion........................................................................................................... 117 Recommendations ............................................................................................... 118 Limitations of the Study ...................................................................................... 119

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Time. ............................................................................................................... 119 Resource Availability. .................................................................................... 119 Budget. ............................................................................................................ 119 CHAPTER 6 ......................................................................................................... 121 Research Application .......................................................................................... 121 Value Proposition ........................................................................................... 122 Business Plan .................................................................................................. 123 Business Description: .................................................................................. 123 Revenue Streams. ........................................................................................ 123 Growth Strategy. ......................................................................................... 123 Mission Statement. ...................................................................................... 124 Vision Statement. ........................................................................................ 124 Distribution Channels.................................................................................. 124 Marketing Strategy. ..................................................................................... 124 SWOT Analysis. ......................................................................................... 125 Brand Identity ................................................................................................. 127 Product Description ........................................................................................ 128 The Brochure. .............................................................................................. 128 The App. ...................................................................................................... 128 The website. ................................................................................................ 130

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APPENDIX ........................................................................................................... 131 Appendix A ........................................................................................................ 131 Appendix B ......................................................................................................... 132 Appendix C ......................................................................................................... 135 Appendix D ......................................................................................................... 138 Appendix D1 ................................................................................................... 138 Appendix D2 ................................................................................................... 142 Appendix E.......................................................................................................... 143 Appendix E1 ................................................................................................... 143 Appendix E2 ................................................................................................... 147 Appendix F .......................................................................................................... 152 Appendix F1 ................................................................................................... 152 Appendix F2 ................................................................................................... 172 Appendix F3 ................................................................................................... 186 Appendix G ......................................................................................................... 200 Appendix G1 ....................................................................................................... 200 Appendix G2 ....................................................................................................... 202 Bibliography ......................................................................................................... 209

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List of Tables Table 1 – ................................................................................................................... 62 The reason behind business entity selection ............................................................ 62 Table 2 – ................................................................................................................... 69 Regulatory System knowledge rating ....................................................................... 69 Table 3 – ................................................................................................................... 70 Primary sources of Information ............................................................................... 70 Table 4 – ................................................................................................................... 81 Key Findings from Emiliana Puyana’s Interview .................................................... 81 Table 5 – ................................................................................................................... 82 Key Findings from Fedline Ferjuste’s Interview ..................................................... 82 Table 6 – ................................................................................................................... 84 Key Findings from HPS’s Interview ........................................................................ 84 Table 7 – ................................................................................................................... 94 Level of Intimidation ................................................................................................ 94 Table 8 – ................................................................................................................. 100 Familiarity with deferent groups of laws ............................................................... 100 Table 9 – ................................................................................................................. 102 Familiarity with Labor Laws ................................................................................. 102 Table 10 – ............................................................................................................... 105 Perception of technology as a tool ......................................................................... 105 Table 11 – ............................................................................................................... 110 Content Metadata Findings.................................................................................... 110 Table 12 – ............................................................................................................... 112

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Content Metadata Analysis .................................................................................... 112 Table A1 – .............................................................................................................. 135 La Cocina’s Active Entrepreneurs Questionnaire. ................................................ 135 Table D1 – .............................................................................................................. 138 Aspiring Entrepreneurs Questionnaire. ................................................................. 138 Table G2 – .............................................................................................................. 202 Content Metadata Analysis by Search Term .......................................................... 202

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List of Figures

Figure 1 – Number of pages in the Federal Code by year........................................ 18 Figure 2 – New Businesses created by year in the U.S. ........................................... 18 Figure 3 – Business formation statistics by states 2006 vs. 2010 ............................ 19 Figure 4 – Decline in Firm birth and Death rates..................................................... 20 Figure 5 – Jobs created by establishments less than one (1) year old ...................... 23 Figure 6 – Regulations by President (First 18 Months in Office) ............................ 30 Figure 7 – Regulatory impact on small firms........................................................... 37 Source: National Small Business Association, (2017), Regulation Survey. ............ 37 Figure 8 – Years in Business. ................................................................................... 59 Figure 9 – Type of product....................................................................................... 60 Figure 10 – Type of Business Entity ........................................................................ 61 Figure 11 – Graphic representation of reason behind entity selection ..................... 62 Figure 12 – Years before hiring ............................................................................... 64 Figure 13 – Location of production ......................................................................... 65 Figure 14 – Perception of the regulatory system...................................................... 67 Figure 15 – Regulatory Burden ................................................................................ 69 Figure 16 – Practices to Stay Up-to-Date................................................................. 72 Figure 17 – Tax compliance practice ....................................................................... 73 Figure 18 – Tools for employment law compliance ................................................ 74 Figure 19 – Length of the registration process......................................................... 75 Figure 20 – Insurance practice A ............................................................................. 76 Figure 21 – Insurance practice B.............................................................................. 76

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Figure 22 – Insurance practice C.............................................................................. 77 Figure 23 – Intellectual property .............................................................................. 77 Figure 24 – Intellectual property practices ............................................................... 78 Figure 25 – Entrepreneurial inclination (Answered 232)......................................... 87 Figure 26 – Gender................................................................................................... 88 Figure 27 – Region ................................................................................................... 88 Figure 28 – Household Income ................................................................................ 89 Figure 29 – Age ........................................................................................................ 90 Figure 30 – Industry Preferences ............................................................................. 91 Figure 31 – Barrier to entrepreneurial achievement................................................. 92 Figure 32 – Level of Intimidation ............................................................................ 94 Figure 33 – Device Type .......................................................................................... 95 Figure 34 – Aspiring entrepreneurs knowledge level .............................................. 96 Figure 35 – Preferred sources of information .......................................................... 97 Figure 36 – Information accessibility ...................................................................... 97 Figure 37 – Familiarity with business structures ..................................................... 98 Figure 38 – Estimated length of a registration process ............................................ 99 Figure 39 – Familiarity with deferent groups of laws ............................................ 100 Figure 40 – Familiarity with Labor Laws .............................................................. 102 Figure 41 – Practice tendencies to ensure compliance ........................................... 104 Figure 42 – Perception of technology as a tool ...................................................... 105 Figure 43 – Intellectual Property............................................................................ 106 Figure 44 – External help tendencies ..................................................................... 107 Figure 45 - PGE Logo ............................................................................................ 127

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Figure 46 – App Personalization Questionnaire .................................................... 129

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Dedicatory To my children, Alesia and Alberto whose love, kindness, sweet kisses, and patience served me as fuel to keep me going. – I love you “to infinity and beyond!” To my loving husband, Leslie Baute, who has been my rock, my strength, my accomplice, and my biggest support through this process. – Te Amo Chiqui. To my late father, Alberto Sosa, whose fierce intelligence, ethical values, and professionalism continue to inspire me and spur me on. I wish you were here to see this complete. – I miss you all day, every day. To Venezuela, my country of birth. May we reunite soon. – I miss you, as well. To all “aspiring” and “active” entrepreneurs. – May the content of this study assist you as you navigate the beautiful path of entrepreneurship. Keep dreaming. Keep innovating. Keep delivering. – Best of luck to you all.

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Acknowledgments First and foremost, I would like to thank Prof. Fedline Ferjuste who not only contributed to this study and taught me all I know about the U.S. legal system but most importantly made me fall in love with the world of business law and always encouraged me to think critically. Without her, this paper would not have existed. Also, I would like to thank Dr. Thelma Lazo-Flores and Prof. Mariam Elias for their support, suggestions, and encouragement through this process. Their dedication and overwhelming attitude towards helping their student have been solely and mainly responsible for the completion of this study. Without their timely guidance, scrutiny, and scholarly advice, this study could have been, well, a disaster. Last but not least, I would like to extend my sincere gratitude to the exceptional faculty of the Miami International University of Arts and Design. In particular, Prof. Stephanie Zapata, whom I consider not only my mentor but my friend. Moreover, Prof. Jeanie Lisenby, Prof. Laura Ramirez, and Prof. Rima Gerhard who through their selfless dedication and commitment gave me more than just business knowledge; they gave me life lessons that I will for always cherish.

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Abstract of Graduate Thesis Presented to the Design and Media Management Program at Miami International University of Art and Design in Partial Fulfillment of the Requirements for the Master’s Degree in Design and Media Management

“ENTREPRENEURIAL EMPOWERMENT: BREAKING THROUGH THE UNITED STATES RED TAPE” By Andrea C. Sosa June 2019 Chair: Dr. Thelma Lazo-Flores Regulation plays a critical role in a free market economy. However, mounting evidence suggests that excessive “Red Tape” in the United States is deterring entrepreneurial activity and limiting small business growth. Because economic health, social change, and industrial rejuvenation, depend primarily on entrepreneurs and small business owners, it is imperative that they learn to navigate the regulatory system despite its complexity and overextended burden. With this in mind and a limited scope focused on tax law, labor law, and industry-specific regulations form local, state, and federal governments, this study examines through primary and secondary research the administrative costs (time and money) and the pains imposed on small enterprises by the current regulatory framework. The author implements a mixed-method approach that includes an exploratory case study on “active entrepreneurs” from the food industry, three interviews with field professionals, and a probable sample survey among a population of “aspiring entrepreneurs." Furthermore, through the application of a content meta-data analysis, the study probes the best practices, tips, and recommendations currently available online. Consequently, consistent results derived from the research suggest: 1) the best approach towards decreasing the costs, the risks and the causes of the current regulatory burden is through active participation and engagement from the entrepreneurs themselves, starting with research and protective practices. 2) Entrepreneurs and small business owners are claiming for more efficient systems and leaner processes to compliance that decrease “task burden,” instead of a reduction on the number of rules as some literature suggests. Ultimately, the findings from all methods combined, assist the author in generating a “Practical Guide for Entrepreneurs to Regulatory Compliance” designed to serves as a tool for successful navigation of the system, all with the intention of safekeeping economic growth, labor security, and innovation in the U.S. through the empowerment of entrepreneurship.

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CHAPTER 1 Introduction Regulation plays a critical role in a free market economy. It determines the rules for competition, ensures a leveled playing field, governs participants’ behaviors, and protects consumers, public health and safety, amongst many other things, so there is no question on its relevance. However, over the last two decades, many scholars, the Federal Government, and even some regulatory agencies in the United States have worried and studied that regulation overload is deterring entrepreneurship and small business sustainability. This concern is genuine and understandable since entrepreneurship drives economic health, social change, industrial rejuvenation, and technological progress in any nation. Nonetheless, despite their interest and conclusive results from multiple studies, there seems to be little done on the mater since Red Tape burden continues to increase every year. In fact, in 2017, the Code of Federal Regulation reached a new record with over one-hundred eighty-six thousand (186,374) pages; representing a nineteen percent (19%) increase in just one decade (Long, 2019). Under such circumstances with this study the author, as a multipreneur and a future owner of a U.S.-based small business in the food industry, finds imperative that entrepreneurs and small business owners alike learn to navigate the complex and burdensome system while better relief solutions, than those currently in place, arise from the regulating authorities. With this in mind, this study examines through primary and secondary research the administrative costs (time and money) and the pains imposed on small enterprises by the current regulatory framework. It implements mixed-method research that includes an exploratory case study on “active entrepreneurs” from the food industry, three interviews

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with field professionals, and a probable sample survey among a population of “aspiring entrepreneurs." Additionally, through the implementation of content meta-data analysis, the investigation mines on the best practices, tips, and recommendations currently available on the Internet. All methods combined, assist the author in her quest to generate a “Practical Guide for Entrepreneurs to Regulatory Compliance” that serves as a tool to relieve the pains, decrease the impact of the costs, and empower entrepreneurs with the intention of safekeeping economic growth and labor security in the U.S. for years to come. It is relevant to mention that because regulation is such a broad topic the scope of the project is limited to and focused on tax law, labor law, and industry-specific regulations form local, state, and federal governments.

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Background Red tape in the United States is affecting the creation and growth of small business and deterring entrepreneurial spirit among the new generations (Meyer, 2105). However, the complex regulatory framework has been a part of the United States since it became an independent nation. The problem may or may not be based on the different tiers of power present in the system including federal, state and local governments, the regulatory agencies and all the constituents that form part of these structures which govern not only businesses activities but society in general. Nevertheless, what is true is that the continued creation of laws is piling up to be the final stroke. Accordingly, to understand how the compliance process works in the U.S. for entrepreneurs and small businesses, it is essential that this study starts by looking at the different levels of governance, and shows the critical points behind the U.S. regulatory frame throughout history. For that, it identifies the problem and establishes why it is vital not only for regulators to change their ways but most importantly, for entrepreneurs to learn how to navigate and manage the problem.

Layering of Power The complex regulatory environment in the United States goes as far as 1789 when the constitution was signed. At that time the Constitution was very innovative not only because it included the creation of the Legislative branch but more so because it granted the Congress, which consists of The House of Representatives and The Senate, instead of the president, the power to regulate and “legislate.” A power that before seventeen eighty-nine (1789) used to be executed by emperors and kings around the world. In fact, Article III of the U.S. Constitution, Section 8, Clause 18, explicitly grants members of Congress the power

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to make “all laws” they feel “necessary and proper” to carry out “any power vested in the U.S. government or any department or officer thereof” (U.S. Const. Art. I1, § 8). Nonetheless, the Constitution, as the U.S. supreme law, also grants some powers and responsibilities to the other two branches of The Federal Government in terms of the regulatory framework. The executive branch which includes the president, the vice-president, the executive department, fifteen (15) federal agencies that are members of the cabinet, the independent agencies, the commissions, and committees; are responsible for carrying out and enforcing the laws and maintaining regulatory oversight. While the judicial branch, which includes The U.S. Supreme Court and other Federal Courts, is responsible for interpreting the law and limiting the power of the other government branches and all constituents. (Bagley and Savage, 2016). Additionally, in the light of defining the concept of federalism and limiting the power of the federal government, in seventeen ninety-one (1791), with the ratification of the Tenth Amendment, a part of The Bill of Rights, the regulatory framework got even more complicated. The Tenth Amendment reserves all “the powers not delegated to the United States by the Constitution, nor prohibited by it to the States respectively, or to the people” (U.S. Const. Amend. X). Additionally, to make matters more complex, since all state governments’ are modeled after the federal government, not only are they formed by the three branches, but also have their independent constitutions which are all longer than the U.S. Constitution itself. Moreover, since they can be organized in any way they wish, the administrative structures vary greatly from one states to another. In fact, “no two state executive organizations are identical,” complicating the regulatory scene even more (The White House, n.d.).

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Like its federal counterpart, at a state level the execution of the regulatory power often referred to as “police power” which includes the power to protect the health, safety, welfare, and morals of state residents, also falls on the three branches of the state government. The executive branch, which includes: the governor, the attorney general, the secretary, the auditors, commissioners, and the state agencies, is responsible for executing the laws created by the state’s legislative branch and defined by the judicial branch. The legislative branch in all states except Nebraska include a bicameral legislature model made up of two chambers: a smaller upper house, referred to as The Senate, and a larger lower house, usually called the House of Representatives, Assembly, or the House of Delegates. Similar to the Federal government, both chambers are responsible for making state regulations and fulfill other governing responsibilities, evaluate the state issues, and create legislation that becomes state laws. It is essential to mention that because most often both, state and federal level regulate the same business activities if a state law conflicts with federal law, the later takes precedence or preempts the state law. (The White House, n.d.). At a state level, the judicial branch is made of the State Supreme Court and lower level courts including courts of appeals. “The Supreme Court focuses on correcting errors made in lower courts and therefore holds no trials. Rulings made in state supreme courts are normally binding; however, when questions are raised regarding consistency with the U.S. Constitution, matters may be appealed directly to the United States Supreme Court.” (The White House, n.d.). At the third level of the regulatory red tape, local governments complicate the matter even more as they usually add two more layers to the regulatory structure: county and municipal governments. Although, contrary to the federal and state governments, it is the people and the state government, instead of the constitution, who grant the powers of the

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local authorities. In general, the people directly elect mayors, city councils, and other governing bodies. The local governments enact municipal ordinances, rule aspects such as building codes, zoning regulations, public health, waste disposal, local environmental issues, and many more. And then, one more layer. Despite the U.S. Government being a complicated tiered structure with many branches and a vast number of players, it is not to blame for the complexity of the regulatory frame; neither is the U.S. Congress solely responsible for it. The real problem lays in the fact that regulatory agencies, which are commonly referred to as part of the Fourth Branch of Government, although they are supposed to be part of the executive branch at the federal and state level, are acting as independent forms of government. Moreover, they are overextending their power despite its impact on the business environment and society at large. A power that is not granted by the constitution nor controlled by it. A power that is not even given by the people they control for to agency official are appointed and not elected. To illustrate the extent of the problem, we can see that America’s most binding rules are not passed by Congress (elected representatives) but are instead issued as regulations, crafted mostly by thousands of unreachable, unelected, and unknown bureaucrats.

For instance, in two

thousand sixteen (2016), Congress enacted two-hundred-fourteen (214) public laws, while federal agencies finalized over thirty-eight hundred (3,853) rules; a spread difference that seems to be increasing year after year. (Wayne, 2017). To make matters even more complicated, the Federal government does not truly know how many agencies, bureaus, components, and commissions really exist. As a matter of fact, the Administrative Conference of the United States, in its most recent Sourcebook of United States Executive Agencies publication in 2015, stated: “[T]there is no authoritative list of

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government agencies” (Administrative Conference, 2015). However, at one point Senate Judiciary Committee hearing Chairman Chuck Grassley noted that there were over four hundred and thirty (430) departments, agencies, and sub-agencies as of 2015, and by December 2016 the number had already increased to four hundred and forty (440) agencies (Wayne, 2017). So, we cannot help but wonder if even the government cannot keep all agencies and regulators in check, how are entrepreneurs and small business owners going to be able to follow all agencies that govern their business operations and, furthermore, keep track of the continued additions to the regulatory framework? A point often overlooked by scholars and historians is that the burdensome regulatory framework may come as a result of the fact that all these agencies and sub-agencies budgets depend on the number of regulations they are trying to pass for any given period. (USA Gov, n.d.). Hence, it is only understandable and expected that the more laws they pass, the more money they will have and therefore, the more “power” they will have within the committee. Consequently, maybe the solution could start by changing this fact, but that is something that this humble author leaves to the authorities to evaluate and other scholars to comment.

To regulate or deregulate, that is the question. Under these circumstances, where there is an undetermined number of agencies, too many levels of regulatory power, and the continued addition of rules and prohibitions that govern the business environment; entrepreneurs are holding back. With attention to the fact that regulatory overload increases entry barriers, as fewer businesses are willing and able to face and cover compliance costs to enter the market, it is imperative to note that is not only affecting economic growth and the birth of new businesses but is also playing in benefit of larger firms. Moreover, scholars believe that these larger incumbents may even pursue such

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regulations of entry deliberately to protect themselves from competition from new entrants. (Coffey et al., 2016; McLaughlin, 2018; Dixon et al., 2006). So, again, we cannot help but wonder who are these regulations really serving? One point should be made clear: Institutions matter and regulations matter. Society and the business environment, in particular, need a frame that delimits the business activity, promotes market competition, controls the power of larger incumbents and mitigates the effects of business activity on consumers and society in general. Therefore, this study is not focused on suggesting that we need to reevaluate the government structure or tiering of power, nor aims to question the duties and responsibilities of legislators. However, it is here to demonstrate that what we need are institutions that understand what happens within this environment and that the problem is not any regulation in particular; but instead, the accumulation that increases and potentializes the pains of the small business owners making it almost unnavigable to practicing and aspiring entrepreneurs. As Michel Mandel, chief economist at the Progressive Policy Institute, depicts it in his intervention at the Regulatory Improvement Commission (RIC), “this is the pebble in the river effect.” He explains, one single pebble does not change the flow of a river, however, if enough pebbles are put into the stream not only could this cause the river to change paths but it could even result in the full stop the flow of the water. (Mandel, 2016). This analogy shows that if we, regulators, legislators, and society in general, do not work together to remove these “pebbles,” America will end up with an entrepreneurial river either stopped or on a different path than that expected. The U.S needs regulators that only add the necessary pebbles and entrepreneurs that learn to navigate among them.

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The Study Purpose of the study As previously discussed it is a fact that the future development of new enterprises could be limited by the many economic, labor, and industry-specific regulations that control the business environment in the U.S. unless entrepreneurs find an effective way to cope with the regulatory overload. Therefore, with this study, the author seeks to produce a “Practical Guide for Entrepreneurs to Regulatory Compliance” (PGE) as a tool to cut through the red tape, and foster the entrepreneurial spirit in benefit of economic growth and labor security. While a vast number of studies have been done on the subject over the past two decades, none of them have generated solutions or recommendations to the entrepreneurs themselves. These studies have had the governments, regulators, and agencies as their target audience, and thus have aimed at changing their behaviors and practices, instead of providing tools that could help entrepreneurs cope with the already existent problem. Consequently, with its “Practical Guide” and because it bases recommendations on the combination of historical and literary data from renowned scholars, statistical researches from highly recognized organizations, authoritative input from the government and agencies, primary statistical data, and most importantly recommendations from practicing entrepreneurs; this study becomes first of its kind and delivers high value to its target audience.

Design of the Study For the investigation, the author chose to apply an exploratory design method as to where there has been too few or even none earlier studies that can serve as an informational foundation and as a guide to predict outcomes, which is this study’s case, this is the best methodological approach. The idea behind this method is merely exploratory. It seeks to gain

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familiarity with the research problem, establish an understanding of what would be the best approach in proceeding with future studies, and determine future methodological approaches that could serve the investigation and further data mining. Consequently, to be able to identify the entrepreneurs and small business owners’ pains and find the most effective and efficient ways for them to cope with regulations, not only at birth but also during the growth of their small firms, the author implemented a mixedmethod research approach. Firstly, qualitative research that began with an exploratory case study on active entrepreneurs from a preselected sample from a kitchen incubator in San Francisco, followed by three (3) one-on-one interviews with professionals in the field. Secondly, the quantitative research also included the administration of one (1) online survey on a probable sample using the SurveyMonkey® platform and finished with a content metadata analysis on information that is available on the web in order to identify the pain “relievers.” Research Objectives The combination of the findings from the different research methods is what allows the author to generate a conclusive statement on the problem, develop recommendations for further studies, and create the PGE on "Regulatory Compliance” that will help entrepreneurs cut through U.S. Red Tape; which is ultimately the final objective of the study. It is essential to keep in mind that this study and its “PGE” are intended for all entrepreneurs that seek to operate within the U.S. regulatory model. Although it mentions regulations from the Food and Beverage Industry briefly, these are just used by the author as an example to illustrate the burden that industry-specific mandates can have on a venture, and by no means limits the audience of this study. Further, it is relevant to note that this study is not about entrepreneurs in the food industry (commonly referred to as “foodpreneurs”) and

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it is not a guide to how to be an entrepreneur. Instead, it is about finding the most effective ways to manage and control the administrative costs associated with the regulatory burden, time and money, and providing future small business owners a compilation of “pain relieving strategies” they should consider while pursuing their dream. To this end, each of the study's sections and chapters focuses on one or more of the study’s specific objectives, which are: A. Objectives by conducting secondary research a. Familiarize the author and reader with necessary details, settings, and concerns. b. Evaluate how U.S. regulatory overload has historically affected small business creation and entrepreneurial initiatives. c. Determine how the regulatory burden rises entry barriers for entrepreneurs. d. Identify the effects that the administrative costs associated with regulatory burden have on small business operations and how they jeopardize their sustainability. e. Investigate on legislative initiatives to deregulation and recognize who is ultimately responsible for regulatory overload and why. B. Objectives by Qualitative Research a. From the exploratory case study on practicing entrepreneurs, collect data from primary research that provides exploratory and specific results that allow to: i. Evaluate the burden of regulations based on the business structure. ii. Assess concern and knowledge levels of “practicing” entrepreneurs on the regulatory environment. iii. Determine best practice tendencies from constituents in the field and identify the costs that compliance represents to their ventures. iv. Recognize best practice tendencies in terms of protection. v. Learn about their recommendations.

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b. From the one-on-one professional interviews: i. Collect more in-depth information on the problem and the causes. ii. To mine primary data on tips, recommendations, and best practices from professionals related to the topic. C. Objectives by Quantitative Research a. From the Online survey with a probable sample (200 respondents): i. To determine from the totality of the sample, what percentage are “aspiring entrepreneurs,” regardless of their industry preference. ii. Conduct primary research to test the results and findings collected from the previous method to serve as the evidence base for final tip compilation for the “Practical Guide.” iii. Assess “concern” and “knowledge” levels of potential entrepreneurs on the U.S. regulatory framework. iv. Determine if, in fact, the regulatory burden is perceived as a barrier of entry by would-be entrepreneurs. v. Determine what future studies could evaluate to continue to assist entrepreneurs in overcoming their troubles. b. From the website’s content metadata analysis, evaluate secondary research data that allows to: i. Investigate the most commonly mentioned tips, suggestions, and best practices already available to entrepreneurs. ii. Identify the most frequently mentioned mistakes made by entrepreneurs regarding compliance.

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iii. Evaluate the ease or difficulty of finding and interpreting information on the subject. iv. Generate new ideas and assumptions. v. Develop tentative theories or “best practices” to approach the problem. D. Finally yet equally important, the conclusion and application of the study will explain how the implementation of the “Practical Guide for Entrepreneurs” as an innovative tool, becomes a way to warrant the economic growth and labor security of the United States. Besides, suggesting additional techniques and solutions that could be implemented to lessen the effects of regulations on entrepreneurial initiatives further.

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CHAPTER 2 Review of Literature The Organization for Economic Co-operation and Development (OECD) defines regulation as: “a set of ‘incentives’ established either by the legislature, Government, or public administration that mandates or prohibits actions of citizens and enterprises… Regulations are supported by the explicit threat of punishment for non-compliance.” (OECD, 1994). Therefore, as recognized by the Congressional Research Service, “[f]ederal rulemaking is an important mechanism through which the government implements policy.” A mechanism whose relevance and importance to the nation, particularly in business, is not questioned since all stakeholders understand that regulation establishes an even playing field, governs participants behavior and protects consumers, public health, and safety. Confirmedly, eighty-six percent (86%) of small business owners see regulation as a necessary part of a modern economy, and a ninety-three percent (93%) believe they can leave with regulations if they are fair and reasonable. (American Sustainable Business Council, n.d.) Moreover, all participants of the economy and member of society recognize that rules are necessary to create the circumstances under which the nation as a whole can prosper so that strong consumer demand can exist to support a growing economy. As the Center for American Entrepreneurship recognizes, “without question, innovation, economic growth, and wealth creation depend on the promulgation and enforcement of regulation” (CAE, n.d). However, findings from the research argument that spread across every sector, regulatory accumulation acts as a drag on the economy (Long, 2019).

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Consequences of regulatory accumulation Over the past two decades, many scholars have dedicated to the evaluation of the causes and the consequences that regulatory accumulation has on entrepreneurship, small business formation, and their sustainability, and the economy at large. Through a variety of research methods, these scholars have compiled a body of work that puts in evidence how the regulatory burden is affecting America in more ways than regulators care to acknowledge.

Inhibiting fair competition and Small Business birth and growth. As expressed in the First Amendment to the U.S. Constitution, one of the unique characteristics of the U.S. is its freedom. In it, it states freedom of speech, freedom of religion, freedom of the press, among others. However, in the economic system, a unique characteristic is the freedom to start a business relatively easy and quick (Sadeghi, 2008). In fact, to most Americans and immigrants, this represents the “American Dream.” Consequently, the efforts of these “American dream seekers” through their entrepreneurial initiatives and their business formation are the ones that lead to a better economy. The birth and growth of their businesses not only adds value to society but also causes the decline of less productive business and the relocation of resources from less profitable to more profitable enterprises. According to the economist Joseph Schumpeter, who popularized the term, this dynamic act, is known as “creative destruction” (Alm & Cox, n.d). Creative destruction then becomes the foundation for a stable business dynamism, which is essential for economic growth. Most importantly it is the foundation of capitalism for to it becomes the seed of innovation and the driver of competition, both which ultimately offer society improved, less expensive, and more updated products and services than those already in the market. Furthermore, it propels job creation, provides workers with more

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opportunities, better benefits, more productive offers, and hence increased labor security, and a better quality of life to all within a capitalist society. (Alm & Cox, n.d). For instance, a 2016 study on The Accumulative Costs of Regulation by Bentley Coffey, Patrick A. McLaughlin, and Pietro Peretto for the Mercatus Center from the George Mason University, puts in evidence that although “regulations are often intended to address some perceived market failure, they come at the cost of great barriers of entry for new firms that seek to enter the market.” (Coffey, McLaughlin and Peretto, 2016) Limiting then the probability of creative destruction. To illustrate this point, it only requires a comparison between the number of pages published in the U.S. Federal Code of Regulation by year (Figure 1) and the number of small business formation (Figure 2). For example, the graph released by the U.S. Census Bureau in 2014 as part of their “Business Formation Statistics” research, which takes the pulse of business formation in the United States, shows that in 1977 the number of start-ups per year was almost six-hundred thousand (600,000), point at which the number of regulations, according to the George Mason University, was around seventy thousand pages (70,000). Contrasted with a business creation of only four-hundred fifty thousand (450,000) in 2014 when the number of pages in the federal code of regulations reached to be around onehundred eighty thousand pages (180,000).

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Figure 1 – Number of pages in the Federal Code by year Source: George Mason University, (2017), U.S. Federal Code of Regulation

( A l m

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Figure 2 – New Businesses created by year in the U.S. o m Source: U.S. Census Bureau, (2014), Business Formation Statistics. x & ,

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Also illustrative, the map below (Figure 3), taken from the U.S. Census Bureau 2014 “Business Formation Statistics,” gives a snapshot of the variation in per capita business formation per year across states in 2006 compared to 2010. A period in which the Federal Regulation code increased over twenty-thousand (20,000) pages, representing a total increment of around thirteen percent (13.33%).

Figure 3 – Business formation statistics by states 2006 vs. 2010 Source: U.S. Census Bureau, (2014), Business Formation Statistics. Additionally, Coffey, McLaughlin, and Peretto’s findings also suggest, “small firms are affected more dramatically than large incumbents, but that neither seems to be affected by the increase of regulation.” A finding supported by a 2006 working paper published by the Kauffman-Rand Center for the Study of Small Business and Regulation. In this working paper, the authors identify that some of the reasons as to why smaller sized entities are more affected as regulation increases include that “they are less likely to be diversified, are less able to leverage economies of scale, and have more limited access to capital markets.” (Dixon, Gates, Kapur, Seabury, Talley, 2006). The authors explain that small businesses “are

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more risk-averse because they are more-resource constrained” thus less able to react to unexpected events; a difference that places them in a competitive disadvantage. Ultimately, what this competitive disadvantage, caused by regulatory accumulation, produces is a dramatic decline in firm birth and firm death (Figure 4). This is highly worrisome to scholars, and should be to government representatives because, as the Economic Innovation Group (EIG) puts it in their 2017 report on business dynamism, “[a] less dynamic economy with fewer new companies will ultimately be one with weaker competitive pressure.” (Economic Innovation Group, 2017). This is a point highlighted in their report as one of their most relevant findings for to that the lack of business dynamism experienced in the U.S. economy between 1997 and 2012 resulted in high concentration of power by large incumbents as “the four largest firms, in half of all industries, captured at least twenty-four percent (24%) of their markets.” A percentage then that reveals the undermining effect over competition policies and antitrust laws.

Figure 4 – Decline in Firm birth and Death rates Source: U.S. Census Bureau, (2014), Business Formation Statistics.

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Moreover, there is substantial evidence among multiple sources to support that with the increasing regulatory burden, even the most promising new businesses are “less likely to survive and grow than in previous years.” For example, the number of initial public offerings (IPO’s) between the 1990s and the 2000s fell by almost three quarters in just a decade. Although EIG’s understanding over what exactly caused this shift in the economy is still uncertain, their hypothesis strongly suggests that “the volume of regulation, which seems to increase in response to each passing crisis, and the complexity of the tax regime” are to blame. They say it is because “they both place a disproportionate burden on small and young companies, which cannot spread their fixed costs of compliance across a vast organization,” thus limiting their growth potential. (Economic Innovation Group, 2017). Under these conditions, is no wonder why Coffey and his peers, Dixon and his coauthors, plus the rest of public choice literature all suggest that big firms and the industries themselves are the top promoters of the regulation. Furthermore, they even suggest that large firms might be actively seeking to increase regulations. (Coffey et al., 2016; McLaughlin, 2018; Dixon et al., 2006). Findings that reveal the unevenness of the playing field and hence contradicting one of the overall purposes of regulation in the first place. (Coffey et al., 2016).

Endangering Labor Security. The literature on the relevance of small businesses to the U.S. economy and the labor market homogeneously agree that small businesses are essential. Numbers from the 2018 U.S. Small Business Administration Office of Advocacy report on small businesses profile, demonstrate that these enterprises represent almost half of all gross revenue generated by U.S companies, employ near forty-eight percent (47.5%) of the private workforce, and represent

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ninety-nine point nine percent (99.9%) of all employers in the nation with thirty point two (30.2) million enterprises. (U.S. Small Business Administration, 2018). However, many mainstream media sources and even government officials such as the Washington Post, Cass Sunstein (former director of the OMB and the OIRA under President Obama), and even the Economic Policy Institute (EPI), allege that neither regulation nor regulatory burden, for that matter, plays a determining role on the labor market. As they see it, “regulation overall is neither a prime job killer nor a key job creator.” Their pro-regulation stance is explained in a two thousand eleven (2011) EPI report that states, “review of the studies of regulations in place finds little evidence of ‘significant’ negative effects on employment.” (Economic Policy Institute, 2011). The report further explains that even if a new business is not created, older enterprises in that industry will need more employees to be able to cover the increase in demand that the aspiring entrants intended to target. Hence, it is not that the jobs were not created; it is just that they were created elsewhere. They call it the “job position shift” (Economic Policy Institute, 2011). Contradicting this argument, multiple scholars do believe that the regulatory burden does jeopardize labor security. For instance, through their empirical research, Coffey and his co-authors, using industry-level data and RegData’s index of regulatory intensity, provide evidence to demonstrate that regulation does harm employment growth. According to their results, a ten percent (10%) increase in regulation leads to a point nine percent (0.9 %) reduction on hiring (Coffey et al., 2016). This percentage allowed them to conclude that in the years between 1998 and 2011 the increase of federal regulation cost the U.S. labor market over five hundred thirty (530) new job positions “every year for the average industry.” (Coffrey et al., 2016).

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Additionally, numbers from The U.S. Census Bureau in a section of their “Business Formation Statistics” research, in which they track job creation from firms less than a year old, also manifested a worrisome decline of one point seven million (1.7M) new jobs deficit between 1999, the dot-com boom, and 2015 (Figure 5). A number seconded by the findings from the EIG who also determined that the deficit in new firm creation for 2014 was responsible for “nearly one million (1M) missing jobs” as a consequence to the one-hundred fifty-four thousand (154,000) fewer companies that were launched that year which were supposed to create an average of six (6) jobs per firm. Even more alarming is EIG’s estimation on job deficit from firms that were never born, calculated by conservative estimations to be three point four million (3.4M) jobs that were never created (Economic Innovation Group, 2017).

Figure 5 – Jobs created by establishments less than one (1) year old Source: U.S. Census Bureau, (2016,) Business Formation Statistics.

What is true, however, is that currently, in 2019, the unemployment rate is at its lowest level in nearly fifty years (The White House, 2019). EIG offers a potential explanation

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for this phenomenon. They allege that “[o]n its face, job growth stands out as a relative bright spot in the wake of the Great Recession.” With approximately fifteen point six million (15.6M) new jobs in seventy-five (75) months the recovery is in a good pace, however as they point out “by historical standards the pace of job growth has disappointed” (Economic Innovation Group, 2017). What they mean is that job recovery would have been significantly stronger if the country’s startup rate had been higher. They justify the decline of unemployment to the fact that “older companies contribution are not due to expanded hiring, however, but rather to fewer layoffs than usual.” (Economic Innovation Group, 2017). Thus, even though the unemployment rate is low, there has been little contribution to the market. Subsequently, the deterring number of new firms plus the growing weight of older incumbents has scholars and economists worry as this factor is exacerbating “market monopsony: A condition where sellers of labor (workers) confront too few buyers (employers) who, with their outsized market power, are able to set the price of labor (wages) to their own liking.” (Economic Innovation Group, 2017). This is highly worrisome as it contributes to widening income inequality; something that can be counteracted only by startups as they “break up any coalitions among established employers and competing for workers.” Actions that ultimately “help ensure that the labor market remains a sellers’ market.” (Economic Innovation Group, 2017). All of these findings serve as tokens to exemplify the massive counterproductive effects that regulation represents as these potential job positions would have represented prosperity opportunities to many people in every sector of the economy. Furthermore, they could have benefited the current wage conditions and provided the labor market with dynamic mobility that produces not only wealth but also wellbeing. Leaving to reflect, then

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again, on whom regulations are really serving and questioning how is it that regulation is supporting economic growth and wealth creation as it originally intended.

Deterring Entrepreneurship Some say that “entrepreneurship is what changes the world.” (Wooley, 2017). Albeit it is true that entrepreneurship is driven by passion, ambition, self-motivation, creativity, and courage, which are all personal attributes; it is also true that to become an entrepreneur, one requires “freedom to experiment, the right to compete, and the right to reap the rewards from economic success” (Cotes, 2016). Ana Maria Zarate from The George Washington University notes in her study Regulatory Insight, “a combination of opportunity, capabilities, and resources not necessarily lead to entrepreneurship if opportunity costs and start-up costs outweigh the potential benefit.” (Zarate, 2015). According to multiple scholars and former Senator Dan Coats’ State of Entrepreneurship speech for the Joint Economic Committee, “government-created obstacles” are making the costs overshadow the benefits of entrepreneurship among the U.S. population, and the World Banks seems to agree. In their 2019 Ease of Doing Business annual rating, which measures eleven (11) areas of business regulation to diagnose the complexity of regulatory processes, the United States is ranked eighth (8th) out of one-hundred ninety (190) countries. A position that remains stable since last year but that deteriorated exponentially since 2009 when the country reached a record low positioning in fourth (4th) place. (World Bank Group, 2019). Senator Coats mentions that some of the difficulties and the most significant barriers stopping entrepreneurs from following their dreams include lack of financing, regulation from all levels of government, and even licensing requirements which elevate the difficulties

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that aspiring entrepreneurs need to overcome before launching their ventures (Cotes, 2016). For example, in terms of funding, the Securities and Exchange Commission (SEC) regulations on equity-based investment serve as an illustration of how regulations limit the freedom of entrepreneurs, as not only they reduce the options for funding available to the entrepreneurs but also interfere in their chance of obtaining ulterior benefits such as guidance and networks of their investors. According to Jarred Meyer from Forbes, these regulations are “a major reason why less than one percent (1%) of start-ups are funded by venture capitalists” (Meyer, 2015). Even if entrepreneurs can fund their businesses, labor laws can also prevent their ventures from getting off the ground. As Meyer points out and following Coats line of thought, occupational licensing requirements are an example of how sometimes regulations can be absurd and create unnecessary obstacles. He supports his position by saying “[w]hile it may be in the interest of public safety for doctors and EMTs to be licensed, it does not make any sense for low-risk occupations, such as African hair braiders, interior designers, tree trimmers, and tour guides, to need one.” (Meyer, 2015). Ultimately, the main problem between entrepreneurial aspirations and regulation is that it cannot be realistically measured until the “ambitions” become start-ups, the point at which entrepreneurs are burdened again with more regulations which they need to overcome, some successfully achieving it while others fail. Hence, the real effects of how much the country is missing or not benefiting from all those who never get the opportunity to follow their dream are unmeasurable, and thus it is imperative to take actions towards deregulation. As an illustration of how deregulation benefits the nation, we can look back to 1978 when there were less than fifty (50) brewers in the United States. At this time, President Jimmy Carter ordered the removal of all prohibitions on home beer brewing. Four decades

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later, this single action turned the United States from “laughing stock to leader in the production of tasty lagers and ales” (Welch, 2018), in fact as of twenty-eighteen (2018) there were more than five thousand (5,000) breweries in the nation. Notwithstanding and despite historical proofs of the benefits of deregulatory initiatives and the consequences of regulatory overload, the Code of Federal Regulation keeps increasing in length and complexity.

Limiting Innovation Ultimately, by limiting entrepreneurship, entrepreneurial aspirations, and small business growth regulatory overload is harming America in an even bigger way. The advance of new technologies, the creation of something new or improved, or ideas to doing something in a superior way most often come from the innovations of entrepreneurs. As the Center of the American Entrepreneurship quotes: “Entrepreneurs throughout modern economic history, in this country and others, have been disproportionately responsible for truly radical innovations – the airplane, the railroad, the automobile, electric service, the telegraph and telephone, the computer, air conditioning, and so on – that not only fundamentally transformed consumers’ lives, but also became platforms for many other industries that, in combination, have fundamentally changed entire economies.” (Center of American Entrepreneurship, n.d.) Innovation is crucial for economic development in any nation as it plays a vital role in technological upgrading and increasing the utilization and efficient allocation of production factors. Thus, by limiting innovation through regulatory overload, legislators can ultimately end-up hurting America to the point that it ceases to be the “leader of the free

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world.” For example, more patents were filed in China in 2011 than in the USA. (Goedhuys, 2011), and this should set off every alarm in the system.

Deteriorating Americans’ Living Standards Last but not least, regulatory accumulation has severe consequences for American’s standard of living, meaning that by limiting creative destruction, innovation, new job creation, and competitiveness, “consumers pay more, workers receive less, and retirement savings grow more slowly, it even limits American’s freedom.” (McLaughlin, 2018). To illustrate how significant these losses can be to a country’s economy, it suffices to look at findings from an investigative study conducted 2005 by the World Bank, showing that a ten percent (10%) increase in a country’s regulatory burden slows the annual growth rate of GDP per capita by half a percentage point. Resulting then in thousands of dollars lost in GDP per capita growth in less than a decade. (World Bank, 2005). Other economists have also estimated that a heavily regulated economy grows two to three percent (2%-3%) slower than a moderately regulated one (McLaughlin & Greene, 2014). Further, a relevant excerpt published in the Journal of Economic Growth in June 2013 tells just how big of a difference regulatory accumulation made in the United States economy between the years 1949 and 2011: “We can convert the reduction in output caused by regulation to more tangible terms by computing the dollar value of the loss involved. […] In 2011, the nominal GDP was $15.1 trillion. Had regulation remained at its 1949 level, current GDP [2011] would have been about $53.9 trillion, an increase of $38.8 trillion. With about 140 million households and 300

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million people, an annual loss of $38.8 trillion converts to about $277,100 per household and $129,300 per person” (Dawson & Seater, 2013). More specifically, according to Patrick McLaughlin, in the year 2012 alone, the perpetual accumulation of rules since 1980, cost the American population nearly thirteen thousand dollars (USD 13,000) per person.

Government Initiatives to Deregulation Overall, and despite appearances, the government is and has been aware of the previously mentioned consequences of the regulatory burden. In fact, over the past, forty to fifty (40-50) years each president has sought to generate some relief through presidential and congressional initiatives, including statutes, executive orders, circulars, and other documents, as well as by creating agencies that together aim to assist in reducing barriers for entrepreneurs and small businesses in terms of compliance. These actions in federal administrative law are referred to as “regulatory review.” “Regulatory review may involve an examination of the content or effect of a rule, its estimated economic costs, and benefits, or the adherence of the rule and the rulemaking agency to procedural requirements” (Ballotpedia, n.d). Moreover, “retrospective regulatory review, is used to determine if existing regulations should be retained, modified, or repealed.” This section identifies some of the most important executive order, agencies relating to federal regulatory review.

Presidential Oversight of Government Regulatory Policy The most recent step towards regulatory review was on January 30, 2017, when President Donald Trump signed Executive Order 13771: "Reducing Regulation and

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Controlling Regulatory Costs." The order states that the executive branch ought to be "prudent and financially responsible in the expenditure of funds" from taxpayers while also managing the compliance costs that organizations and individuals face in order to obey federal regulations. The order also required that agencies engaged in rulemaking, whenever possible, conduct retrospective reviews of their existing regulations and recommend two for repeal.” (Ballotpedia, n.d.). President Trump has been an active promoter of deregulation not only through his campaign but through his presidency. For instance, comparing the last six (6) presidents of the United States vis-a-vis regulatory actions during their first eighteen (18) months in office (Figure 6), President Trump has come to be the president with the least regulations enacted.

Figure 6 – Regulations by President (First 18 Months in Office) Source: Dudley, S. (2018, August 14). Documenting Deregulation, Forbes. Nonetheless, he is not the first president to identify regulatory burden’s costs as a problem and take action to potentially solve it. To put it another way, the “deregulation idea” and regulatory review actions have been around for decades. In a 2007 report the U.S. Government Accountability Office (GAO), an independent, nonpartisan agency that is

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contracted and under the supervision of the U.S. Congress, claimed that “the presidential practice of directing agencies to review and reconsider existing regulations began with the administration of President Jimmy Carter and was continued by his successors” which started the “Deregulating Era.” (Ballotpedia, n.d) According to historians, the “deregulatory era” was during the 1970s and 1980s and with Presidents Jimmy Carter and Ronald Regan as active promoters of deregulation initiatives. Notably, in his first State of the Union speech, refereeing to his executive order E.O. 12044 President Carter said: “We really need to realize that there is a limit to the role and the function of government. Bit by bit we are chopping down the thicket to unnecessary federal regulations by which government too often interferes in our personal lives and our personal businesses”(Welch, 2018). President Carter’s E.O. 12044 issued in 1978, was the first ever Executive Order that mandated regulatory review. It required agencies to “periodically review and adopt procedures to improve existing and future regulations.” (C.F.R. 1978). Then President Ronald Reagan solidified regulatory oversight authority within the White House, issuing Executive Order 11291, which required the Office of Management and Budget (OMB) review and approval of rules. This order was later supported and improved by President George H.W. Bush, who instructed agencies to identify existing “unnecessary regulations” to eliminate “unnecessary regulatory burden.” (U.S. Government Accountability Office). Following, in 1993, President Bill Clinton issued Executive Order 12866, which directed agencies to develop a plan for the regular review of existing significant rules. This executive order became highly relevant to history as it was the first time that the term “significant” was defined to be “rules that exceeded costs of one-hundred million dollars in

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impact.” The E.O. also authorized the Office of Information and Regulatory Affairs (OIRA), a part of the OMB, to review all new and preexisting significant regulatory actions. Later, according to the 2007 GAO report on retrospective regulatory review, "in 2001, 2002, and 2004, the administration of President George W. Bush focused mainly on asking the public to suggest reforms of existing regulations” (Ballotpedia, n.d.). Suggestions that were later taken into account by President Barak Obama, who revised EO 12866 with two new executive orders. The first, E.O 13563, "Improving Regulation and Regulatory Review," issued on January 18, 2011, mandating that economically significant rules should abide by RIA standards; and the second, E.O. 13610, "Identifying and Reducing Regulatory Burdens," issued on May 10, 2012. Combined both E.Os contained additional provisions on retrospective regulatory review, including a requirement for agencies to report on their reviews to OIRA twice per year, in January and July to evaluate “rules that may be outmoded, ineffective, insufficient, or excessively burdensome” and also provided for public participation in the retrospective review process. (Ballotpedia, n.d.), In summary, Presidents Jimmy Carter, Ronald Regan, Bill Clinton, and now President Donald Trump, among others have all understood that not necessarily more regulations means a safer society and nation, but that instead, it deters economic growth and hence tend to it as part of their presidential goals.

Legislative Initiatives for Deregulation In the same fashion, Congress has also enacted several federal statutes to reduce and limit the costs and burdens of federal regulations, including: •

The Administrative Procedure Act (APA 1946), which was the first law to govern the general conduct of administrative agencies, establishes uniform procedures for

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federal agencies to propose and issue regulations. This is the process known as rulemaking. “The APA also addresses policy statements and licenses issued by agencies and provides for judicial review of agency adjudications and other final decisions.” (Ballotpedia, n.d). •

The Regulatory Flexibility Act (RFA 1980) is the pivotal act for small business regulatory reform, in which it was first acknowledged that small firms suffer disproportionately from the impact of federal regulations and thus inspired some opportunities of relief such as tax brackets and deductions.

•

The Paperwork Reduction Act (PRA 1980) was first enacted in 1980 and later strengthened in 1995, by requiring agencies to reduce paperwork requirements in a 10% for 1996 &1997 and 5% each year after that by minimizing duplication of information collection, guaranteeing its utility, and proving only whatever is required to support the proper performance of the agency’s mission.

•

Unfunded Mandates Reform Act (UMRA 1995), additionally limits the ability of regulatory agencies to place burdens on the state, local, and tribal governments.

•

The Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA 1996), was an attempt to reinforce and strengthen the RFA of 1980. This amendment allows small businesses to challenge agencies on proposed regulations and requires The Office of Advocacy of the Small Business Administration (SBA) to report to Congress every year on federal agencies’ compliance with the RFA 1980. Additionally, SBREFA also covers regulations enforced by the Internal Revenue Service (IRS) and requires that both the Environmental Protection Agency (EPA) and

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the Occupational Safety and Health Administration (OSHA) receive input from affected small businesses before proposed regulations are published. •

Congressional Review Act (CRA 1996), a federal law that mandates a review period during which Congress, by can overturn new federal agency rules and with approval of the president block those agencies from creating similar rules in the future. “Before 2017, the law was successfully used only once, to overturn a rule on ergonomics in the workplace in 2001. In the first four months of his administration, President Donald Trump signed 14 CRA resolutions from Congress undoing a variety of rules issued near the end of Barack Obama's presidency.” (Ballotpedia, n.d).

•

Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999 (section 638(a)) requires the OMB to report to Congress yearly on the costs and benefits of regulations and recommendations for reform.

•

Truth in Regulating Act of 2000 gives Congress the authority to request that GAO conduct an independent evaluation of economically significant rules at the proposed or final stages.

Then, who is to blame? As shown above, the efforts on behalf of the government are a visible representation of how concerned the United States authorities have been over the causes, consequences, and costs that regulation represent to the business environment and economy at large. Nevertheless, as previously detailed, their efforts still fall short. Evidence from multiple studies, suggests that this inefficiency in controlling and effectively monitoring regulatory burden is the result of the considerable independence that Congress and the courts have given to the agencies. Furthermore, as argued by many scholars

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including Professor Francis Chittenden, Dr. Saleema Kauser and Dr. Panikkos Poutziourus from the Manchester Business School at The University of Manchester; this shortcoming it is also due to the fact that agencies take a haphazard approach to reporting and analyzing costs and benefits, despite their allegations to be operating under clear statutory mandates. Highlighting, then, a critical point of debate between scholars on the subject, where some argue that the problem is that agencies are “measuring the costs at the outcome level,” while others argue they are “measuring the costs at a process level.” (Chittenden, Kauser and Poutziourus, 2002). Resulting then, in little convergence between researchers in determining the exact compliance costs of regulation. Be it as it may, it cannot be underestimated the power that big companies have on the regulatory environment. As previously mentioned, these corporations are active seekers of more regulation as they increase entry barriers. Hence, they actively exercise this power through lobbying, which is well-known and often discussed by pundits and legislators alike. For instance, a recent study conducted by Charles Lowrance III, from the James Madison University found a positive relationship between the federal regulatory burden per industry and number of lobbyists that represent it. He explains that there are more regulations in highly represented industries, and the more lobbyists an industry has the more regulations it will likely pass every year. (Lowrance, 2019). Increasing then, every time and with every effort, the administrative costs to compliance for the small businesses and the entrepreneurs. The Administrative Burden Costs on small businesses Despite legislators belief “that regulations lead to more efficient methods of production and may encourage management to explore new and cheaper ways to operate and thus stimulate the competitiveness” (Chittenden et al., 2002), evidence collected through several studies proves the contrary. Emphatically, something that most scholars agree on is

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that regulatory accumulation has come to represent a “hidden tax” to businesses operating in the U.S. and thus to the population (Akan, 2018). They justify this statement by evaluating what they referred to, interchangeably, as “administrative burden costs” or “red tape burden costs.” “Which is nothing more than estimating the amount of time and resources that businesses use to comply with a regulation” (Akan, 2018). Results from the latest National Small Business Association (NSBA) survey (link available in Appendix A) that evaluates regulation effects on American small businesses present the most updated data on the subject.

Opportunity costs Perhaps the most worrisome aspect in which regulation affects small businesses is by enabling their opportunities and thus cannot be overstated (Coffrey et al., 2016). To illustrate this it suffices to look at one single question of the NSBA survey which concluded that seventy percent (70%) of the sample say that new regulations have a very or somewhat impact on their plans to grow or expand their businesses. Moreover, more than half have held off hiring a new employee or improving salaries due to the regulatory burden associated with labor compliance (Figure 7). Worrisome statistics for not only represent opportunity loses for the enterprise but also for the labor market and the American economy, as they restrain from creating better products, innovating, or growing to create economies of scale which would allow them to lower their prices and better serve the American population.

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Figure 7 – Regulatory impact on small firms Source: National Small Business Association, (2017), Regulation Survey. Economic Costs According to the survey, as of 2017, the average estimated economic costs derived from the regulatory burden for a business’ first year of operation is more than eighty-three thousand dollars (USD 83,019.23). This figure is quite worrisome first because, as the USA Government web site points out, most often new businesses lack the resources for their survival, in particular, the first year, in addition to being unable, due to their scale, to amortize these costs and hence decreasing even more their chances of survival. (USAGov, n.d). Second, because those that survive will need to include these expenses in their price structure, which at the end are getting paid by the client or consumer. No wonder then why even the government calls it the “invisible tax” (USAGov, n.d). Moreover, the survey was also able to determine that while the overwhelming majority (90%) of businesses have not been fined for regulatory noncompliance. Plus, those that have faced significant fines that averaged at approximately thirty-thousand six hundred dollars (USD 30,651.14) in the past five (5) years. However, it is essential also to note that

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out of those that have been fined, seventy-two percent (72%) respond to having been mulcted only once. This allows to understand that entrepreneurs and small business owners are trying hard to comply even if it puts their businesses’ survival at risk.

Time Expenditure Lastly, but among the most compelling findings, the report states that nearly one-inthree small business owner spends more than eighty (80) hours each year dealing with Federal regulation in addition to forty-plus (40+) hours dealing with State and Local regulations. Furthermore, the survey also determined that nearly one-in-four have invested time into reading proposed regulations, yet sixty-three percent (63%) say that they had to comply with those regulations they red half of the time or less, which represents a considerable time waste for small firms. Additionally, thirty-two percent (32%) of the respondents alleged to have filed comments on proposed regulations which take two (2) hours or more to do so. Not to mention the thirty-eight percent that does not submit comments because “it is too time-consuming or too confusing.” (NSBA, 20147). When comparing the time expenditure on regulatory compliance versus the time invested in going through guidance documents, interpretation, and other memos related to regulatory changes, results reveal that it is equally or more burdensome to small firms for to fifty-eight percent (58%) manifest spending equal or more time on them. These statistics are highly worrisome because as literature points out, every minute invested in these tasks “distracts business owners’ focus and represents time away from their product line and the marketplace” thus ultimately hindering technological innovation and productivity growth as previously demonstrated. (USA Gov., n.d). Moreover, they reveal

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that regulations “are often badly designed” (Chittenden et al., 2002), as small business owners need to invest too much time to understand and comment on them.

Law Groups that impose the most burden on Small Businesses Under these conditions, when the NSBA survey inquired respondents on which were the regulatory agencies, they found to be the most difficult to comply with when it comes to regulatory burden. The top three responses ranked in order were as follows:

Tax Law Out of thirteen (13) possible choices the Internal Revenue Service (IRS) ranked first with twenty-nine percent (29%) of the small business owners stating that not only the time expenditure that they need to invest in understanding the rules and the economic costs they incur on but also the number of regulations in place, are what makes it the most difficult agency to comply with. (NSBA, 2017). A Congressional Research Service report illustrates the burden that the IRS imposes noting that “the federal tax system represents approximately eighty percent (80%) of the overall ‘paperwork burden’ for the federal government” (CRS, 2009). A statistic that the SBA Office of Advocacy supports by only evaluating the sheer volume of federal tax forms, schedules, instructions, and publications published by the Internal Revenue Service (IRS).” (Quantria Strategies LLC, 2011) As explained by the Government Accountability Office (GAO), small businesses are required to undertake several tax compliance-related activities that create a burden. “[t]hese activities can be grouped into general categories such as income tax activities, employerrelated tax activities, and third-party information reporting activities.” Moreover,

tax

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compliance activities “vary depending on the businesses’ asset size, filing entity type (e.g., sole proprietor, partnership), number of employees, and industry type.” (GAO, 2015). However, it is essential to mention that according to IRS research, “compliance burden increases with the size of businesses, whether measured in terms of assets, receipts, or employment” which makes sense (GAO, 2015).

Labor Law For more than one hundred years, the American rule has been that an employment agreement of indefinite duration is an at-will contract; that is, the employee can quit at any time, and the employer can discharge the employee at any time, for any or no reason, with or without advance notice. However, over the past seventy-five years (75), there has been an explosion in laws regulating the employment relationship. Currently, the United States Department of Labor (DOL) “oversees and enforces more than one-hundred-eighty (180) federal laws governing workplace activities for about ten million (10 M) employers and onehundred twenty-five million (125 M) workers.” (Doyle, 2019). No wonder then why the Department of Labor (DOL) was found to be the second most burdensome agency, with fourteen percent (14%) of votes, among the NSBA’s survey respondents. According to Constance Bagley and Diane W. Savage in their book titled Managers and the Legal Environment, the burden derives from the accumulation of rules that began with the union movement, with which employees acquired economic and political power in their dealings with employers, continued by the emergence of the civil rights movement, and later followed by the anti-discrimination legislation of the 1960s. (Bagley & Savage, 2016). This accumulation of laws has caused employers not only to examine their hiring and firing carefully but also other employment practices including wages, hours and salary,

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discrimination and protected groups, harassment, employee benefits, paid time off, job applicant and employee testing, privacy, and many other important workplace and employee rights issues. Thus, turning the relationship between employer and employee in the most critical set of laws for virtually any business in the United States. (For a more detailed list of labor laws see Appendix B).

Industry-specific Regulations – Food Industry In the third place of the survey’s inquiry, “Other” ranked third with (14%) of the votes. This result is considered to group all industry-specific agencies. In the case of the food industry, which is the example chosen for this study, would include, for instance, agencies such as the United States Department of Agriculture (USDA), the Food Safety Inspection Service (FSIS) of USDA, the Food and Drug Administration (FDA), the Environmental Protection Agency (EPA), and even the U.S. Department of Commerce (USCD) which enforces trade agreements and U.S. Department of Homeland Security Customs and Border Protection (CBP) when importing or exporting goods. More specifically, research shows that there are around fifteen (15) federal agencies that administer laws related to food safety. Thus, it is safe to say that it is a heavily regulated industry. Equally important in terms of regulatory burden, the State agencies are also to blame. They are responsible “to govern food safety and to have an active role in overseeing food processing businesses within their respective states” and although they additionally all follow Food legislations such as the Food Safety Modernization Act (FSMA), Hazard Analysis and Critical Control Point (HACCP) Food Safety Plan, Hazard Analysis includes Intentional Attacks (Food Defense Plan), among others; they all base their individual food codes on the guidance of the FDA Code of Regulations. (National Conference of State Legislation, 2019).

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Scholars that evaluate food regulatory environment, such as Richard Williams, call attention to the fact that not necessarily more regulations means a “safer nation” as it distracts the enterprises form focusing on the paramount rules with a “bunch” of “not so relevant” rules. (Williams, 2016). A conclusion that has been as a constant throughout this literature that has illustrated how regulatory burden it not serving America better as it is intended. Hence, is the reason why all consulted literature and scholars call for action from the governments and from the regulatory agencies to generate efficient mechanisms to reduce regulatory burden soon. Some suggest creating new laws to cluster and simplify old laws, other suggest a more thorough screening process, and others even suggest allowing for selfregulation; but what no study does yet, is evaluate the best methods for entrepreneurs to survive and navigate the current regulatory framework and thus, this study.

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CHAPTER 3 Methodology This section presents a detailed explanation of the four methods of research used in this study. It is intended to enlighten the reader on the processes, the protocols, and the design to demonstrate the validity and provide information in case this study needs to be reproduced.

Qualitative Research Study Design La Cocina – Exploratory Case Study: Practicing Entrepreneurs. As previously mentioned, the methodology for the investigation begins with an exploratory case study. This method was used to come to an educated idea of the necessary details, set the stage, and identify the pains of the subjects caused by regulatory overload. Therefore it was necessary for the exploratory case study to evaluate entrepreneurs exposed to the “same degree” of regulatory burden. Hence, the author chose to work with a nonprobability sample that qualified under two conditions: a) being successful entrepreneurs and b) all operating in the same industry; which for this study the author selected the food and beverage industry. With this intention then, the sample was selected from the database of an Incubator / Commercial Kitchen program in San Francisco, Ca. called La Cocina, which was available to the author through her network and thus assisted in relieving the limitations of this study, which include restrictions in time and budget. Consequently, the survey’s sample results in twenty-five (25), randomly selected entrepreneurs from the “food and beverage” industry that have been part of “La Cocina’s” incubator program; which will be referred to in this study as the “Practicing Entrepreneurs.” Note: For more information on La Cocina please refer to Appendix C.

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By mining data through the administration of an online questionnaire (Appendix D), the author sought to learn from the respondents' experiences and ask for their recommendations. The survey was open for responses for seven (7) days, starting April 25th, 2019, and ending on May 2nd, 2019 at midnight, before closing for data collection and analysis. Its design included different types of questions, not only to make the answering process more appealing to the subjects but also to deter potential automatic responses that often come from only multiple-choice questions. Some of the question formats used include multiple choice, dropdown, open-ended, semantic differential, image choice, likeability (star rating), rank-order questions, and dichotomous questions only show to answer choices. It is also relevant to mention that, because the survey was administered through a preselected database among “La Cocina’s” contacts, it was not anonymous, information that was adequately shared with all respondents. The questionnaire was presented to respondents by an introductory email sent directly to their email inboxes, which briefly explained the purpose of the study. From there, the respondents were forwarded to the SurveyMonkey.com platform to where the questionnaire was uploaded in English. Additionally, using her design expertise, the author has also carefully designed the look and feel of the email and the survey. This was done as an attempt to add formality and a professional look to the data mining process and to present a consistent and appealing look to respondents. The color scheme selected, included both colors of the most relevant political parties in the U.S. (red and blue) to show that there is no hidden political intentions or party favoritism in questioning the regulatory framework of the U.S. With twenty-five (25) questions, the five-minute survey’s objectives were: 1. To determine the type of business and the potential compliance burden. Questions one (1) through eight (8), allowed to group the respondents based on

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factors such as type of organizational entity, years in business, numbers of employees, state and city of operation and type of product they produce. This information and grouping are relevant, as each of the answers directly influences the number of regulations they face. For instance, it is not the same to operate in California than in Ohio. It is not the same, in the face of regulatory paperwork, to have one employee than twelve, and regulations are not the same if operating as a sole proprietor than if operating as a non-profit. 2. To determine “concern” and “knowledge” levels of these entrepreneurs vis-à-vis regulations. Questions nine (9) through fourteen (14), and question seventeen (17), allow to understand were these entrepreneurs stand, how they feel about the subject at hand, and how fearful they were about regulation prior launching their ventures. 3. To determine best practice tendencies and identify the cost that compliance represents to their venture, these being monetary costs and time-related costs. Questions fifteen (15) through eighteen (18) allow determining what additional actions, steps, and resources these entrepreneurs seek that could represent an expenditure of time and money only to keep up with changes and be able to comply. 4. To determine best practice tendencies in terms of protection. Questions nineteen (19) through twenty-three (23) allow determining best practices in terms of protection and regulations, for example, copyright protection, insurance, liability, among others. 5. To learn about their recommendations. Questions twenty-four (24) and twentyfive (25) specifically asked for their feedback and advice for aspiring entrepreneurs. All of the respondents that constitute the “Practicing Entrepreneurs” sample are currently at various stages of a business life-cycle, this allowed the study to determine and evaluate if, or not, these entrepreneurs and small business owners have learned to cope with

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the burdensome regulatory frame. Furthermore, it allowed identifying which have been the common – and most effective – practices in learning to do so. It is relevant to highlight that the evaluation of these entrepreneurs from the food industry, in particular, is only to be considered as an example. As previously implied, this industry was chosen to evaluate the regulatory frame that includes industry-specific regulations, and by no means is meant to limit the findings or results to this particular industry.

One-on-one Interviews: Insight from Professionals. The second qualitative research method includes three (3) one-on-one interviews. Through these interviews, the author sought to find more elaborated and realistic opinions from its interviewees in comparison to a guided and limited survey questionnaire. In the interviews, the subjects who come from diverse backgrounds, who are employees to a variety of companies including private corporations and governmental agencies, and who work for different industries; share their personal and professional opinions on the current regulatory framework that governs the U.S. business environment. They provide value to the study as they represent a different side of the coin because they assist or train entrepreneurs in starting their businesses, unfolding an outsider’s point of view on their struggles. Following, the author includes some background information on the interviewees and the companies they work, as well as a brief list of reasons for their relevance in this study. Please note that Interviewee #2 wishes to remain anonymous and hence little information on her background or details about the company she works for have been included. (Available in Appendix E, the interviews simulation documents drafted by the author as a guide on topics for discussion and to determine the tone and voice of the conversations).

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1. Ms. Emiliana Puyana – Program Director at “La Cocina” Venezuelan born, Emiliana Puyana, has worked in the U.S. food industry since she was fifteen (15) years old. After graduating from The Culinary Institute of America, she has held most positions in the industry, from prep cook to chef de cuisine. Some of the most prominent restaurants that take part of her impressive resume include La Folie and Salt House in San Francisco. Additionally, in 2011, she ventured into entrepreneurship, and with the assistance of La Cocina’s incubator program was able to establish a pickling business called “Jarred SF Brine.” After a long run, she now finds herself back at La Cocina but not as an entrepreneur, as the Program Director of the incubator kitchen (La Cocina, n.d.). Relevance to the study: •

She is a multipreneur (pickling business and pet care business). Therefore, she has experienced regulatory burden first hand.

•

She has worked in the food industry for many years and in different positions. Hence, her understanding of the Food industry regulatory frame provides excellent insight for industry-specific regulations and their impact not only on entrepreneurs but small businesses as well.

•

Ms. Puyana has occupied all job levels within the industry. This means has been an employee, a boss, and a business owner. Therefore, she can provide helpful tips and recommendations that satisfy everyone and “cost” less.

•

Although originally from Venezuela, Ms. Puyana has worked in the U.S. all her life and hence, has a deep understanding of the regulatory system. Moreover, she can provide a comparison regulatory frame in Venezuela vs. that of the United States, and give her perspective on the benefits or disadvantages of more or fewer regulations.

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She helps foodpreneurs bring their business to life and grow them. Thus, she can provide valuable advice to entrepreneurs.

•

The author believes her expertise and experience provide significant value to the study in general.

2. Ms. Fedline Ferjuste – Tax Specialist and Advisor Born in Haiti but raised in Florida since she was a little girl, Ms. Fedline Ferjust, has grown up with a close relationship to the U.S. government. From joining the United States Army for five (5) years, to working for the Department of Justice (DOJ) as a Special Assistant United States Attorney, and even working at the Internal Revenue Service (IRS) as a Senior Tax Specialist and On the Job Instructor, Ms. Ferjuste’s career has always been linked with policing and regulations. Furthermore, she published a law review article in 2011, discussing how Florida’s eleventh circuit fails to protect migrant and seasonal workers. Finally but not less important, she currently works as a Tax Specialist and Advisor in addition to her teaching position at Barry University and Miami International University of Art and Design, courses in the areas of

Law, Policy and Ethics, Financial Management, and Business Law (The

Haitian Chamber of Commerce, n.d.). Relevance to the study: •

She worked for the U.S Department of Treasury. Because this department focuses on the economic growth of the nation is relevant to learn about her perception vis-à-vis de conclusive results from the number of studies that identify the threat that regulation burden poses on entrepreneurs and therefore putting in jeopardy U.S. development.

•

She worked for the Internal Revenue Service (IRS). Hence, her insight and input on tax regulations are invaluable.

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As she has been on both sides of Tax compliance tasks, one as a taxpayer (citizen, employee, and more) and as a tax collector and advisor, her recommendations, advice, and best practices on the topic would add significant value to the study and the end product.

•

Because she is an immigrant, who has learned to live within the regulatory framework of the United States, this study will benefit from her knowledge, experience, and ability to compare the U.S. regulatory system vs. that in Haiti. More importantly, asses, if having more laws and policing, is better or worse to a nation, given the significant difference between both countries.

•

Her teaching background provides a broader range of information as she can discuss in-depth business and labor laws, and perhaps share simple tips that she gives her students who wish to become entrepreneurs.

•

Based on the content of her published paper and her active participation on some of the nation's institutions and agencies (IRS, DOJ, Navy, and more), her “proregulation” position would provide a balance to the study and diminish any bias that the project could have from the author.

Ms. H.P.S. (wishes to remain anonymous) – Head of Human Resources at “BBS.” For five (5) years, Ms. HPS worked at a company that handled political campaigns in

the Logistics and PR departments. Her duties included managing resources (people, money, and goods) across the different locations of the campaign’s hubs spread throughout the nation. She now finds herself as head of the Human Resources and Compliance departments for an online sales company that imports beauty products from several countries. The company, BBS (initials), manages ten (10) in-house employees and over 200 worldwide.

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Relevance to the Study: •

Her knowledge of regulation in different industries, obtained through her work as a government contractor and as an online retailer from the beauty and health industry, qualify her as a well-rounded candidate.

•

Because deals with payroll duties, human resource management, and costs evaluation on a day-to-day basis, her insight and best practice recommendations in regards to labor law will be of great value to small businesses as by only managing ten (10) employees in the U.S. the company she now works for operates as one.

•

Her experience managing mobile offices while working for the political campaigns provides the study with insight into what the best practices for record and bookkeeping are.

•

Because an entrepreneur runs the company she now works for, she has insight, and valuable information as to what are some of the mistakes would be entrepreneurs need to be in the lookout.

•

Her ability to compare managing human resources for big corporations vs. small businesses allows her to provide insight into the differences in responsibilities, approaches, and duties.

Important note. It is relevant to mention, for record purposes, that the author had every intention to interview a representative from the Small Business Administration (SBA) office in Miami. This interview would have been valuable as this agency supports entrepreneurial initiatives, understands the pains of entrepreneurs, and plays a part in the U.S. regulatory environment. However, despite three (3) emails, four (4) phone calls, and

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one (1) visit to the offices located at 100 South Biscayne Boulevard in Downtown Miami, the author was still unable to reach Ms. Heather Hines; who, according an agency representative, is the only authorized person to speak on behalf of the SBA as she is responsible for media and public affairs.

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Quantitative Research Study Design Probable Sample Survey: Aspiring Entrepreneurs. The first quantitative research method – as previously mentioned in the introduction of this study – is an online survey conducted on a simple random sample of two-hundred (200) anonymous respondents, from the SurveyMonkey® platform’s database. This method reorganized the interpreted results obtained through qualitative research to generate the questionnaire. The Survey was open for seven (7) days starting May 6th, 2019 and ending May 13th at midnight before closing for data collection and analysis. The database, or subject group, was available after paying a monetary fee of seven hundred dollars (USD 700), equivalent to three dollars and fifty cents per response (USD 3.50), to the website operator. No criteria for sample selection was provided to the platform operator beyond that of defining the country to be the United States of America. Thus, all genders, races, regions, ages, income brackets, qualified to be a potential respondent. The author chose to include this method as it helps mine data not only from a larger sample than that evaluated in the exploratory case study but most importantly – because of how it was designed – allows to mine information on the topic specifically from aspiring entrepreneurs; providing the study with an evidence base of results that generate more meaningful conclusions. Identical to that in the exploratory case study, this survey’s design also includes the different types of questions previously mentioned. Again, this is to not only to make the answering process more appealing to the subjects but, to also deter potential automatic responses that often come from only multiple-choice inquiries. With twenty-five (25) questions, the five-minute survey’s objectives were:

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1. To determine out of the totality of the sample, what percentage are “potential entrepreneurs” regardless of the industry they wish to venture in. Question one (Q1) allows separating the simple random sample into three groups. First, those that are already entrepreneurs, second those that do not wish to become one; and third, those that want to become entrepreneurs but have not done so yet. The last being the only group of interest for this study as they are the “potential entrepreneurs” who would not only be inhibited by the regulatory burden but also beneficiate from the “Practical Guide.” 2. To evaluate, through primary research, if, in fact, the regulatory burden is a top reason stopping aspiring entrepreneurs from following their entrepreneurial dream. Questions three (Q3) and four (Q4) allow for the author to mine first-hand data on whether or not regulations are a top reason behind the decline of small business formation, as evaluated in the literature review, or if it is instead not even on potential entrepreneurs’ minds as a barrier to their start-ups. 3. To evaluate “concern” and “knowledge” levels of these potential entrepreneurs vis-à-vis regulations. Several questions throughout the survey allow to understand were these entrepreneurs stand, how they feel about the subject at hand, and how much they know about the business regulatory framework in general. 4. To determine best practice tendencies and preferences for future compliance actions. Though questions such as number six (Q6), number ten (Q10), and eleven (Q11), among many others; the survey seeks to mine which would be the potential best practices that these aspiring entrepreneurs would tend to follow after they become small business owners. The reasoning behind determining this information is to not only be able to understand the “Practical Guide’s” target audience, but most

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importantly evaluate if what they will be doing corresponds to the tips and recommendations mined from the previously applied methods, and determine the degree of “training” these would-be entrepreneurs need. 5. To assess their preferences on informative sources and their perception of information availability. Questions eight (Q8) and nine (Q9) provide the study with additional insight that allows to identify future applications for this study and generate recommendations for other stakeholders such as regulatory agencies and the governments. Following the same protocol and design used in the exploratory survey, this questionnaire was also presented in English and carefully designed to give a professional and politically-neutral branding through the utilization of the red, white, blue color scheme. However, contrary to the conditions of the case study, this time, the author had no control over how respondents were approached by the platform to request their participation.

Content Meta-Data Analysis: What the web says. After mining the experience and perceptions of practicing entrepreneurs, collecting valuable insight from the interviewees, and learning about the aspiring entrepreneurs stand in the face of regulation, it was also necessary that this study investigated the tools and recommendations already available online for all entrepreneurs (practicing and aspiring). Not only because these would directly compete, with the practical guide suggested in this study, but also because they would serve as a foundational proof of which are the best practices according to a variety of sources including law firms, scholars, renowned magazines form the business environment, among others. Hence, by applying a meta-analysis, which uses a statistical approach to combine the results from multiple studies, the author sought to find a

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correlation between the information provided by the top fifty (50) websites that resulted from the online search. Despite meta-analysis being subject to criticism by multiple researchers and scholars as it is perceived as a subjective method, the author chose to include it as part of this study’s quantitative research methodology as it is still the superior approach for reviews of literature. Some of the arguments behind the critics come from first the possibility of “combining apples and oranges;” that is when there is a chance of pulling articles that are dissimilar in some ways or wrongfully classifying them. The second, because of the “file drawer effect;” which fundamentally questions the probability of relevant studies or sources not appearing in the search as they are not “relevant enough” and hence are absent from the meta-data. To counteract these probabilities, opposing scholars recommend a systematic approach, which is nothing more than clearly describing step by step so that the process is transparent. (Borenstein, Hedges, Higgins & Rothstein, 2009). Hence, the following process detailed. A. Sample Selection. For obtaining the top-fifty websites that would serve as the database, the author made use of the Firefox browser and Google search engine as access tools. The “search words” or “search phrases” inquired – which for this study would be referred to as “search terms” – include, in no particular order: 1. “What laws and regulations do I need to comply with in business?” 2. “Tips for dealing with regulatory compliance for entrepreneurs.” 3. “Tips for meeting regulatory compliance.” 4. “Tips for complying with regulations.” 5. “Tips for startups cutting red tape.” 6. “Small Business tips for cutting Red Tape.” 7. “Best practice for small business regulatory compliance.”

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8. “U.S. compliance manual for startups.” 9. “Ways to stay current on compliance.” 10. “Coping with regulations.” 11. “How to comply [for] small businesses.” 12. “Checklist for startups business law compliance.” 13. “Tips for small business tax filing.” 14. “Top ten employment laws to know.” 15. “Legal problems entrepreneurs.” 16. “Entrepreneurs legal mistakes.” B. Collection of sources. It is essential to note that although these search terms provided links to a variety of websites styles, for example, those that included analytical and critical review articles, this study focuses only on those that give a numbered list, a step guide, or cataloged information about the subject. Hence, it is proper to note that because this has been an action that controlled the structure of the database, the results can vary in the event of reproduction of this study. However, this criterion was selected as a way to establish a pattern among the sources. It is also relevant to keep in mind that because of “cookies” that search engines often install in computers, results obtained from the search terms could have been influenced, and thus could have influenced the material available to the author for analysis. However, this potential bias or influence would later be counter-weighted by the data collected from all other methods. C. Data Analysis. To determine what are the most relevant advice, tips, and best practices (which from now on will be referred to only as “tips”) recommended by the database, the author proceeded to assign a “concept” to each tip as part of the protocol.

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These “concepts” were generated as a way to categorize and cluster the information into groups and allow further evaluation with a percentage analysis. This approach was meant to identify frequency distribution, how relevant or irrelevant a specific recommendation is in accordance to the totality of the sources, represent the collected data in a way that promotes better understanding, and determining what kinds of tips the PGE should include. These “concepts” are in no particular order: 1. Learn

9. Be smart

2. Train

10. File

3. Use technology

11. Protect

4. Find help

12. Monitor

5. Be proactive

13. Do not be afraid

6. Stay up to date

14. Schedule

7. Plan

15. Bookkeeping

8. Define

16. Research

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CHAPTER 4 Results Interpretation and Discussion In the following section, the author presents, interprets, and analyzes the data collected through the application of the four research methods. Results are presented under each of the objectives discussed in the methodology to ease of interpretation of the information they were designed to mine. Additionally, please note that all percentage values in graphs and images have been rounded to the nearest full number for presentation purposes. Result Interpretation – Qualitative Research Active Entrepreneurs Survey The data collected from the survey presented to “La Cocina’s” entrepreneurs, provided this study with findings that are both informative and clear at the same time. Despite collecting only forty-four percent (44%) of the expected responses (eleven out of twenty-five), the findings allow drawing meaningful conclusions that provide value and serve as the foundation for the other research methods of this study which leverage on these findings. Collectively the findings allow to familiarize with necessary details, set the stage, identify the pain generating points, and evaluate potential relief strategies. 1. Obj. #1: To determine the type of business and the potential compliance burden. With such a small sample, completeness and thoroughness of the data could be questioned. However, as previously noted, the data obtained still provides a substantial enough range to reveal the foodpreneurs’ stand on the regulatory burden and its associated costs to their ventures under four criteria. First, out of the eleven (11) respondents, the sample offers start-up businesses that have been operating for as little as less than a year, to as much as more than five years (Figure 8).

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This allows evaluating the foodpreneurs’ insight at the different stages of a start-up life cycle, which can influence the number of regulations that govern the business and the level of knowledge that they have. Q4: How many years have you been in business?

Figure 8 – Years in Business. Secondly, the sample also presents the study with a good range of companies that produce different types of products within the food industry (Figure 9). This variety allows seeing that although regulations in this industry vary depending on the product and production processes, the findings are still coherent among all respondents.

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Q2: What type of food do you offer? If multiple options apply, please select all.

18% 9%

36%

9% 18%

Figure 9 – Type of product

Thirdly, the data collected also offers a substantial variety of the different types of business structures possible in the United States (Figure 10). With as little as eleven (11) enterprises, the sample counts with three (3) foodpreneurs operating as Sole Proprietors, one (1) with a Limited Partnership, six (6) ventures operating as Limited Liability Companies (LLCs), and even one (1) registered as a Corporation. Hence, and because the regulatory framework varies so much from one type of business entity to another, the study can collect data form active entrepreneurs from all kinds of entities except non-profit organizations. This last detail is also a relevant finding as supports the percentage of entrepreneurs that follow non-profit initiatives, which usually tends to be very low in comparison to all other structures.

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Q5: Under what type of business entity does it operate?

Figure 10 – Type of Business Entity Fourthly, these findings also allow identifying that, when it comes to selecting under what type of entity the subjects wanted their businesses to operate, the selection, as depicted in Table 1 and illustrated in Figure 11, was driven primarily by their desire to protect themselves from vulnerability to liability. Seconded by their desire to protect their assets; and revealing tax criteria as the least important reason behind their selection. This last finding could be justified with the fact that most of the time entrepreneurs are not familiar with tax regulations until they have already started their operations and registered their business to do so, hence it might be something that is not given any thought at the initial stage.

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Table 1 – The reason behind business entity selection Q18: Which of the following had more weight when deciding what type of business entity to choose? Please rank: (1 most relevant)

Figure 11 – Graphic representation of reason behind entity selection Additionally, highly competent when evaluating compliance costs, economic growth, and labor security, is the information associated with employees. In this regards, the data presents an ample enough range among the responses in terms of the number of employees. In it, we can find from answers to question seven (Q7) three (3) businesses operating with no employees, two (2) enterprises with one (1) employee, three (3) with two (2) employees, one (1) reporting four (4), one (1) with five (5), and even one (1) reporting having eight (8). This finding allows us to determine

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that the mean value in terms of employment among these startups is equal to 2.27, while the mode is equal to zero (0), and with a median average to be two (2) employees per venture. Data Collected: (0, 0, 0, 1, 1, 2, 2, 2, 4, 5, 8) Mode = 0 Mean = (0 + 0 + 0 + 1 + 1 + 2 + 2 + 2 + 4 + 5 + 8) /11= 2.27 Median = 2 Notwithstanding contradictory data collected from question eight (Q8) that probes the integrity of this information, as six (6) of respondents manifested not having employees (Figure 12), the findings are still of interest for the study and relevant for analysis. Because, as determined in the literature review section of this study, regulations associated with labor laws is one – if not the most – complex and most expensive set of rules to comply within the eyes of entrepreneurs and small business owners. They call attention to the fact that out of eleven (11) small businesses, only twenty-five (25) job positions have been created. Furthermore, out of those eleven (11) enterprises, two (2) waited more than one (1) year before hiring an employee. Equally important is to note that with only twenty-seven percent (27.27%) of the ventures reporting being in operation for less than a year, it is alarming to see that six (6) of them still do not have employees. This finding suggests that those start-ups that yet do not have employees are taking longer to hire (create job positions) than their peers did. A result that demonstrates direct implication on the topic of the study and reveals how labor security is being affected by the delay of small business owners to incur in all expenses associated with labor law compliance.

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Q8: How many months or years into your operation before you hired your first employee?

20%

10% 60% 10%

Figure 12 – Years before hiring Nevertheless, the sample is also limiting on two relevant factors. First, the location of the businesses and second, the place where they manufacture their products. In terms of area, one hundred percent (100%) of the respondents state that they operate in San Francisco, California (finding revealed form the open-ended question #1). Although this is one of the most regulated states, according to Wayne Winegard in his 50-State Small Business Regulation Index study published in 2015, and therefore is convenient for this study, it would have been more beneficial in terms of research to have respondents from other states or municipalities. However, this limitation also serves to establish an even playing field so that the evaluation of the results part form a coherent base amongst all foodpreneurs. In terms of location for manufacturing and production purposes, for example, home-based production (protected by cottage state laws) or the use of a certified kitchen rental, nine (9) out of the eleven (11) respondents reply to be “tenants at a certified commercial kitchen” (Figure 13). On the One hand, this is a response that could have been implied from the beginning of the study since

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all of these foodpreneurs come from “La Cocina’s” contacts database. However, the author expected the response to change as the years in business increased among the respondents, and thus explains the reason behind asking the question. On the other hand, one (1) respondent states to be operating out of a co-packaging facility after out-growing “La Cocina,” and one (1) more respondent claims to own a certified commercial kitchen. On that account, it would be advisable for future researches to consider having a broader selection on the location. This would allow evaluating findings of the effects of states regulations between states, and to include a more extensive dataset that accounted for more ventures operating from all types of facilities, as the regulatory burden from one to the next changes dramatically. Q3: Where do you manufacture/ produce/ cook your products?

Figure 13 – Location of production

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In summary, from the questions that addressed objective #1, it can be said that results lead to two relevant conclusions: a. Resistance to vulnerability amid liability and the desire to protect personal assets are the two most important reasons when choosing the type of entity under which foodpreneurs register their businesses, not regulatory frame restrictions. b. That small business owners are taking longer to hire or generate job positions because of the costs associated with labor law compliance, which supports the thesis of the study. 2. Obj. #2: To determine “concern” and “knowledge” levels of the entrepreneurs vis-àvis regulations. As could have been perceived, the previously analyzed questions and results served the study as a way to establish a sort of “demographic data,” if you will, on the enterprises being enquired. However, it is not until question number nine (Q9) that the study could mine over the subjects’ pain points on regulation. On this account, question nine (Q9) becomes key to this study as it explicitly asks the entrepreneurs about their level of intimidation vis-à-vis the regulations they would encounter before launching their ventures. Respondents were able to rank their results with the assistance of a likeability scale. Hence, to thoroughly evaluate the results, it is proper not only to consider the average value (also known as the mean) but further calculate the median and the mode as well. Data Collected: (100, 100, 100, 100, 100, 89, 53, 50, 49, 34, and 1) Mode = 100 Mean = (100 + 100 + 100 + 100 + 100 + 89 + 53 + 50 + 49 + 34 + 1) /11= 70.54 Median = 89

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These values allow confirming that the “concern” level of these foodpreneurs, under every measure, is in the highest end of the scale. Revealing that, in fact, with a mode of one hundred (100), entrepreneurs were “extremely worried” about the regulatory environment before launching their businesses. These results go beyond previous reports, such as that from the NSBA’s small business compliance survey (Appendix A), in which on a similar question fifty-one percent (51%) of their respondents stated to be “not very worried,” or “not be worried at all.” However, their findings also revealed that this tendency increased in an additional fourteen percent (14%) after the small business owners had been in operations for more than six months, and in an additional fifteen percent (15%) after being in operations for two years. The discrepancy among the results could be explained based on types of industries, and the fact that the regulatory framework on the food and beverage industry in particular and its “severity” is, almost, general knowledge. An even more gripping finding derives from question eleven (Q11), which asked how respondents feel about the U.S. regulatory system in general, not only before launching their ventures but even now as they are small business owners, responses reveal the high level of dissatisfaction these entrepreneurs have with the system (Figure 14). Q11: How do you feel about the U.S. Regulatory system?

Figure 14 – Perception of the regulatory system

27.27%

54.55%

18.18%

0.00%

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This finding is influential to this study as dissatisfaction with the regulatory system can relate to entrepreneurial decline as suggested by the literature previously reviewed. Furthermore, the fact that none of the subjects feels “happy” or “excited” about the regulatory system, at least hints that they perceive the costs and the burden of regulation to be more significant than the benefits that the regulatory system provides to them. Amongst other informative findings, the survey revealed that, contrary to the author’s expectations and the results published by the 2017 NSBA Small Business Regulation Survey (available in the appendix), respondents accuse the state government, instead of industry-specific or federal regulations, to be the most burdensome (Figure 15) (National Small Business Administration, 2017). Undoubtedly, this response is understandable as one hundred percent (100%) of the sample operates in the most regulated state in the nation, California (Winegard, 2015). Additionally, it is interesting to note that none of the respondents acknowledge the federal government as a source for regulatory burden. While in the case of the NSBA’s survey, their sample, made out of one thousand small business owners (1,000), fifty-eight percent (58%) say that the federal government is the source of the most impactful regulatory burden (National Small Business Administration, 2017). This disparity, however, may be attributable to the fact that this study focuses only in food sector while the NSBA’s includes all sectors of the economy. However, it is still an exciting find.

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Q12: Would you say that the MOST substantial portion of the regulatory burden on your business comes from:

9% 27% 27%

36%

Figure 15 – Regulatory Burden Regarding their “knowledge” on regulation, the limited sample also provides compelling evidence. First, when asked to assess their current knowledge level on regulation, seven (7) out of the eleven (11) respondents considered having an intermediate level, ranked with three stars and representing more than half of the sample. While three (3) subjects consider having an above average level, and only one (1) declaring to have a lower than average level of knowledge on regulation (Table 2). Table 2 – Regulatory System knowledge rating

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Second, when enquired how they learned about the regulatory system they currently know and understand, the option of “school or professional training” received the most votes out of the five (5) options representing a near seventy-three percent (72.73%) (Table 3). Two exciting findings to keep in mind when designing the marketing strategy of the PG, which will be further discussed in Chapter 6. It is also relevant to note that because the question format allowed for respondents to choose multiple answers, a total of twenty-two (22) votes represent the poll’s base. Consequently, it is essential to highlight that, on average, respondents manifest relying on at least two (2) sources of information as their foundation to knowledge on the subject, with internet and government websites tied in second place. Table 3 – Primary sources of Information

Additionally, when asked how much time they feel they have dedicated to learning about regulations, were zero (0) was little time and one hundred (100) was too much time, the overall result locates the sample near the fifty-seven percent (57%) mark, which means that the average response between all foodpreneurs is to have invested neither too much nor too little time into learning. However, by calculating the mode, findings suggest a higher number of entrepreneurs

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accuse spending too much time in comparison to those who stated to have not invested any time at all, as the mode is equal to one hundred. Data collected = (100, 100, 100, 85, 60, 53, 50, 49, 20, 15, and 0) Mode = 100 Mean = (100 + 100 + 100 + 85 + 60 + 53 + 50 + 49 + 20 + 15 + 0) /11 = 57.45 Median = 53 These last three (3) findings, when examined together, reveal even more meaningful information. First because if eight (8) out of eleven (11) respondents are declaring to have a medium to low knowledge level on regulation, while also stating to dedicate an above average amount of time into learning about the law. Then, it could be implied that either it is too complicated and hence they are not understanding, or the sources from where they are gathering information on the subject are not good enough for them to feel they have a good, or above average knowledge at the least. Furthermore, because they declare that the top three sources of information on the subject are school or professional training, general internet websites and those that are from governmental agencies; then it could be inferred that these sources need to be improved to meet the entrepreneur's needs. Findings that put in evidence the pain points of these entrepreneurs. Nevertheless, and of high interest, in terms of knowledge and information, the questionnaire also allowed determining that half of the subjects (54.55%) say that “they don’t have time” to keep up to date with regulation changes in their industry, and that they “just wing it” (Figure 16). An intriguing find when considering, again, that they dedicate a close to the average amount of time into learning about regulations. Hence, this could further question the integrity of the collected responses. Nonetheless, for those who state “trying to keep up-to-date,” the preferred method is through forums and industry-specific associations, which differs significantly from the tendencies

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revealed in the NSBA survey where respondents testify to preferring the internet and governmental agencies as their primary sources. Q14: How do you keep up to date with regulation changes in your industry?

Figure 16 – Practices to Stay Up-to-Date 3. Obj. #3: To determine best practice tendencies and identify the cost that compliance represents to their venture, these being economical and time-related. To determine the monetary costs associated with compliance that these ventures encounter, questions fifteen (Q15) and sixteen (Q16) were designed to evaluate, if or not, these entrepreneurs were seeking and paying for assistance in any way. For example, in question number fifteen (Q15), when respondents were asked which of the options was most helpful in dealing with tax regulations, five (5) responded to having an accountant (Figure 17), which suggests that almost half of the sample incurs in monetary expenses associated with professional fees. Also relevant but with a lesser degree, is that two (2) respondents, use tax management software or apps to manage accounting tasks. Hence, revealing that they too have associated monetary costs caused by these regulations as they need to pay for the subscription and monthly fees. All while only one (1) subject claims to use the IRS, and other non-profit resources to handle their tax compliance, which are free

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of charge. The remaining three (3) surveyed foodpreneurs chose “other” as their option and, although not clarified with the questionnaire, it is speculated that they rely on “La Cocina’s” for the necessary assistance on the mater. Q15: To your business, which of the following is most helpful to deal with tax compliance?

27% 45% 9% 18%

Figure 17 – Tax compliance practice In the same way, question sixteen’s (Q16) findings are of high interest as more than half of the sample states to use “other” as their option to deal with employment laws and regulations (Figure 18). It is speculated, again, that “other” means they are relying on “La Cocina’s” professionals to handle this issue for them. At the same time, three (3) out of the eleven (11) respondents, state to handling this subject “casually.” The author considers this finding to be not only relevant but surprising, since, as mentioned throughout this study in multiple occasions, employment law is extremely time-consuming and very complicated for these entrepreneurs to be managing it in such a casual manner. Without even mentioning the penalties that they can incur if they fail to comply appropriately. However, at this particular point, it is relevant to call attention to the fact that none of the respondents abstained from answering this question. Hence, results could

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also be altered by the “un-informed” answers from those foodpreneurs that previously declared not having employees and thus are not familiar with the responsibilities and details of this specific segment of the regulatory framework. Q16: To your business, which of the following is most helpful to deal with employment laws and regulations?

27% 64%

Figure 18 – Tools for employment law compliance Amongst other informative findings revealed by this method is the difference in time expenditure reported by the respondents in regards to formalizing their businesses (Figure 19). Out of all respondents approximately over one-fourth of the sample reported being able to formalize their business in a period between one week and one month, while a little more than half of the respondents reported taking “more than six months,” to go through the process. This finding indicates that the length of time to formalize a business in the same state, in the same industry, and governed by the same authorities and agencies, is unpredictable. A finding that further puts in evidence the inconsistency in the system, among the regulating authorities, and in the processes. Furthermore, this result highlights how shifting from an informal economy to formal economy

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elevates the effects of the costs associated with compliance, as entrepreneurs are unable to plan not only the amount of time correctly, but also which resources they need to invest in the process. Q6: How long did it take you to go through the process of formalizing your business?

Figure 19 – Length of the registration process 4. Obj. #4: To determine best practice tendencies in terms of protection. Of even greater appeal to the purpose of this study, and despite the limited size of the sample, findings from following five (5) questions of the survey – questions nineteen (Q19) through twenty-three (Q23) – provide conclusions that illustrate the foodpreneurs stands on what would be considered best practices in a regular business environment. For instance, results show, that almost three-quarters of the respondents claim to have insurance on their businesses, while the remaining respondents say that they will have one soon (Figure 20), and none respond to not needing one.

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Q19: Do you have insurance on your business?

27%

73%

Figure 20 – Insurance practice A Conversely, that same 75% responded negatively to having a “safety budget” to cover expenses that could derive from litigation or penalty fees, while 27% declare the opposite (Figure 21) and one respondent even reported not recommending having one (Figure 22). Q20: Do you have a “safety budget” to deal with regulatory fines or expenses in case of litigation?

27%

73%

Figure 21 – Insurance practice B

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Q21: Would you recommend having one?

91%

Figure 22 – Insurance practice C Last but not less appealing, in terms of intellectual property rights (IP) and protection, all respondents seem to understand the value of IP. However, only six (6) recognize it as highly necessary while the rest believe it to be relevant but not determinant on their success (Figure 23). Nonetheless, contrary to the previously mentioned finding, when subjects were asked if they have or have filed for IP protection, only two (2) responded affirmative (Figure 24). Together these findings allow determining although they recognize the value of IP, they still neglected to seek it. Speculations on the reasons can only be attributable to either lack of time to deal with the tasks and paperwork, or lack of money as IP can sometimes be costly. Q23: Do you think that, for your business, any form of intellectual property is:

45% 55%

Figure 23 – Intellectual property

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Q22: Have you filed or have intellectual property rights protection such as copyright, patent, trade dress, trademark, etc.?

18%

82%

Figure 24 – Intellectual property practices 5. Obj. #5: To learn about their recommendations Over and above all the findings collected through this method, the final two questions, question twenty-three (Q24) and twenty-five (Q25), add additional value to the data mining process when respondents give their recommendations to aspiring entrepreneurs. Responses are presented in no particular order and have been copied verbatim from the platform’s result analysis tab: •

“Push through. It is much work but is worth attending to.”

•

“Give it all you’ve got.”

•

“Work hard but smart.”

•

“Find a program like La Cocina.”

•

“Just do it.”

•

“Do not lose faith and keep up with the regulations.”

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•

“There is a lot of information on the internet these days. You just have to do a lot of research. I am lucky to have an organization like La Cocina, giving advice on some regulatory issues when I started my business. That was a big help.”

•

“Seek out on-the-ground local community resources, research, keep a notebook, and Rinse & Repeat.”

•

“Network and keep talking to people in the same industry as you. They have gone through everything you are going through and can help you avoid mistakes and lead you towards the best path.”

•

“Do it right from the beginning; you won’t have time to revise or re-do when you start, do the right thing, pay taxes on time, and avoid penalties.” It is relevant to note that all of the recommendations call for actions from the entrepreneurs; they suggest that they should be proactive and not reactive to regulation.

Active Entrepreneurs Survey – Key Takeaways. In summary, the top five (5) key findings revealed from this data mining method could be sum-up in the following statements: 1. The entrepreneurs are taking longer than before to generate new job positions. Speculations on the reason behind this finding could be the high costs associated with labor law compliance. 2. Entrepreneurs need better sources of information, not only in terms of content but also in efficiency. They need to provide the most amount of information in the least amount of time.

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3. Entrepreneurs need to be proactive. They need to put in the work and dedicate time to compliance and learning about it. “Just winging it” should not be enough. 4. They all value regulation and its benefits but find the costs associated with it to be more significant. For example, they understand the value of IP but have not filed for one. 5. The system is highly inconsistent in terms of registration and processing times. This finding reveals problems on the authorities’ end but also causes the costs (time and money) to increase for the entrepreneurs. (Note: if a more detailed, or broader information is required, please access the survey monkey website through the following link, where the results of this survey are stored and posted. Link: https://www.surveymonkey.com/results/SM-39BCS6CHV/ ).

Professional’s Interviews. The second qualitative research method accounted for three (3) one-on-one interviews. Form the conversations with the different women Ms. Puyana, Ms. Ferjust, and Ms. HPS; the study was able to mine crucial information points that support the objectives designed for this method. i. To collect more in-depth information on the problem and the causes. ii. To mine primary data on tips, recommendations, and best practices from professionals related to the topic. Hence, in the following tables (Table 4, Table 5, and Table 6), a summary of such findings is presented. However, the full transcripts of each of the interviews are available in Appendix F, and the most relevant findings have been highlighted for easy recognition. As a brief overview, it is relevant to remember that these women come from different backgrounds and have different expertise from working with/for entrepreneurs and diverse

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specialties. In the case of Ms. Puyana she works assisting and training entrepreneurs at the start-up phases of their ventures in the food industry, Ms. Ferjuste assists small business owners in tax matters and trains potential entrepreneurs at two Florida-based universities, while Ms. HPS works for an entrepreneur and handles all tasks related to labor law. Hence the feedback from these ladies comes of high value and present an outsiders point of view on the three (3) focus points of this study, industry-specific regulations, tax law, and labor law. 1. Ms. Emiliana Puyana – This interview was conducted the evening of April 30, 2019, at 8:25 pm (EDT), via telephone. The total duration of the recording is thirty-six minutes and fifty-two seconds (0:36:52). From the conversation, the key findings include: Table 4 – Key Findings from Emiliana Puyana’s Interview

Emiliana Puyana

NAME

FINDINGS BASED ON SET OBJECTIVES Objective #1

Objective #2

Collect information on the causes and the problem

Mine recommendations, tips, and best practices

•

Regulation is good

•

Learn how to run a corporation

•

The system is much confusing

•

Find help

•

Managing compliance is a burdensome task

•

Research

•

Law is a big hurdle to jump through

•

Research (again)

•

Too many tiers/ layers of government

•

Get a CPA

•

Too many participants at each level

•

Hire a payroll processing company

•

Too little information available

•

Find pro-bono resources

•

Even contradictory information

•

Seek training opportunities

•

Too many filing requirements

•

Make a Business Plan, not fancy just good.

•

Difficulties arise because there are variances between counties and state lines

•

Departments function as separate entities within the same county

•

Government officials should know all rules too

Ms. Puyana made a statement that the author finds to be crude but extremely representative and relevant to this study. She said: “if you are not ready [or can't afford] to have a payroll service,

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then you are not ready to have a paid employee.” (Puyana, 2019) This statement puts in context the fact that although regulation can be a burden and pose monetary costs to a business, compliance is, however, a conscious decision that also gives the entrepreneurs an opportunity to evaluate the real state of their venture and minimize potential risks. 1. Ms. Fedline Ferjuste – This interview was conducted the morning of May 9, 2019, at 11:30 am (EDT), via telephone. The total duration of the recording is twenty-four minutes and thirty-four seconds (0:24:34). From the conversation, some of the key findings include: Table 5 –

Fedline Ferjuste

NAME

Key Findings from Fedline Ferjuste’s Interview Objective #1

Objective #2

Collect information on the causes and the problem

Mine recommendations, tips, and best practices

• Regulations are good.

•

If you seek help, compliance is less difficult.

• We need to be told what to do and what not to do.

•

Do not do it yourself. Get help.

• Tax law is not easy because there are old laws, new laws, and modified laws.

•

Do not wait to find a professional until something is simply wrong.

• Too many laws. This is a bad thing and a burden.

•

Make a business plan and include compliance expenses.

• The problem is that laws are subject to interpretation.

•

Read and research literature and read case laws. It helps understand.

• Laws are not broken sometimes just insufficient.

•

Research is time-consuming but worth it.

• Tax law is huge.

•

You can assist some classes. Not for a degree just training.

•

Read books.

•

Understand the relationship between finance, accounting, and tax so that you can take advantage of the benefits.

•

Make compliance a part of your business plan.

•

Get a lawyer and a GOOD accountant.

•

Start with the SBA.

• •

Go to your local chamber of commerce. Know your politician they are an integral part of the system they make the regulations and can help you relive their weight.

•

Leverage on the value you provide to the community and the knowledge you have about them to advance legislation

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Although with this interview, the study was not able to mine enough information on pains and costs, since Ms. Ferjuste is at the end a pro-regulation subject, her recommendations provide invaluable weight. For instance, the conversation caught the author’s attention on two key aspects. First, she made a remark that stated: “when you do your business plan, and you do your assets minus liabilities equals owners’ equity, [risk of non-compliance] is a liability.” This is highly relevant, for to she reminds this study on the fact that not only compliance tasks but also noncompliance consequences represent costs, or as she says, liabilities to the entrepreneurs. Although this might be general knowledge, the author wanted to highlight this comment as it is the first source that addresses the topic vis-a-vis the bottom line (profit) every and any venture and thus remarks that, like any other part of a balance sheet, compliance also needs the proper attention. The second point made by Ms. Ferjust that caught the author’s attention is that she recommends for the entrepreneurs to get to know their politicians. This recommendation is relevant first because it is the only source among all to suggest it; and second, because this tip could be a small step that entrepreneurs and small business owners can do to counteract the effects of the lobbyist strategies used by the big corporations with members of Congress. 2. Ms. HPS – This interview was conducted face to face the morning of May 13, 2019, at 8:30 am (EDT) in a warehouse-office space in the City of Doral, Miami. The total duration of the recording is twenty-eight minutes and thirteen seconds (0:28:13).

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Table 6 – Key Findings from HPS’s Interview

NAME

FINDINGS BASED ON SET OBJECTIVES Objective #1

Objective #2

Collect information on the causes and the problem

Mine recommendations, tips, and best practices

HPS

• Not knowing what it is that you want and what you need. • Help need does not mean employees. Seek exactly what you need.

• Value your employees and make them feel safe. • Clearly define the roles of your employees.

• It is costly to comply for big corps but mostly for small businesses.

• Start with an accountant first.

• The uncertainty around entrepreneurship affects compliance strategy planning.

• Then you could extend to a payroll service firm or lawyer.

• Laws are designed for big established companies, not new entrants

• Learn, so that you can feel more confident.

• Problems arise when there is confusion or uncertainty.

• Keep records of contractors’ invoices it is evidence of work for hire. • If it is on a retainer basis, sign detailed contracts with companies, not people. • Bookkeeping. • Having things in writing protects the employee and the employer. • Even if you have outside help, budget time to manage in-house tasks. • Be sensitive to cultural differences. • In case you make a mistake first talk to the employee. • In HR, communication is priority number one.

From the conversation with Ms. HPS, the author wishes to comment on the section of the interview when Ms. HPS explains that part of the big challenge that regulations pose to entrepreneurs, may they be aspiring or potential, is that the employer-employee relationship is intricately related to the success of the venture. Since there is much that the entrepreneurs cannot foresee like the success of their product or service, market penetration and thus the expected lifespan of the business, among others, the same happens with these relationships, and thus the costs derived from compliance efforts and with the consequences increase exponentially.

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Professional’s Interviews – Key takeaways. From these conversations, the study can identify that: 1. All the interviewees understand the real value of regulation and praise it. 2. However, they do consider it to be a significant burden to anyone, but in particular to small business and entrepreneurs. 3. All of them coincide that “get[ing] help” and “research” (learn) are the top strategies to mitigate risks and cost and ensure compliance. 4. Although all propose different strategies to the “research and learning” recommendation, they all understand that entrepreneurs do not have time to do this thoroughly. 5. Moreover that doing so distracts the entrepreneurs from what should be their only focus: running successful businesses that add value to the community, and support U.S. economic growth and labor security. These all are findings that back the thesis of this study and enriches its proposed “Practical Guide” with recommendations that have been tested and practiced by these interviewees with the entrepreneurs that make a part of their working environments.

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Result Interpretation – Quantitative Research Aspiring Entrepreneur Survey. The empirical data gathered through the second survey provides additional quantitative findings that support the objectives of this study. As previously mentioned, contrary to the exploratory survey, this questionnaire first, targeted a not controlled population and second, provided a larger sample size with a total of two-hundred and thirty-two (232) respondents, which offers the research a more representative and a less questionable population for evaluation. 1. Objective #1. To determine out of the entire sample, what percentage are “potential entrepreneurs,” regardless of the industry in which they wish to venture in. The first finding mined though this method came from question one (Q1) that served as the qualifying question for the study. Results show that out of the totality of the sample, 232 respondents, only twenty-eight percent (27.58% to be exact) declare to having entrepreneurial aspirations (see Figure 25). A finding that, if compared to the latest facts demonstrated by the Kauffman Foundation in their Kauffman Indicators of Entrepreneurship Index (KIEI) published in 2017, becomes highly relevant to this study. In this publication, the Kauffman Foundation states that the rate of early-stage entrepreneurship, meaning the percentage of would-be entrepreneurs that become small business owners per year, to be at a point thirty-three percent (0.33%) (Kaufman Foundation, 2017). Hence, the difference between the “potential” entrepreneurs (25% revealed in this study) and practicing entrepreneurs (0.33% from the Kauffman Index), provides evidence to speculate that in fact, entrepreneurship in the U.S. is in trouble. It is premature to try to find an explanation for this, however, it is not less curious or alarming to see that so many people do not get to materialize this aspiration or that take too long to be able to do it.

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Q1: Have you ever wished/wanted to be an entrepreneur in the U.S.?

Figure 25 – Entrepreneurial inclination (Answered 232) Either way, because from this method the study is only interested in understanding “aspiring entrepreneurs,” and not in those that accomplish it, this section continues to analyze only the responses of the “subsample” made out of the sixty-five (65) qualifiable respondents. (Note: The complete results of the survey depicting the totality of the sample, two hundred thirty-two (232) respondents, can be found at https://www.surveymonkey.com/results/SM-B6BQHRYZV/) According to the demographics section of the questionnaire this subsample is made out of thirty-eight males (38), representing sixty percent (60%), and twenty-six (26) females representing a forty percent (40%) (See Figure 26) (Note: one (1) respondent skipped the demographics questions). Out of the entire sample only three (3) respondents, equivalent to a four point six percent (4.6%) of the subsample, are immigrants from nations such as South Africa, Brazil, and India; while the remaining ninety-five percent (95.4%) was borne and live in the United States. Moreover, findings also show that out of the three (3) immigrants, two (2) are entrepreneurs in their home

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country. This finding further allows determining then, that the motive for not pursuing this “career path,” or their entrepreneurial dream, is not because of a lack of character typically associated with entrepreneurs but because of perceived barriers of entry. Q22: Gender

40% 59%

Figure 26 – Gender Further, since the sample selection provided by the platform is random, the location of all respondents, including the immigrants, is distributed among all regions of the U.S. and distributed among all income levels of the population. This provides value to the database as it reveals that entrepreneurial “aspirations” are not regionalized within the nation nor impaired by geographical conditions, state legislation, or economic status (Figures 27 & 28). Q24: Region

Figure 27 – Region

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Q23: Household Income

Figure 28 – Household Income

Moreover, but not less relevant, the results indicate that all group ages are represented among the sample; but that the thirty to forty-four (30-44) age group represents the largest pool of potential entrepreneurs. So, it can be inferred that the “entrepreneurial spirit” does not cease to exist even as people grow old, mature, learn about the life, learn about the business environment, or the basics of the regulatory system. However, it does seem to shift depending on the state of life according to the genders. For example, in Figure 29 the graph illustrates an increase of entrepreneurial aspirations for men above sixty (60) years old, which could be justified with retirement; while for the women, entrepreneurial aspirations decrease considerably when they reach

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this age. Perhaps this finding could be justified the fact that at this age, women are most inclined to look after grandchildren, for example, than to be running a business. Q21: Age

Figure 29 – Age It is worth discussing another satisfying result collected from this group. This being that the food and beverage industry is the preferred sector among the consulted potential entrepreneurs' sample as it turned to be the industry with the highest percentage of responses (25%), despite the strict regulatory framework that governs it. While the graph presented in Figure 30, shows the option “others” as having the most substantial amount of responses, the food industry is still the most popular. Because when analyzed in detail, this responses include a variety of sectors including in, no particular order, retail, service, education, fitness (which should have been under health), and “don’t know” as the most commonly mentioned industries, but none sum to be above the percentage behind the food industry option. This finding comes to be of great value to this study as it validates and supports the author’s choice for selecting this industry to frame the exploratory case study.

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Q2: In which industry would you like to start your business?

Figure 30 – Industry Preferences 2. Objective #2. To evaluate, through primary research, if, in fact, the regulatory burden is a top reason stopping aspiring entrepreneurs from following their dream. To address this objective, in question two (Q3) would-be entrepreneurs were asked to, among seven options, choose “which was the ‘top reason’ they had not followed through with their entrepreneurial dream.”

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Q3: Which would you say is the top reason you haven't followed your entrepreneurial dream?

Figure 31 – Barrier to entrepreneurial achievement As depicted in Figure 31 (above), the findings suggest that the consulted sample does not see regulation as a reason nor as a barrier for not following their dream of launching their businesses. Notably, since it was only one respondent (1) out of the sixty-five (65) subsample that chose this option, and thus represents such a small part of the total sample, the result becomes almost irrelevant when compared to the rest. This finding then suggests that, at least from the perspective of aspiring entrepreneur’s, regulation, and its burden, do not play a critical role behind their inhibition to follow the entrepreneurial path, and therefore, challenges in a way the argument and thesis of this study. Despite, this result, combined with those gathered form the case study allows to reach new conclusions and support the argument of how compliance increases the risks and costs for

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entrepreneurs. This study previously exposed how “active entrepreneurs” perceive the regulatory environment, then, by comparing it to the perception of “potential entrepreneurs,” results demonstrate that the consciousness of regulation as a barrier does not come into play until the subjects become “active” participants of the entrepreneurial dynamic. This suggests that the associated costs, and thus, the consequences of noncompliance are higher, as it is something that would-be entrepreneurs do not plan for but are confronted with. In a like manner, and as further proof of the unawareness state of the potential entrepreneurs vis-à-vis the regulatory environment that would govern their potential businesses, question four (Q4) unveils new interesting findings that, compared to those collected from “active entrepreneurs,” provide additional support the newly discovered conclusion. Using a likeability scale, this question explicitly asked the potential entrepreneurs to rank their level of intimidation vis-à-vis the regulatory system (Figure 32). A question that when analyzed with the same statistical measures the mode, the mean, and the median (see Table 7), used to evaluate the practicing entrepreneurs (case study), reveal findings that allow us to confirm that the “worry” level of aspiring entrepreneurs is dissimilar. Hence, once again, this finding suggests that the perception of the regulatory system as a barrier and as something that could represent a threat to their ventures is not acknowledged until they become “active” members of the entrepreneurial dynamic. In short, since the pains and the costs are not identifiable for aspiring entrepreneurs; a fact, that it increases the risks and the impact of the consequences.

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Q4: How intimidated are you by the U.S. regulatory environment?

Figure 32 – Level of Intimidation Table 7 – Level of Intimidation

Mode= 75 (Please review Appendix section for details) In other words, contrary to foodpreneurs that showed to have “very high” levels of worrisome, potential entrepreneurs demonstrate to have “medium worry level” with a median and mean close to fifty (50) despite having a value of seventy-five (75), as the mode. A value questioned by the author under two main premise, first, that seventy-five (75) although the most repeated value, appears only six times (6) in a sample as large as sixty-five (65), responses questioning then its “true” relevance. Second and most substantial, because since 38% of the respondents claim to have used a touch screen device to answer the survey (iPhone, Android, tablet, etc. (Figure 33)), the accuracy of the results vs. respondents intents could be questioned because of the small difference

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between the other values. For example: 0,49,49,50,51,75,75,73… Here the mode would be seventyfive (75) as it appears twice, but the fact that there are so many responses around the fifty (50) value, four to be exact, questions if truly respondents meant to select fifty (50) more times than they did seventy-five (75). Therefore, based on this argument, the author chooses to dismiss this result. Q25: Device Type

20%

18% 53%

Figure 33 – Device Type Nevertheless, because the primary objective of this study is to provide entrepreneurs, and aspiring entrepreneurs for that matter, with the PGE on Regulatory Compliance, it is still essential to continue to mine and analyzes the respondents’ knowledge levels vis-à-vis the regulatory environment. After all, “potential entrepreneur” is the staring tittle of who will later become an active entrepreneur.

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3. Objective #3. To evaluate “worry” and “knowledge” levels of these potential entrepreneurs vis-à-vis regulations. Following question four (Q4), the survey inquired on the respondents’ level of knowledge and revealed further favorable findings towards the primary goal of this study. First, fifty-one percent (51%) of the respondents consider having a low or medium-low knowledge over the regulations that would control their potential businesses (Figure 34). Q5: How would you rank your knowledge on the regulations that would control your potential business?

Figure 34 – Aspiring entrepreneurs knowledge level Second, when asked to rate their preferred sources for information on laws and regulations, respondents seem to have heterogeneous responses as when evaluating the total ranking the scores are quite close with the highest, received by the internet option, with of four point eight (4.8) and the lowest at four point three (4.3) for training. (Figure 35).

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Q8: Please rank in order of relevance to you these sources to find information about regulations

Figure 35 – Preferred sources of information

And third, when asked how they feel about the ease or difficulty of finding information on laws and regulations twenty-six percent (26%) find it difficult, while twenty-seven percent (27%) seems to find it easy, while forty-six (46%) of the aspiring entrepreneurs seem to be “not be sure” (Figure 36). Q7: How do you feel about ease or difficulty of finding information on laws before starting a business?

27%

26%

46%

Figure 36 – Information accessibility

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These results together present findings that allow drawing two similar conclusions to those generated through the case study evaluation. The first that, identical to the sampled foodpreneurs, potential entrepreneurs are not being proactive in seeking information and understanding the regulatory environment. And second that, like foodpreneurs, potential entrepreneurs also need better sources of information so that these statistics could be more determining. For example, having an exponentially better source could alter the respondent’s perception on the ease to find information as it would become a “go-to” source and thus would change not only their impression on the ease of information mining but also their choice of primary source. Another interesting finding is that more than thirty percent (30%) claim to be completely unfamiliar with the types of business structures they could use to register their businesses (Figure 37). This result suggests then that, because the type of entity chosen by any entrepreneur for their business has such a determining role in terms of regulatory burden, then their illiteracy on the matter could also have influenced their response about their level of intimidation concerning the regulatory environment. Therefore, once again suggesting that to be indeed able to evaluate the perception of would-be entrepreneurs in terms of regulation as a barrier, future studies should consider collecting a more literate subject base. Q9: How familiar are you with the types of business structures possible in the U.S.?

Figure 37 – Familiarity with business structures

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However, and despite their illiteracy on the matter, the “aspiring entrepreneurs” seem to be quite realistic over their calculations on how long it would take them to register a business, with fifty-one percent (51%) believing it would take them more than six months (Figure 38). Speculations on the reasoning behind their calculations could potentially be explained by assuming that they perceive navigating the system as highly complicated, and therefore expect it to take a long time. Alternatively, it could simply mean that they believe it would be a lot of paperwork. In whichever the case, these results imply that registering a business is a time-consuming task. Thus, supporting this study’s thesis and suggesting that passing from an informal economy to a formal economy would represent in fact, high costs in the form of time consumption. Q12: How long do you think formalizing a business would take you?

Figure 38 – Estimated length of a registration process Subsequently, though more specific questions, the survey mined the potential entrepreneurs’ knowledge levels on two parameters. The first over different sets of laws that govern

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the business environment (See Figure 39 & Table 8), and second on specific acts and regulations from the labor law group (see Figure 40 & Table 9). Q10: How familiar are you with the following

Figure 39 – Familiarity with deferent groups of laws

Table 8 – Familiarity with deferent groups of laws Laws governing business structures Intellectual Property Laws Tax Laws Employement Laws Advertising Laws Total votes under each level Total % of votes under each level

Not at all 47.69% 43.08% 50.77% 36.92% 61.54%

31 28 33 24 40

Somewhat 50.77% 32 53.85% 34 47.69% 31 60.00% 39 35.38% 23

156 48.00%

159 48.92%

Very 3.08% 4.62% 1.54% 3.08% 3.08%

2 3 1 2 2

Total 65 65 65 65 65

10 325 3.08% 100.00%

Table 5 (above), which has been modified by the author to analyze further the simple results provided by SurveyMonkey, illustrates that – when evaluated as a whole – forty-eight percent

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(48%) of the subsample considers to be “not familiar at all” with the groups of laws presented. This finding is of high interest to this study as it proves that there is a “market need,” if you will, for the author’s proposed “Practical Guide.” It demonstrates that advertising laws are the group that potential entrepreneurs feel to know the least about (61% under “not familiar at all”), while Employment Laws (60%) followed by Intellectual Property laws (53.85%) seem to be more familiar to the respondents (“somewhat”). As a side note, it could also be said that, with this data that shows how the aspiring entrepreneurs have little knowledge on the general regulatory business environment, it is no wonder that they do not find the regulatory system either intimidating nor perceive it as a barrier. While on the contrary foodpreneurs, who have already been exposed to all these groups of laws, state to find it to be both. In terms of the knowledge of the potential entrepreneurs on Labor or Employment laws, Figure 29 and Table 6 allow to identify that the most unfamiliar regulation among the sample is the Age Discrimination in Employment Act (ADEA Act) and the Consolidated Omnibus Budget Reconciliation Act (COBRA) with near seventy-four percent (73.85%) and fifty-four percent (53.85%) respectively in the “not [familiar] at all” column. Whereas, the Health Insurance Portability and Accountability Act (HIPPA) is the option which most respondents feel more familiar with.

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Q14: How familiar are you with the following acts and regulations on labor laws?

Figure 40 – Familiarity with Labor Laws

Table 9 – Familiarity with Labor Laws Minimum Wage and Overtime Pay HIPPA regulations OSHA regulations ADA regulations ADEA act COBRA mandates Tittle V of the Civil Rights Act Total votes under each level Total % of votes under each level

Not at all 20.00% 35.38% 30.77% 50.77% 73.85% 53.85% 47.69%

13 22 20 33 48 35 31

Somewhat 53.85% 35 33.85% 21 43.08% 28 38.46% 24 26.15% 16 40.00% 26 44.62% 29

202 44.40%

179 39.34%

Very 27.69% 35.38% 27.69% 12.31% 1.54% 6.15% 7.69%

17 22 17 8 1 4 5

Total 65 65 65 65 65 65 65

74 455 16.26% 100.00%

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In short, from the data mined, the key findings that emerged further support this study and demonstrated the imminent need to familiarize aspiring entrepreneurs with the regulatory environment before the launch of their ventures. May it be through the “Practical Guide to Regulatory Compliance” proposed in this study, or any other resources, as proven the best practice to deter compliance costs and promote entrepreneurial initiatives should begin with information. 4. Objective #4. To determine best practice tendencies and preferences for future compliance actions. Equally important to understanding the potential entrepreneurs’ knowledge and worry levels in the face of the regulatory environment is evaluating what is their sentiment towards the already identified “best practices.” For example, from the results collected in question six (Q6), where the sample was asked to select what they believed to be the “best way” to ensure compliance; out of the five options “getting educated” received the highest results with a total of thirty (30) votes, followed by “researching” and “finding professional help” tied in second place with a total of twenty-eight (28) votes each (Figure 41). While on the contrary, using technology was ranked last with only (13) votes. It is relevant to mention that for this question it seems that on average the members of the subsample selected two choices as the answer pool is based on one hundred and twenty-two (122) responses while the sample is of only sixty-five (65) subjects. This results are curious to the author as she expected – based on the passiveness that the would-be entrepreneurs have shown towards compliance – that instead of selecting the choices that required the most action from their behalf they would have chosen technology as it would be the choice that did the most for them with the less amount of effort.

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Q6: To you, which of the following would be the "BEST WAY" to ensure compliance:

Figure 41 – Practice tendencies to ensure compliance Notwithstanding, when asked how likely they are about using technology to stay compliant, potential entrepreneurs declare to be highly prone to using technology as a tool (see Figure 42 and Table 10). With a median of ninety (90) and a statistical mean near seventy-nine (79), we can see that this result disputes the previously evaluated findings. However, with a mode of one-hundred (100), speculations could be drawn around the possibility that maybe one, or both, of the questions, were not clear enough to allow respondents to provide a more coherent response. Therefore, because it remains unclear to which degree aspiring entrepreneurs prefer technological tools such as apps and software to assist them in their compliance tasks it would be recommended that future

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studies design a more detailed question that allows drawing more meaningful conclusions on this particular matter. Please note that this time, the author is taking into account the mode since it appeared more than twenty-seven 27 times, representing 41.5 percent of the responses and thus making it highly relevant. Q17: How likely are you to using technology to stay compliant?

Figure 42 – Perception of technology as a tool

Table 10 – Perception of technology as a tool

Mode= 100 (Please review Appendix section for details)

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Another finding retrieved from this method that further demonstrates the illiteracy of the sample in terms of the value of regulation is that an alarming 22% of the consulted would-be entrepreneurs consider that to their potential businesses any form of intellectual property is “unnecessary” (Figure 43). This finding casts new light on the imminent need for training. Meaning that it is necessary to enlighten the aspiring entrepreneurs on the value of IP protection and that, although it might represent a more significant load of paperwork, in this in this particular case of the regulatory environment, the benefits outweigh the costs. Q15: Do you think that for your potential business, any form of Intellectual Property would be:

26%

22%

52%

Figure 43 – Intellectual Property Also related to what are believed to be best practices for regulatory compliance where literature suggests seeking outside help, from question thirteen (Q13) the study can determine that, the consulted sample seems to be little inclined to do so. Not only, out of the three mentioned services (legal advice, accounting assistance, and payroll services), where only seventeen believe

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they will hire a lawyer, and only fifteen believe they will hire an accountant. Moreover, as illustrated in Figure 44, the potential entrepreneurs seem to be “highly unlikely” to hire or invest in “payroll services.” This result could demonstrate two things. First, that since they are not yet managing payroll duties, they are unfamiliar with the burden level that payroll represents to an entrepreneur and the time requirement it demands (high cost). Second that, similar to the evaluated foodpreneurs, they are planning to manage it casually and thus willing to absorb or manage any liability or problem that may derive from it. In short, they can be basing their decision on a riskbenefit-cost analysis. Q13: During the early stages of your venture, how likely would you be to hire the following?

Figure 44 – External help tendencies In summary from these last findings that sought to illustrate what would be the “best practices” of future small business owners and entrepreneurs this study can conclude that: a) they need to be instructed on the value of taking a proactive approach to compliance. This means seeking

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additional help, filling for protection and investing time to learn about the changes; and b) they seem to be pro-technology, but do not understand how it can serve them. Objective #5. To assess their preferences on informative sources and their perception of information availability. Data collected that supports this objective, and its findings have already been discussed. In essence: A) that there is no preferred source of information; instead, all options are perceived as equally valuable and relevant. B) Respondents seem to have opposing stands over the ease of difficulty of finding information on regulations and laws, leaving the study with an undeterminable response. C) They seem to be supportive of using technology as the driver of information. Thus, it could be implied that in addition to the printed version of the “Practical Guide,” the application of this study should also include the development of an app. Aspiring Entrepreneur Survey – Key Takeaways. In summary, the top five key findings revealed from this data mining method could be sum-up in the following statements: 1. Entrepreneurial aspirations are not regionalized, nor impaired by geographical conditions, state legislation, economic status and income, gender, nationality, or age. Therefore, solutions that promote entrepreneurial initiatives should be designed to cater to all. 2. Results demonstrate that the consciousness of regulation as a barrier does not come into play until the subjects become “active” participants of the entrepreneurial dynamic. Hence they cannot be deterring potential entrepreneurial spirit but only entrepreneurial achievement. 3. Aspiring entrepreneurs are also not proactive enough in seeking information on regulation and also manifest to need better sources.

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4. The potential entrepreneurs seem to be illiterate on the regulatory environment, on the benefits, on the consequences, and the costs associated with compliance. Demonstrating then, that illiteracy on the subject seems to be the real cost as they are less able to plan a strategy to face it successfully. 5. Information, may it be through research, better sources, technological tools, or assistance from professional sources is the first step to diminish economic costs and time expense. Therefore, investing early-on money or time increases compliance probability, and hence, diminishes repercussions derived from law violations. Note: if a more detailed, or broader information is required, please access the survey monkey website through the following link, where the results of this survey are stored and posted. Link: https://www.surveymonkey.com/results/SM-M9728XL6V/

Content Metadata Analysis. As previously mentioned the fourth and final method implemented for this study intended to assess what tips, suggestions, and recommendations the World Wide Web has to offer potential entrepreneurs as a guide to help them ease the process of compliance. Following the search and selection criteria described in the methodology, the content metadata analysis includes the list of websites available in Appendix G1. From this database, the author was able to collect five-hundred (500) tips that were categorized into fifteen (15) groups following the concept criteria established at the beginning of the study (Appendix G2). Then by counting the number of tips under each concept, a statistical percentage was generated in order to evaluate which of the concepts was more popular among the sites and be able to select later the top ten (10) concepts that would make it to the “Practical Guide”

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(Table 11). To make this further selection, which is often referred to as skimming, the threshold was set at five percent (5%), meaning that only the concepts that had a recurrence percentage value above this threshold will be part of the PGE. Table 11 – Content Metadata Findings DATABASE MAIN CONCEPT

Threshold

# OF TIPS

FREQUENCY

PROTECT

16%

LEARN &RESEARCH

16%

PLAN

10%

FILE

BE SMART

DEFINE

FIND HELP

BOOKEEPING

STAY UP TO DATE

BE PROACTIVE

TRAIN

MONITOR

USE TECHNOLOGY

SCHEDULE

DON'T BE AFRAID

500

100%

Total tips

Last, from the many tips found under each concept, the author proceeded to “filter” the recommendations to eliminate repetition of tips, which rises as a consequence of using multiple sources. From that process, in some cases, subcategories were identified. For example, under the “Protect” concept the eighty-one (81) tips found could be classified into ten (10) sub-subcategories, these suggesting that entrepreneurs should protect: themselves, their employees, the business from employees, the company’s assets, the consumers/clients, the business, and the funds and finances. Furthermore, under each of these recommendations, the filtering process also allowed to identify

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the top five (5) most commonly suggested practices. For example: under the recommendation to entrepreneurs to protect themselves, tips suggest that they should do so by: 1. Not accepting a gentlemen’s agreement or a handshake. 2. Making sure that the founders’ agreement is in writing. 3. Getting Health and Disability insurance for themselves. 4. Not starting a business while employed by a competitor. 5. Keeping their mouth shut until IPs come through. Under this condition, “Protect” turned out to be the most relevant recommendation concept, with ten (10) subcategories and a total of fifty (50) tips and suggestions for entrepreneurs. Additionally, the concepts of “Learn & Research, File, and Be Smart,” also present sub-categories with ten (10), six (6), five (5) and two (2) sub-concepts respectively. Further, “Research & Learned” resulted in a total of fifty (50) tips, while “File” and “Be Smart” totalized fifteen (15) recommendations each, and “Plan” with twenty (20). At the same time the primary concepts of “Define, Find Help, Bookkeeping, Stay Up-to-date, and Be Proactive,” did not allow for further categorizing, and hence remaining as general concepts with ten (10) tips each (Table 12). For the complete list of tips, concepts, and categories, please reference appendix G3 located on page xxxxx of this document where a detailed chart displays the findings.

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Table 12 – Content Metadata Analysis DATABASE MAIN CONCEPT

FINDINGS

# OF TIPS

FREQUENCY

# SUB CATG.

TOTAL #TIPS

PROTECT

16%

LEARN &RESEARCH

16%

PLAN

10%

FILE

BE SMART

DEFINE

FIND HELP

BOOKEEPING

STAY UP TO DATE

BE PROACTIVE

TRAIN

MONITOR

USE TECHNOLOGY

SCHEDULE

DON'T BE AFRAID Total tips

500

100%

do not make the threshold cut

200

In summary, by content analysis, this method supports the thesis allows drawing two meaningful conclusions. First, because the most common suggestions found revolve around labor law, tax law, and considerations about industry-specific regulations, which tend to appear consistently under each concept, it can be inferred that in fact, these are the law groups that represent the most significant challenges to entrepreneurs. Thus, they represent the most burdensome regulatory frame when seeking compliance. Second, that because the list, despite the author’s best efforts, remains relatively long with a total of two-hundred (200) tips; it can be inferred that the number of tasks and the amount of work that entrepreneurs need to do and follow only to ensure compliance is equally extensive. This finding then supports this study’s thesis by demonstrating that efforts of entrepreneurs for

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regulatory compliance translate into high costs in terms of opportunity, time, and money in addition to rising entry barriers as not all entrepreneurs can provide the required time allowance when trying to start and launch a business. Discussion of Findings In this section, the study has presented in detail the results obtained from each research method, and findings have supported not only the thesis of the study but also have contributed to finding solutions to the problem hereby presented. Moreover, they have to enlighten the author and reader on what are considered the best practices that entrepreneurs should follow to ease regulatory compliance. However, it is not until the findings are evaluated as a group that this study can reach its conclusion. Thus, taking the key takeaways for each of the methods and comparing them abreast each other, results show: 1. Contrary to the aspiring entrepreneurs who, because of their demonstrated illiteracy on the value and costs of regulation, do not understand the burden that compliance represents, all other consultees agree that the regulatory system is, in fact, a burden on small businesses and entrepreneurs. 2. They also agree that most of their pains are caused because the current the regulatory system has too many layers of power, too many agents, too many regulations that seek to do the same thing (implying the insufficiency of such rules), and too much misinformation around the subject. Hence, demonstrates a clear message to the authorities that the entrepreneurial community is not necessarily calling for deregularization but instead for a less complex system with fewer red tape. 3. Because, the same consultants recognize the value, the importance, and the benefits that the regulatory system provides, thus firmly believe it is necessary, findings reveal that

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entrepreneurs do not “mind” taking action towards abiding by it, although they do demand, however, for statutes to be expressed in plain less complicated English. 4. The study also demonstrated that neither aspiring nor potential entrepreneurs are “proactive enough” into taking these “actions” and thus raises questions on if the high administrative costs affecting their venture is also a consequence of their non-proactive disposition towards the regulatory system. 5. Nonetheless, all consultees also agree that finding information and understanding it is a burden all by itself. No matter if it is the consulted professionals, the practicing entrepreneurs, or the aspiring entrepreneurs, all agree that “valuable” information tailored to their specific needs is scarce, scattered, and too complex to access and understand increasing then exponentially the time expenditure associated with the task. Hence, demonstrating that there is an imminent need for tools such as this study’s “Practical Guide for Entrepreneurs on Regulatory Compliance.”

In summary, the entirety of this work has revealed three significant discoveries. First, although it is true, as proven with this research, that the accumulation of laws is a burden on small businesses activities and rises entry barriers for new entrants. It is also equally valid that the awareness of their burden and of the costs it implies is not perceived nor identified by aspiring entrepreneurs until they become active members of the entrepreneurial community. Thus, suggesting that entrepreneurial aspiration and spirit is not negatively affected by the current regulatory environment, but it should be positively influenced if the chances of success increase as a consequence of modifications of such an environment. A point not only to be considered by the

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authorities but also by the entrepreneurs as they too can assist then in the empowerment of entrepreneurship for the preservation of America's economic environment. Second, rules call for actions to ensure compliance. Consequently, regulatory burden calls for even more active participation from the entrepreneurs demanding more time and thus increasing the costs. Furthermore, because these “actions” shift small business owner’s focus from running and growing successful businesses, to merely seeking compliance; it can be inferred that in reality, it is not the excessive number of regulations, nor the burden of the administrative costs what is ultimately affecting entrepreneurial success and small business sustainability. Instead, it “task burden” the ultimate cause jeopardizing U.S. labor security and technological progress as it becomes the source of the pain generators identified through the research. Therefore, suggesting that what is needed are more efficient processes that decrease the task amount not necessarily the number of regulations. Third, the demonstrated illiteracy of aspiring entrepreneurs in addition to the “laid-back” attitude that practicing entrepreneurs have towards compliance further allows questioning of the actual responsibility of regulation accumulation, or the governing authorities for that matter, over business developments and entrepreneurial aspirations. Albeit it is true that accumulation does affect the conditions, results also demonstrate that entrepreneurs are also partially responsible not only of causing the consequences but also of increasing the impact regulatory accumulation produces over their businesses. Because, for example, the less they know about a potential consequence or risk, the less time they dedicate to planning a strategy. Furthermore, the less they understand the risks, the more they may bargain vis-a-vis the potential benefits. Thus, this study believes that, unless entrepreneurs are taught to see and recognize regulation as an equally important part of their business operation, results will not change even if

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deregulation initiatives are enforced; as it could be speculated that if much regulation is calling for little initiative, then less regulation would generate even less action. Hence it is imperative that entrepreneurs and small business owner alike recognize that too are to “blame” for the decline of entrepreneurship in the U.S. and small business formation and sustainability.

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CHAPTER 5 Conclusion This study has evaluated how, by quantity abuse, regulations, and legislation are inhibiting entrepreneurship turning to be counterproductive to the United States in terms of job creation, small business growth, and industry-specific innovation. The results obtained through the qualitative and quantitative research methods provided consistent and valuable information that allowed to: a) evaluate the effects of the administrative costs on small business sustainability, b) identifying pain generators and their consequences, and c) finding a “pain relieving solutions.” However, of even greater appeal, this study revealed that contrary to popular believe and public literature, authorities are not solely responsible for the decline of entrepreneurial success and small business growth, but instead, both aspiring and practicing entrepreneurs also carry part of the responsibility. This is an invaluable finding that shines a light towards hope, as now the entrepreneurial community can take matters into their hands while awaits for a better, less complex, and more efficient regulatory system from the governing authorities. A finding that allows concluding that instead of only demanding and waiting for actions from the government, scholars and the population at large should be empowering, assisting and supporting entrepreneurs into becoming literate, proactive and resilient vis-à-vis regulation. Notwithstanding it is also relevant to highlight for the authorities that this study also concludes that the most significant pain generator of the regulatory burden is complexity. Thus, this study also concludes with a call to action on their behalf. Results demonstrated that it is imperative for compliance processes to become leaner, that rules are expressed in a more straightforward English, that the paperwork is reduced, and that regulations are consistent and coherent. This actions would decrease exponentially “task burden” on entrepreneurs and small business owners alike, thus

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returning their focus towards their ventures, which will ultimately benefit America’s economic growth as explained in this study. Recommendations The author sees the “Practical Guide for Entrepreneurs” on “Regulatory Compliance” as the first step towards this new objective of empowering entrepreneurs and the results from this study support the value it brings to the entrepreneurial community. However, she also recognized that it could be of even higher value if further information was available for consideration and thus wishes to propose the following recommendations to future researches: •

It would be highly valuable to test the suggested tips, and through evidence-based results, evaluate how each of the recommendations reduces administrative cost and makes the compliance process leaner in terms of the number of tasks.

•

Evaluate the proposed tips through case study analysis in order to determine their individual values and be able to provide entrepreneurs with sufficient information to allow them to chose among similar options.

•

Additionally, asses how active participation and engagement through the proposed strategies the entrepreneurial environment changes, for example, a year or a decade.

•

Last but not least, it would also be interesting to evaluate to what degree the active engagement of entrepreneurs could limit the reach of lobbyists, big corps, and regulatory agencies. This not only to evaluate the success of the strategy but more importantly to generate statistical data that could be used by training initiatives to motivate future entrepreneurs to be active instead of just reactive despite the time expenditure it might represent.

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Limitations of the Study As in any investigation, this study has encountered some limitations that could have interfered with the thoroughness of the results and even the effectiveness of the proposed “Practical Guide to Entrepreneurs for Regulatory Compliance.” Thus, the author wishes to call attention to them, and their effects, and asks the target audience, those critically reviewing this document, and those using it as a research tool to keep them in mind as they reflect on the findings, conclusions and recommendations hereby presented. These limitations included: Time. Because the following study was conducted in ten (10) weeks, the author did not have enough time to prove the proposed toolkit’s effectiveness, efficiency, and most importantly, likeability on aspiring entrepreneurs. A lengthier period would have allowed the author to, to tests the “PGE for Regulatory Compliance” in the field with both aspiring and practicing entrepreneurs before the publication of the study. Resource Availability. Additionally, this restrictive time frame also limited and affected sampling. Resulting in a sample size for the exploratory case study that by no mean represents a significant portion of the U.S. entrepreneurial workforce from the food industry. Caused not only by delayed responses to the exploratory survey but also by limiting the ability to seek a larger pool of subjects from sources other than La Cocina. Hence, it could raise questions over the bias or thoroughness of the study. Budget. Because to find a probable and large enough sample using the SurveyMonkey platform the author needed to pay a three dollars and fifty cents ($3.50 UDS) fee per response, the sample obtained from the survey administered to the potential entrepreneurs was also limited by budget availability. Leaving, then, the study with a probable sample size of only two-hundred (200) respondents in total, but with only sixty-five (65) aspiring entrepreneurs who were the only portion

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of interest to this study. Again resulting in a sample size that, by no means, is a significant representation of the entrepreneurial tendencies of the United States population. Thus, the author suggests for further research with a larger sample to corroborate the present findings. Tools. The content metadata research method was limited not only because of the tight schedule of the study but also because the author did not have the resources to perform automatic algorithmic analysis on the dataset. Meaning that because she did not have the knowledge to generate an algorithm to filter and compare the sources and their information, nor had the economic resources to seek for tools such as professional help or software that could assist with the task, the study depicts only the amount of sites that the author thought to be manageable. Furthermore, because the comparison and selection were done manually by the author, accuracy, and bias could then be questioned.

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CHAPTER 6 Research Application The body of work presented in the previous chapters has allowed not only to identify and understand the pains of practicing entrepreneurs vis-à-vis the regulatory system, but also identify what potential entrepreneurs need to alleviate the effect of these pains as they exercise entrepreneurship. These findings together then allowed the author to design the “Practical Guide to entrepreneurs for regulatory compliance.” The PGE is designed and conceptualized as a way to assist entrepreneurs in navigating the regulatory system and cut through the U.S. red tape. By presenting tips and best practices, information and assistance that help deter the effects and costs associated with compliance, PGE, intends to be a contribution that helps foster the entrepreneurial spirit in the U.S. in benefit of economic growth and labor security. With the purpose of explaining the business model proposal and strategy for the implementation of the “Practical Guide,” in its three (3) versions, a printed brochure, the app, and the website, this chapter presents: the value proposition, the strengths weaknesses, opportunities and threats surrounding the idea (SWOT Analysis); and a brief version of the business plan. Additionally, it also provides a brief explanation of the design and visuals of the brochure application as an example of the brand identity and an explanation on the operability of each of the application formats.

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Value Proposition The study has allowed understanding that what entrepreneurs want is to be able to comply with the law in the most effective and cost-efficient way. This meaning that they wish to invest less time and incur in less monetary expenses while dealing with regulations so that they can focus their attention of building and running successful businesses; instead of being distracted with paperwork and held back by regulatory red tape. It also revealed through the different research methods that the pains that active entrepreneurs have, and that potential entrepreneurs will face, include: 1. A complicated, layered, and sometimes contradicting regulatory system. 2. A deflected focus because of too many tasks, too many topics, and too many rules that they need to understand, follow, and perform. 3. Non-localized, nor personalized information anywhere, unless they seek professional assistance, which elevates start-up costs and increases entry barriers. Under this conditions then, it can be identified that what entrepreneurs desperately seek is a customizable, up-to-date, easy to understand and available on-demand source of information from a trusted advisor that can assist them in navigating the complex regulatory waters. Hence, the value of the “Practical Guide to Entrepreneurs for Regulatory Compliance” relies on the fact that with its three (3) application formats: the brochure, the app, and the website; the brand can relieve their pains by: •

Allowing customization (first of a kind).

•

Decreasing their time expenditure on compliance tasks.

•

Decreasing monetary investment in external professional help.

•

Increasing the time allowance for business implementation and operation.

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Business Plan From the value proposition, then it is easier to understand the business plan proposed by the author to turn the “Practical Guide” from just a one-time deliverable to an enterprise that can be sustained through time. Business Description: Foremost, it is relevant to address that because of the high value that this idea represents to the growth and health of the United States economy, and because of the potential social value it has, and the opportunities for innovation it may trigger; the author sees this venture as a non-profit enterprise. This meaning that the PGE would become a brand that, instead of working for profit gain and accumulation, will operate for the general public gain through education and empowerment of entrepreneurs and small business owners. Revenue Streams. The aforementioned action increases the probabilities of obtaining funding from federal and state governments, as well as from private funders that might choose to file their contributions and obtain a tax deduction. Both becoming the primary sources of income to the non-profit organization. In addition to secondary funding opportunities that might arise from add displays and partnerships with entities such as law firms, and payroll service companies, among many others. Growth Strategy. The idea behind turning the “Practical Guide” into a venture instead of a one-time deliverable falls on the potential of advising and instructing, active and aspiring entrepreneurs which are the target market, in more concepts than only regulatory compliance. Some other ideas could include: “A Practical Guide to Entrepreneurs for Capacity Management” or “A Practical Guide to Entrepreneurs for Funding Acquisition,” among many others.

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Mission Statement. Then, the purpose of PGE could be summarized and understood thought its mission statement that narrates: “To generate economic growth and labor security in the U.S. by decreasing the costs associated with entrepreneurship and lowering the entry barriers through information, education, and resource availability.” – PGE’s Mission Statement. Vision Statement. In the same way, the vision helps identify the final objectives and goals behind the efforts of the ventures, which is: “To become the number one, most up-to-date, personalizable, and reliable source of information among the United States entrepreneurial market.”– PGE’s Vision Statement. Distribution Channels. First, the brochure version of the PGE the packet will be distributed and available to the target audience at locations such as universities, chambers of commerce, community centers, and government agencies, as these would most likely be the physical locations that aspiring and active entrepreneurs would visit to find information. Second, the app would be available to entrepreneurs thought Apple’s App Store as it would be designed using the iOS system. Last but not least, the website would be available on the world wide web with key SEO that will assist in targeting the audience. Marketing Strategy. First and foremost, PGE wishes to leverage on word-of-mouth tas the primary marketing strategy and thus recognizes that this could only be achieved by delivering top service, high value, and highly relevant and updated information. Additionally, it plans to market each application on the remaining two applications. For instance, in the brochure, the website and the app appear. The same will happen on the website and the app. This strategy will increase the reach and the presence of the brand. Additionally, PGE plans to leverage their partnerships with

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strategic allies such as government agencies, the chambers of commerce and professionals in the field, to serve as a medium to advertising and marketing. SWOT Analysis. From the evaluation of PGE’s potential internal and external environment, some of the identifiable strengths of the venture include: •

It is a first-of-a-kind product and service as no other allows customization.

•

It is a one-stop source for all relevant information.

•

It is on demand as research shows that entrepreneurs are struggling with information availability and decoding.

•

Endless possibilities for revenue sources. For example, through partnerships, government funding, advertisement display, information exchange, among others.

•

Different application methods allow reaching different sectors of the target market. For example, tech-savvy vs. non-tech-savvy, iPhone users vs. Android users. Those who prefer information in print format vs. those who prefer digital.

•

Different application methods provide opportunities for interchangeable marketing, which means, that on the printed version, for example, PGE can advertise its app and website, and vice versa.

•

The implementation of three application methods strengthens brand’s identity increases exposure, generates credibility, and broadens the impact of the tool.

Notwithstanding, PGE also has some potential weaknesses: •

It is a new brand with no brand awareness.

•

Unproven and uncommunicated value

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Budget to counter big corporations’ efforts to obstruct PGE’s operations of empowering and promoting entrepreneurship and small business growth.

For the opportunities: •

The information data PGE will collect on entrepreneurs and the small business environment through the customization option of the app and website could be of high interest to foundations such as the Kaufman Foundation and the Mercatus Center which study these groups and hence represent opportunities for economic funding, or service exchange opportunities.

•

PGE could grow to be a recognizable entrepreneurial school.

•

It could become a TV or radio show to increase brand awareness and motivate potential aspiring entrepreneurs that are hesitant to leap.

Last but not least, for the threats: •

Not transmitting in a good enough way the value of the brand and the guides and PGE gets lost in the chaos of the system. That entrepreneurship continues to decline to a point where there is no more “target audience” to lure.

•

Entrepreneurs nor government agencies trust the brand yet, which increases the barriers of entry.

•

PGE would be subject to the administrative costs, and the risks of the regulatory system (however, seems to be able to navigate it).

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Brand Identity The visuals elements of the PGE’s brand identity, which will be consistent through the three (3) application formats, begins with the logo (Figure 45), which was designed using a geometric shape that resembles a badge and includes a hand illustration holding a pen as a reference to entrepreneurial empowerment.

Figure 45 - PGE Logo Additionally, the color scheme selected includes black, white, light grey, and red as the foundational color scheme which can be combined with up to ten (10) supporting pantons for details and highlights depending on the subject of the guide. For example, in the PGE on Regulatory compliance, the supporting hues include eight different shades of blue that range from deep blue to turquoise and four different hues of orange tones. Furthermore, the triangular transparency and a dashed line detail provide depth and texture to the background while guiding the users’ eyes through the layout, regardless of the format. It is relevant to note that all presentation formats

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include a variety of images, retrieved from the Getty Images royalty-free stock, strategically chosen to represent the diversity of the target audience in terms of race, gender, age, and ethnicity. Last, in terms of brand design, for the written portions, all fonts will be “robotto condensed.”

Product Description “A Practical Guide for Entrepreneurs on Regulatory Compliance” will be available to its target audience, this being potential and practicing entrepreneurs, in three formats. The Brochure. A letter-sized (8.5” x 11”) folder that presents the general tips and recommendations through individual (not bounded) pamphlets (pages) that the user should follow to successfully establish and run a business within the United States regulatory frame. The brochure, contrary to the other proposed applications of the study, is not customizable nor personalizable; it is a broad, general map towards compliance. The brochure is composed of ten (10) sections, where each section corresponds to one of the concepts presented in the methodology and results in sections of this study, an epigraph page, and a blank lined page for notes that the user might want to include. It is to be printed in matte, light-weight card stock and bound with silver med-wight card stock secure handling and closed with a PGE’s logo sticker. The App. The software application of this Practical Guide is intended to build an intuitive, usable, and engaging experience between the user (target audience) and the information. The objective is for the user to be able to customize the content and only present the information they seek and find relevant for their business operations. The motive behind this is to increase efficiency, effectiveness, and lower the time expenditure associated with compliance.

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The interface, which follows the brand identity throughout the navigation, begins with a questionnaire where the users fill the information that will allow customizing the results. It goes as follows:

Figure 46 – App Personalization Questionnaire Following the questionnaire, which is modifiable at any given time, the user is then presented with two options on the screen, a) tips, b) laws. Under the “tips” option, the user is presented with the recommendations that correspond to each of the ten (10) concept. Here only those tips that are relevant and that apply to his/her specific venture will appear, but the option to

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navigate the full list is also available. Under the second option “laws,” the app will present a list of the applicable laws and regulations to his/her business and their explanation in “plain English.” Here the user can click and mark as “checked” those regulations, requirements, or mandates to which he/ she has already complied with or mark as priority those that wish to keep a track on. Moreover, the app’s interface is also designed to give a list of the required paperwork, important contacts’ information and more which is pulled from the internet but stored in the device so that it can be accessed without an Internet connection. Additionally, the app, if allowed by the user, can send reminders and notifications to the user. The website. As previously mentioned the last application method selected by the author to assist entrepreneurs in accomplishing regulatory compliance most efficiently and effectively includes a mobile website. Similar to the app, a mobile website is designed to be accessed not only on desktop computers, may it be Mac or PC, but also through hand-held devices. The intention of developing this channel is to counter the limitations that apps have. For instance, being devicespecific, the app can only reach a segmented population while thought the mobile website the content is available to all. The website will carefully follow format, function, and look of the app but will differ in terms of personalized information availability. This meaning that because websites are not able to send a notification to devices, the user will be limited to the information unless he accesses his profile online. Nevertheless, it will increase the reach and exposure of the content and assist in the marketing strategy.

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APPENDIX Appendix A National Small Business Association 2017 Survey. Available at: https://www.nsba.biz/wpcontent/uploads/2017/01/Regulatory-Survey-2017.pdf

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Appendix B La Cocina – Location: San Francisco, Ca.

Years in Business: 12 years

Description: Incubator Kitchen

Type of Business: Non-profit

Currently in Program: 33 Start-up Businesses Mission Statement: "To cultivate low-income food entrepreneurs as they formalize and grow their businesses by providing affordable commercial kitchen space, industry-specific technical assistance and access to market opportunities. [They] focus primarily on women from communities of color and immigrant communities" (La Cocina, n.d.). Brief Description: “La Cocina is a ground-breaking business incubator designed to reduce the obstacles that often prevent entrepreneurs from creating successful and sustainable small businesses. By providing shared resources and an array of industry-specific services, business incubators ensure small businesses can succeed. La Cocina provides commercial kitchen space and technical assistance to low-income entrepreneurs who are launching, growing, and formalizing food” (La Cocina, n.d.). More information available at: https://lacocinasf.org/

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Two employees of Alicia's Tamales Los Mayas prepare tamales at “La Cocina” industrial kitchen.

Retrieved

from:

https://www.kqed.org/bayareabites/72892/san-francisco-la-cocina-

kitchen-lends-low-income-food-entrepreneurs-a-hand

Jill Litwin works to package her organic children's food called "Peas of Mind" at La Cocina. Retrieved

from:

https://www.sfgate.com/restaurants/article/MISSION-DISTRICT-La-

Cocina-helps-get-cooks-out-2690108.php

La Cocina, the sweet side of entrepreneurship Retrieved from: https://lacocinasf.org/

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La Cocina Kitchen Retrieved from: https://www.wheretraveler.com/san-francisco/eat/taste-delicious-successsan-franciscos-pioneering-incubator-kitchen

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Appendix C Table A1 – La Cocina’s Active Entrepreneurs Questionnaire. Q1. Q2.

Q3.

Q4.

Q5.

Q6.

Q7. Q8.

Where does your business operate? Please specify State and City Open-ended question What type of food do you offer? If multiple options apply, please select all. Prepared Meals that contain any of the following: meat, fish, poultry, and/or eggs, Jarred Goods such as sauces spreads jams, etc. Dry Prepacked Goods such as snacks, protein bars, etc. Pickled, fermented o pasteurized goods (e.g., yogurts, ‘sauerkraut,’ etc.). Baked Goods Non-Alcoholic beverages (energy drinks, juices, etc.) Alcoholic drinks (craft beer, etc.) Other Where do you manufacture/ produce/ cook your products? At home. I am protected by the state Cottage Law I rent a space in a certified commercial kitchen/incubator I own a certifies commercial kitchen Other. Please specify How many years have you been in business? Less than a year Between 1 to 2 years More than two years but less than five More than five Under what type of business entity does it operate? Sole proprietorship Limited partnership Limited liability company Corporation Non-profit organization How long did it take you to go through the process of formalizing your business? About one week About two weeks About one month Between one to three months Between three to six months More than six months How many employees do you have? (Scale from 0 to 100) How many months or years into your operation before you hired your first employee? I don't have employees Less than a month

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Between one to three months Between three to six months Between six months to a year More than a year Q9. Before you launched your business, how intimidated were you about the regulations that you would have to comply with? (Scale from 0 to 100) Q10. How did you learn about the regulations you now know and understand? Please choose all that apply. From the internet. From friends and family From peers in the industry From school or professional training From government agencies websites (IRS, DOL., etc.). Q11. How do you feel about the U.S. Regulatory system? Image 1- Mad Image 2 - Sad Image 3 - neutral Image 4 - happy Image 5 - excited Q12. Would you say that the MOST substantial portion of the regulatory burden on your business comes from: The Federal Government The State Government The Local Government Industry-specific agencies I don't know what this is Q13. How would you rate your knowledge today on the regulatory framework that governs your business’ operation and industry? Is it: (star rating ) * - low I have no Idea about it ** *** **** ***** - High. I know a lot Q14. How do you keep up to date with regulation changes in your industry? I watch the news. If it is there ok, if not I probably won’t know I often check with my attorney I am involved in forums and associations from my industry I occasionally check government pages, but it is not a priority task I don’t have time for that. I just wing it. Q15. To your business, which of the following is most helpful to deal with tax compliance? Our accountant Tax management software

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The IRS tools and resources A friend Other Q16. To your business, which of the following is most helpful to deal with employment laws and regulations? Our head of Human Resources Our attorney We are very informal. We manage it casually Other Q17. How much time do you feel you have spent learning about regulations? (Scale from 0 to 100) Q18. Which of the following had more weight when you were deciding what type of business entity to choose? Please rank in order of relevance: (1 most relevant) Vulnerability to Liability Costs associated with the registration of the business Tax criteria Protection of my assets Other Q19. Do you have insurance on your business? Yes No, but soon No, I don't need one Q20. Do you have a “safety budget” to deal with regulatory fines or expenses in case of litigation? Yes No Q21. Would you recommend having one? Yes No Q22. Have you filed or have intellectual property rights protection such as copyright, patent, trade dress, trademark, etc.? Yes No Q23. Do you think that, for your business, any form of intellectual property is: Highly necessary. My business success and future rests on them They are important but don’t factor in my business success They are unnecessary in my line of work or industry Q24. What would you say to entrepreneurs in terms of regulatory compliance? Run away. It is too much work Push through. It is a lot of work, but it is worth attending to. Push through but hire a specialist. It is too complicated to do it alone Follow your dream. You will handle compliance in incremental periods so don’t worry Q25. If you could give them any advice to help them overcome this barrier, what would it be?

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Appendix D Appendix D1 Table D1 – Aspiring Entrepreneurs Questionnaire. Q1.

Q2.

Q3.

Q4. Q5.

Q6.

Have you ever wished/wanted to be an entrepreneur in the U.S.? Yes. I am An Entrepreneur Yes, but I haven't yet No. In which industry would you like to start your business? Transportation Real Estate Finance Hospitality Construction Consumer Retail Media Health Technology Food and Beverage Other (please specify) Which would you say is the top reason you haven't followed your entrepreneurial dream? I don’t have enough time to plan for it I don't have enough money to pursue it I can't risk not making ends meet I am reluctant because of the regulatory environment I am not sure if my idea /service/product is good How intimidated are you by the U.S. regulatory environment? (Scale from 0 to 100) How would you rank your knowledge on the regulations that would control your potential business? Low Low- Medium Medium Medium-High High To you, which of the following would be the "BEST WAY" to ensure compliance: By networking By researching By finding professional help By using technological tools By getting educated

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By dedicating time to it Other (please specify) How do you feel about ease or difficulty of finding information on laws before starting a Q7. business? Frustrated - it is too hard Not sure Good - It is easy to find Q8. Please rank in order of relevance to you these sources to find information about regulations Internet (blogs, news portals, articles, etc.) Paid Professionals (lawyer, accountant, etc.) Training (degrees, certificates, courses, etc.) Visiting the regulatory agency (DOL, IRS, Local Government offices, etc.) Industry forums and associations Colleagues in the field Q9. How familiar are you with the types of business structures possible in the U.S.? * - Unfamiliar ** - Somewhat familiar *** - Quite familiar **** - Pretty familiar ***** - Very familiar not at Q10. How familiar are you with the following all somewhat very Laws governing business structures Laws governing business structures Intellectual Property Laws Tax Laws Employment Laws Advertising Laws Q11. Do you think that the previous laws apply to: Only businesses that operate in specific industries Only businesses that meet specific sizes All businesses regardless of the industry and size All businesses regardless of their size and conditions No business needs to comply with "ALL" those laws Q12. How long do you think formalizing a business would take you? About one week About two weeks About one month Between two to three months Between three to six months More than six months

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Q13.

During the early stages of your venture, how likely would you be to hire the following?

140

not likely

very somewhat likely

Lawyer Accountant Payroll Services Q14. How familiar are you with the following acts and regulations on labor laws Minimum Wage and Overtime Pa HIPPA regulations OSHA regulations ADA regulations ADEA act COBRA mandates Title V of the Civil Rights Act Q15. Do you think that for your potential business, any form of Intellectual Property would be: Unnecessary in my line of work or industry Important but won't factor into my business success Highly necessary Q16. Which of the following would you prefer to stay up-to-date with new regulations and changes? News Outlets (TV, Print, online) Newsletters from regulatory agencies and governments (DOL, IRS, etc.) A call from your advisors (accountant, layer, etc.) Independent research on your own time (internet, etc.) I don't care to be up-dated Q17. How likely are you to using technology to stay compliant? (Scale from 0 to 100) Q18. What is your country of origin Open-ended question Q19. How long have you lived in the U.S? All my life Less than a year Between 1 and 3 years Between 3 and 5 years Between 5 and 10 years More than 10 years Q20. Are you an entrepreneur in your country of origin? Yes No Q21. Age < 18

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Q22.

Q23.

Q24.

Q25.

18-29 30-44 45-60 > 60 Gender Male Female Household Income $0-$9,999 $10,000-$24,999 $25,000-$49,999 $50,000-$74,999 $75,000-$99,999 $100,000-$124,999 $125,000-$149,999 $150,000-$174,999 $175,000-$199,999 $200,000+ Prefer not to answer Region New England Middle Atlantic East North Central West North Central South Atlantic East South Central West South Central Mountain Pacific Device Type iOS Phone / Tablet Android Phone / Tablet Other Phone / Tablet Windows Desktop / Laptop MacOS Desktop / Laptop Other

141

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Appendix D2 Explanation of Aspiring Entrepreneurs’ Survey Complication It is relevant to mention that this method encountered a complication while it was in the process of data collection. This being that, due to the lack of expertise of the author using the Survey Monkey platform, the initial stage detected a high rate of dismissal by the respondents; causing the platform to “pause the project” until actions were taken. The problem encountered was not because of the type of questions nor the content of them but because of the design of the questionnaire itself. Again, since the author was not familiar with the platform, the qualification question – which would exempt all of the respondents that do not qualify for the study from having to respond to all the questions – was presented followed by the rest of the questionnaire instead of in a different page. Hence, as it is understandable, the respondents chose to leave the survey as they found the questions to be irrelevant in their cases. The issue was promptly fixed by separating the questions into two different pages – as suggested by the platform’s specialist team –. This action allowed the “logic” button to activate and trigger the redirection of the non-applicable respondents towards the end of the questionnaire, where they were presented only with questions that mined their demographic information. Nevertheless, it is relevant to note, that this complication – although a nuisance – had no impact on the data worthy of analysis for this study.

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Appendix E Appendix E1 Interview Simulation #1 – Emiliana Puyana Emiliana! How are you? So, you and I go way back! We have known each other since we were born, but over the past few years, we have lost a bit of contact. I mean, I know that you work at La Cocina, the famous and fabulous kitchen Incubator from San Francisco, but could you explain a little on what is La Cocina does and what you do there? That is great Emiliana! You sound very excited about your job and proud of the mission of the business. I would be too. Now, would you mind telling me a little more about these entrepreneurs you work with? Let’s imagine I am an entrepreneur seeking for La Cocina’s and Emiliana’s help, what would be the typical steps when working with you guys. So, have you ever felt that most of their fears or the reasons as to why entrepreneurs come to La Cocina have something to do with the barriers that regulations present to their venture? For example, choosing were to cook. Or how to get a permit or license? How to register a business, among other things? Can you tell me a little about your experiences on this issue with them? Then, for you and to your understanding, do you think that the most significant portion of regulatory burden comes from the Federal Government, the State government or from the

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local authorities? May I ask on what you base your answer? Is it by the number of agencies that police from each of the governments? Or is it based on the most common sources of fines and warnings? And how do you feel about that? Do you think it is fair for start-ups that still don’t play in the big leagues? Or, do you think it is an even playing field for all if small businesses want to join the market? Last year the National Small Business Association released the latest survey on the effects of regulations on small business. Among many interesting questions, there is one where respondents were asked to say if they thought that the majority of rules covering their business was necessary or unnecessary and more than 60% of the respondents said “unnecessary.” Do you agree that there are too many regulations in the U.S.? What about in the food industry? Or do you think that they are ALL needed to keep the market stable and protect the population? ….. I see I understand, I agree. Now, based on one of your previous answer I would like to ask, in your personal opinion: which would you say is the hardest part of the regulatory framework to the businesses you incubate? Is it compliance with regulations applicable to any business operation such as registering a company and bookkeeping? Is it from employment law, like wages, and workers’ compensation? Or is it those regulations specific to your industry like the ones from the FDA, the local Health Department, etc.? Could you tell me a little about how you help your entrepreneurs cope with them? Wait, let’s go one by one, I would love to hear all in detail… First, tell me about GENERAL BUSINESS LAW, what are your best recommendations, tips, tactics, etc. to help them comply

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in the least amount of time, with the least monetary costs, and to teach them to survive their day to day operations not just registering their business? What

about

regulations

EMPLOYMENT,

what

are

your

best

recommendations, tips, tactics, etc. to help them comply in the least amount of time, with the least monetary costs, and to teach them to survive their day to day operations? What about those INDUSTRY SPECIFIC REGULATIONS, in your case and that of your entrepreneurs would be following the FDA, the Department of Health, etc. what are your best recommendations, tips, tactics, etc to help them comply in the least amount of time, with the least monetary costs, and to teach them to survive their day to day operations? But let me ask you this. How specifically do you and La Cocina help your entrepreneurs cope with all of these regulations? What tools do you provide them with? Do you guys have a manual? Do you have a check sheet? Something along those lines? I see… And if you don’t mind me asking, what is your success rate? Do you know how many of your entrepreneurs have lasted more than 5 years in the market? What about one year? So, I guess that you are in fact, quite efficient and successful. Congrats on that! Although you are currently working at La Cocina, I know that you are an entrepreneur yourself – you know because you never lose your “entrepreneur title” – so I would love to ask you your personal opinion on this matter: do you feel the current regulatory burden is inhibiting entrepreneurial initiatives in the U.S.? …. What about in the food industry? Do you think that, to your knowledge, your industry is in better “entrepreneurial shape” (if you will) than

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others? Is it about the same? Or do you feel it is suffering more than other industries? I agree/disagree. Last but not least, Emiliana, if you could give any advice to all would be entrepreneurs out there, what would it be?... That’s great! And if I asked you to provide them with five tips to effectively and efficiently manage regulatory compliance, what would they be? You can take your time, no worries…. Wow, does are great ones! I will make sure to include them in my study. I know whoever reads it will find them very helpful. Well, I guess this is all for me for now. Thank you for your time and for sharing your valuable insight with me. It was a pleasure catching up with you and reconnect. Keep up the excellent job you are doing for all of us foodpreneurs out there. Good luck and I will talk to you soon.

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Appendix E2 Interview Simulation #2 – Fedline Ferjuste Hello Professor Ferjuste, please allow me to begin by thank you for agreeing to meet with me today. As I briefly explained in my email, I am currently working on my Capstone project. The working title is “Entrepreneurial Empowerment: Breaking through the U.S Red Tape.” To put you a little in context, the study is about finding potential solutions to entrepreneurs to manage and handle the excessive regulations that they face when starting up and running their small businesses. This is relevant because for the past two decades studies have shown that excessive law is deterring entrepreneurial initiatives and since small businesses represent the largest pool of new job creation, not only economic growth and innovation but also labor security could be in danger. The study focuses on three of the most relevant sources of regulation for entrepreneurs — first, an overview of business law, as a general approach. Second, labor law and all that comes when having employees from wages and benefits, to taxes and safety. Third industry-specific regulations, in this case, and due to my background, I am focusing on the Food industry in particular. So today, I would like to discuss with you a little about your personal opinion on the matter. To ask what you think about this topic, and ask your recommendations to help entrepreneurs overcome this barrier. So let’s get started. I would like to start this interview by acknowledging a little about your background, which is quite impressive may I add. From my research, I found that you worked for the IRS, and since in the U.S. nothing is as certain as “death and taxes,” I thought we could start there.

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As you know, tax-related regulations are one of the scariest for entrepreneurs. They apply to capital gain, to employees’ wages and benefits packages. They affect sources of funding and are present in any and every transaction any person does. Not only at a federal level but state and local as well. In fact, a recent survey by the National Small Business Association that evaluated regulatory burden on small businesses, the IRS was ranked first among thirteen other agencies as “the most difficult to work with when it comes to regulatory burden and compliance assistance.” How do you feel about this finding? Do you agree that complying with the IRS is complicated? Do you think it is more complicated than it needs to be? How would you describe your experience working there? Did you ever see of felt that tax regulations affected small businesses unevenly? As a tax advisor, how would you recommend that would-be entrepreneurs face this? I mean, besides maybe hiring a professional. Because we need to keep in mind that most of the time, they don’t have sufficient funds to do so. Do you have a “best practice” guide or checklist that would benefit them? Do you think it would be good for the IRS to create one? Maybe I am dreaming a little but would you or wouldn’t you agree that perhaps tax regulations could give even more leeway to start-ups than it does now? I mean because obviously depending on your size the number of employees and other variables these tax “brackets” – if you will – change. What do you think? Do you think there may be another solution? Do you agree with studies that say that small businesses are not growing so that they do not need to abide by the next “bracket”? If you were a small business owner, what would you do or how would you handle this issue?

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I would like to ask you from migrant to migrant because as you know, I was born in Venezuela, and through my research, I found you were born in Haiti. How do you feel about regulation and entrepreneurial initiatives? I mean. For example, in Venezuela, there is a lot of entrepreneurial spirits. Not only due to the harsh economic and political situation that the country is currently facing but because regulatory policing is so scarce, entrepreneurs are getting a chance to venture without having to deal with “the red tape” and are finding a right and ethical way to start their businesses. Is it the same in Haiti? I mean, I know that Haiti is doing even worse than Venezuela – and I am sorry about that – but how strict are regulations there? Do you think that maybe a more stringent or softer regulatory frame could change things and drive economic growth in the country? Now, in your role as a law professor for non-law students, how do you feel about the complexity of the regulatory framework? Do you think that it is easy for non-lawyers to understand the rules? Do you believe that they facilitate interpretation? How would you recommend for future entrepreneurs to understand them? What tips can you give them? What do you find is the best resource to find information and help on this issue? Under GENERAL BUSINESS LAW, what would be your best recommendations, tips, tactics, etc. to help entrepreneurs comply in the least amount of time, with the least monetary costs, and to teach them to survive their day to day operations not just registering their business?

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In regards to EMPLOYMENT regulations, what would be your best recommendations, tips, tactics, etc. to help them comply? Again, in the least amount of time, with the least monetary costs, and to teach them to survive their day-to-day operations. What about INDUSTRY SPECIFIC REGULATIONS. Are you familiar with any regulatory frame within a specific industry? Which one? What would be your best recommendations, tips, tactics, etc. to help would be entrepreneurs of that industry comply in the least amount of time, with the least monetary costs, and to teach them to survive their day to day operations? Quick question though, wouldn’t you say that when you are an entrepreneur and are trying to launch a business or keep your small business afloat, you don’t have enough time to handle these issues? Then, don’t you think that if entrepreneurs focus their attention on compliance instead of the business, then the probability of failure rises and hence, economic growth and labor security would be in danger? Then what is your recommendation? How can they manage both? Again, besides hiring a professional. Professor Ferjuste, in 2011, you published a paper on how the 11th Circuit of Florida fails to protect migrant workers. There you state that there need to be more regulations for farmers and producers to protect the migrant workers. You say that despite the government’s best intentions to create rules, there are loopholes left for these farmers and producers to exploit workers. Furthermore, you make a call to action to develop MORE REGULATIONS. Hence, I wanted to ask you, have you considered the costs that regulations have on small businesses, or in this case, these farms and producers? I mean, do you personally agree that more laws are the

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solution to bad management or bad people? Because as I see it if the regulations strangle businesses, then these workers won’t have a job in the first place. Don’t get me wrong I am all in about fair workers compensation, no exploitation and beyond. However, I do think that sometimes regulations can create a bigger problem than that the one they are trying to solve. And what would you recommend as the best way to diminish these associated costs? What can they do? Last but Professor Ferjuste I would like to ask you if you could give any advice to all would be entrepreneurs out there, what would it be?... That’s great! And if I asked you to provide them with five tips to effectively and efficiently manage regulatory compliance, what would they be? You can take your time, no worries. Wow, does are great ones! I will make sure to include them in my study. I know whoever reads it will find them very helpful. Well, I guess this is all for me for now. Thank you again for your time and for sharing your valuable insight with me. It was a pleasure seeing you again, and I genuinely hope that we cross paths again in the future. Take good care.

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Appendix F Appendix F1 Interview #1 Transcript - Emiliana Puyana Interviewer: A=Andrea Sosa Interviewee #1: E= Emiliana Puyana Brief: The following transcript is as a verbatim replica of the recordings obtained during the conversation maintained between the Interviewer, Andrea Sosa, and the Interviewee Emiliana Puyana the evening of April 30, 2019, at 8:25 pm (EDT). The interview was conducted via telephone since the interviewee was San Francisco and the Interviewer in Miami, and was recorded using the voice note app from an iPad and transcribed by the author using Microsoft Word. The total duration of the recording is thirty-six minutes and fifty-two seconds (0:36:52).

– Beginning of the Interview – A:

Hi Emiliana, You and I go way back and before we start I will like you to tell you that I am recording this just for the record purposes and I wanted to get your approval.

Yes

OK, thank you. So, we have known each other for a long time, since we were born, but over the past few weeks, we have lost a bit of contact. Over the past few years – sorry. I mean, I know that you are working at LA COCINA. The famous and fabulous kitchen incubator in San Francisco, but can you tell me a little bit about what it is and is that La Cocina does and what is that you do?

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Sure. La Cocina is a nonprofit kitchen incubator located in the heart of The Mission District in San Francisco. The Mission District is, historically, a Latino neighborhood, primarily a Mexican neighborhood. La Cocina was founded as a result of what was perceived to be a need within the Mission District to support – at that time, primarily women – in formalizing food businesses. Back in the 90s, early 90s, there were lots of different nonprofit organizations doing economic development work. They started to find that they all were doing work with a host of majority women, majority Latino women, and they were supporting them in the process of writing business plans of their business. And, when they were checking with these women 6 to 8 months after they have gone through these programs successfully, they kept finding that the vast majority of these women were not formalizing their businesses that they were writing business plans for. When asked why? The majority of them cited lack of accesses to affordable commercial kitchen space as the biggest barrier to entry.

Totally.

That’s really what brought about the idea of La Cocina. La Cocina was born nearly fifteen years ago now. It was simply a community kitchen. So, just a space to have people to come and produce the food they have been producing out of the kitchens in their homes, and be able to formalize their business, and transition from the informal economy. Which is a really thriving and vibrant, and in my opinion a good economy, that has existed – and I hope will continue to exist – here in San Francisco for a very, very long time. It was for them to make their transition into a more formal economy. When we started, we were simply a community kitchen. So, we didn’t offer any of the supporting services that we offer today, and very quickly realized that if we were really

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going to be a successful economic development agency – which is what we are – we needed to make sure that we were supporting the entrepreneurs and leveling the playing field even more. So, it was not just good enough to provide them with a kitchen in which to produce their food legally, if they didn’t then she’ll have the tools to sell this food, that now is costing them more to produce because they had to legitimize the business. A:

Of course. When you talk about La Cocina, and how it evolved… How long have you been there? Sorry.

Almost 15 years.

Oh, wow! So, you have been there since the get-go. That is great.

Oh, I'm sorry. How long have I been here?

Yeah.

Oh, no. I have been at La Cocina as a staff member for four years, and I have been in La Cocina in some capacity or another –I ran my business out of La Cocina – so, I have been involved, heavily involved, with the organization since 2012.

Ok, great! Yeah, because I know you had pickling business. Right?

Correct. Yes

That’s great. Ok, so now, could you tell me a little bit about what specifically it is that you do there?

Sure. So, I am the program manager of La Cocina. So I run basically our incubator program.

From top to bottom. So, for us, that starts with recruitment, so we need to go out in the streets of San Francisco and nearby cities and actually find these informal entrepreneurs and tell them about what La Cocina is. So, that’s where my job really begins. We do this

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by going to churches. We do this by actually checking out Facebook market place, which is really a great, thriving, and formal economy. By walking the streets. By going to partner organizations that do similar, but not exactly the work that we do, and talk about what we do. And then, once we’ve identified the entrepreneurs, I work with them to get them ready to enter the program. Once they are accepted into the program, part of my role is to deliver all the curriculum. So, we have a curriculum that we’ve put together, and over the years, we started to tweak it, so I just did the third reversion to the curriculum. So currently we have a brand new curriculum, the one we are teaching now. I’ll deliver all that, all those classes… A:

Oh, wow! So, it is almost like La Cocina has gone from a commercial kitchen to –like – a full culinary school, almost. Culinary business school!

Yeah, kind of. It might be. The only thing that we don’t teach is cooking. We support entrepreneurs in thinking how to upscale their recipes, secure or procure their ingredients, and we teach them how to work with commercial equipment, but we don’t actually teach cooking. Is the only thing…

So you focus more on the business end of the entrepreneurial initiatives – to call it somehow.

Correct. Yes, so we work with the entrepreneurs… So, the four subjects that we teach are marketing, product, operations, and finances. And so – you know – during marketing, we are really interested in getting the entrepreneur to articulate a really cohesive story about who they are and their brand. We have come to understand over the years that really a story is what is going to sell the product…

Yes, of course.

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…and that people – at least in the bay area – are really ethically connected to how they spend their dollar, or at least a lot of people are. So, we really support the entrepreneurs in telling the story and so...

Well, yeah, and because also the millennials are more keen on that kind of purchasing methods than previous generations were. Like the millennials are more interested in – you know – knowing the story, identifying with the product, feeling that they are doing good by buying that product. You know? That what I believe, and I totally agree with your thought.

Yeah. Exactly. So, we also have a huge network of volunteers. Up to this week, La Cocina had eleven staff members. Which is nothing, when you take into account the number of businesses that we incubate and the tons of resources that we provide them with. Which is just to say that, we don’t actually provide every resource. Some of the resources we just make a connection to and then monitor that relationship to ensure that the resource is being delivered in the way we think is best. So, what that means is, like for marketing we have a vast network of graphic design volunteers who actually come to La Cocina. The entrepreneurs will each prepare for them a creative brief that we support them to put it together, and actually bring samples of the food they plan to sale in the future. And, these graphic designer volunteers take that, listen to these presentations, eat that food, and then go out on their own and create a brand Identity proposal so when they come back with three versions of a logo; the entrepreneurs select the one that they like, and then there is three series of revisions. And, by the time three months have gone by, the entrepreneurs have a full-on logo, a product guide, business cards, etc., etc.

That’s awesome! I think that I should drop-by La Cocina and rely on you guys to do half of my stuff (laughter).

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Nice (laughter).

Emiliana, but let me put you in a little bit of context as to why I am calling you today. Well, I ran my idea by you briefly the last time we spoke. As you know, I am working on my capstone project. It is called “Breaking Through Entrepreneurial Red Tape,” and what I am trying to study is the effect that the regulatory burden has on entrepreneurial initiatives. So, I wanted to contact you with you because you have been in contact with so many entrepreneurs and you have been on both ends of the table. I mean, once you were the entrepreneur, and now you are helping these entrepreneurs. And I wanted to ask you, how do you feel that these young minds or young businesses feel – if I may repeat the word – about having so many regulatory compliances, specifically with the food industry, which is very specific and you need to be very careful.

Yeah. One word: CONFUSED

(laughter) Ok. That’s perfect. That sums it up.

Yeah. I think people generally feel very, very confused. I’ll put it to you this way. I have been working in food, on both sides of the table, for the last … in the same country, for the last 17 years. Definitely for the last 12 years with high involvement as to the procurement of permits and management positions in running kitchens. I am still confused. I have a direct line of communication with people in every department, or in every facet of the Department of Public Health. I have direct contact with the Office of Small Business – which is an office put together by the city and county of San Francisco. I have every tool that no other human being has at my disposal to figure it all out, and it is still confusing for me. It does unjust service to the industry. I mean you can see, because the culinary industry in the Bay Area is still a thriving industry, it is not a huge or not an impossible task, but it is definitely…

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Burdensome.

Yeah. It is a burdensome task, and a big hurdle to jump through, especially when you consider my experience in particular, as it relates to entrepreneurial into the food sector. And, when you look entrepreneurs in the food sector, and by large who are starting restaurants in a city like San Francisco, it is mostly immigrants. And so there is a language barrier, there is usually technology barrier. There no computer literacy or fluency. And when you…

Well and may even – you know – the status barrier. Maybe they are not even legally in the states, so there is another layer of problems and regulatory inhibitions.

Yeah, and so all these things come to stack one on top of the other and really create a climate which is – it really disincentivize the formalization of businesses that really define cities like San Francisco. Right? Like, what is San Francisco without The Mission? – A thriving Latino neighborhood –, What is San Francisco without China Town? Without Little Saigon? Without Japan Town?

Yeah.

It ceases to exist as the culinary destination that it is.

Exactly, exactly. Oh, I love that… I do have another question. Do you feel like,… how many of these entrepreneurs that come to La Cocina leave because they find themselves, you know…. Do you guys have these stats? First of all… But do you feel that some of the entrepreneurs that abandon their entrepreneurial initiatives have something to do with the costs or the difficulty of regulations? Of compliance? More so?

Umm…

Or would you say it would be more towards or caused by different reasons?

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I would say that at La Cocina, we see few entrepreneurs that abandon the pursuit of their businesses dream because of the logistical difficulties around permitting. Part of the reason for that is because they come to La Cocina for that support, so they don’t have to do that.

That was going to be my next question. Yeah. Do you think that – in a good sense (way) – they are taking advantage of all your contacts, and all of your knowledge, and all your network to handle that for them?

Oh, no question about it. I mean, what I hear, very, very often from the entrepreneurs as we are going through the permitting process witch literally for me is: I am going to grab my computer. I am going to pull out the permit that they need to fill out, because I know what kind of business requires which type of permit and actually fill it out for them. Usually, the first time you know, and then I just say: this is what this means, this is what that means, what is this, and so on and so forth. And, so what I hear in those moments or in those conversations, it is a massive “thank you.” And, “I don’t know what I would do.” “I couldn’t have figured this out without you.” And the city of San Francisco – credit where credit is due – has really done a huge job in trying to streamline that process a little bit. And so now the Office of Small Business is a big online portal, where they have, kind of, of streamlined the steps and processes for acquiring all these permits. I would say they came to La Cocina and met with us here – a number of times – in order to get our support in drafting these documents as they related to food-related permits. So, even the city, city officials that practice in San Francisco have needed to ask questions about how the permitting process works.

However, I do want to ask you, though. Now that you mention that the city of San Francisco has done into cutting that regulatory red tape. Would you feel that your entrepreneurs are

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more intimidated or your work is more towards local regulations? Or state regulations? Or even government (federal) regulations? Which one for you would be the most – not only difficult to comply with or more complex to understand but which would be the one that represents the most work? E:

I think it is hard to answer that question like that. I think you know, different businesses are going to trigger different kinds of regulations, and there might be one business that triggers them all. Right? So, The most difficult businesses for us to support in incubating are businesses who want to sell a packaged meat product to consumers. That requires USDA certification, and then you are breaking in… is like the upper escalade of the permitting nightmare.

Ok.

So, but beyond that – you know – if you want to be – you know - if you need to form a corporation because an LLC is not the best entity structure for you, then there is a host of things you need to learn about how to run a corporation. How to report things, and when.

Well yeah, but that’s more like at a government level. Right? I don’t know about the specifics in California or San Francisco for that matter. But, pretty much is like a standard business law all around. Right?

Umm. Kind of. The records that you need to keep on the back end are different.

Ok.

Umm. So you know, if you are a sole proprietorship – you know - for yourself as a business owner you want to run as much as a separate business from your person as you can, but there is very little legality around how you go and deal with that. You could, it’s not a good practice, but you wouldn’t get in any trouble if you used your personal account to pay for

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your business. Umm. When you have an LLC, suddenly you enter a question of how do you need to do things to really keep your business completely separate from yourself. If you have a corporation, there are different things you need to show, about different meetings that you’ve had throughout the year, how shares are divided, and Blah, blah, blah. It is not necessarily a ton of work, but you are adding levels of complexity in any business. You know? It doesn’t matter what it is that you do; you have to decide what entity formation you want to be. And beyond that, you need to know what kind of permit you need at a county level for running any business, and beyond that, you need to know what kind of permit you need for the department of public health. So, before you are done with the initial permitting process, you have formed an entity, which is either a sole proprietorship, which is kind of the easiest entity to form, or an LLC, or a corporation. Which then, you are now dealing differently, or reporting differently with the IRS, and going through the process of registering yourself there. Then you are going to the county – wherever it is – to get you a business license, to just operate a business there. They are going to ask you what business you run. But they are not going to ask you any detail on how to go about running that business. A:

Of course…

They want to know how many employees you have. What you estimate your annual revenue to be. And so now you’ve dealt with the IRS – to form your entity. Then you’ve dealt with the county, to tell them you are running a business under whatever entity you form within their jurisdiction. And then, you go to the third tier, which is now I need to go to the Department of Public Health within the county that I am going to operate in. Right? And

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so, if you want to run a business of going to the farmer's markets, you might have a relationship with five different counties. Right? For example, in the Bay Area, you can have a farmers market in Alameda County. You can have a farmers market in Berkley – that a different county – or you can have a farmers market in the San Francisco, and maybe one in San Jose. Suddenly, you are getting the same license – for all sense and purposes - in four different counties, which all have different permits and slightly different rules. A:

Wow

So, You are running the same business in four neighboring counties.

That is crazy. I mean, for me it is like a spider’s web. It is so much work. I don’t know, I mean it is obviously doable. But it is very complicated, at least for me. And you explained it perfectly because you have been in the business for such a long time. However, did you know that last year the National Small Business Association released a survey on the effects of regulations on small businesses, and among a lot of interesting findings, the survey said 60% percent of the respondents thought that regulations were unnecessary? How do you personally feel about it? Do you feel that every, single thing that you have to comply with is totally worth it? Do you feel they are contradicting sometimes? Like how do you personally feel about it?

I mean, I think regulation is good. I think that we should be regulated and I am speaking always with an eye towards food and the food industry, which is really what I know. I think regulations are good and keen. I think that the difficulties come when there is a variance in the law across counties and state lines that are… Just become very difficult to comply with. And I think what happens is, in most cities, all these departments function as separate entities within the same county.

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Exactly…

And so they all.. it is kind of like one hand washes the other for all of these departments, but they don’t really talk to each other. So, when you call San Francisco city hall, to ask a question about a business license, that business license might be directly tied to your permit to operate – from the Department of Public Health – but the person answering the phone at the city can’t tell you anything about the Department of Public Health permit. So you… For instance, something that I see all the time with our entrepreneurs here at La Cocina is they need to put down an address for a place of business. Right? And most of our entrepreneurs don’t have a full on… Like, they are not selling food to a direct customer out of La Cocina. La Cocina is just a commercial kitchen.

Yes.

So they often make the mistake of putting their home addresses as their business address because they want all their correspondence to go to their home. Which makes a lot of sense, right?

Yes.

But then, when they go to the Department of Public Health to get their permits to operate a food business, they put the address of La Cocina because that is the commercial kitchen where they are going to be producing.

That is what is authorized.

Exactly! They are going to be producing the food to sell at a hundred other places. But they are going to be producing it out of La Cocina. And suddenly when they submit that permit alongside their previously enquired business license from the city and county of San Francisco, the Department of Public Health will reject their permit.

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OH, wow!

Why? Because the address on the business license needs to match, the address on their catering permit application.

Wow, that is crazy! So what is the solution? Sorry, I am intrigued (laughter).

The solution is that somebody in the city, somebody in the office that gives out the business license registrations in the city and county of San Francisco needs to know, to tell the entrepreneurs that the address on your business license needs to be your commerce kitchen facility address.

I see…

But the thing is that the law is not the same across the board. Like if I operate a dog-walking business in San Francisco, I can put my home address as the address for the business license and then operate my dog-walking business – which is a totally different business – but not dissimilar to catering, that you go to where the client is.

Yeah.

But, that suffices for a dog-walking permit. But it does not suffice for a catering permit. And nobody at the county of San Francisco, where you are submitting your permit, tells you that at the moment. Nobody says, “wait a minute, you have to make sure that your address – that you put – is not your home but is your commissary kitchen.”

Exactly

And so, basically what that means, - It is not a huge thing, but it is two trips to the city and county of San Francisco.

Of course, and it is adding time, and it is adding costs making it a little bit more painful the process.

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Exactly

At the end of the day what it shows is that therefore, the entrepreneurs need to invest lots of time researching prior to doing anything.

Exactly.

If I could ask you, what would be your number one recommendation for would be entrepreneurs? Not only in the food industry, but in general, because you also had the dogwalking business, what would be your recommendation in the face of compliance and lowering these costs?

RESEARCH!

Really it comes down to, you know, being a business owner and operating a business is all about getting out of the mindset of “I like to do this.” I usually use this example: it is the difference between saying, “I like Thai food” and “my business is Thai food.” If I like Thai food, I am going to go home and make myself the perfect sweet and sour sauce; and I’m going to spend two hours making sure it has the perfect amount of acid, and sweet, and heat, and so on and so forth, until it is perfectly balanced.

Yeah.

If my BUSINESS is making Thai food – I know it has to be perfectly balanced – but that if I spend an hour getting that source to the right place, then I’ve lost my business already. Right?

Yeah.

So, what that means is that you have to do a ton of research before you get in the kitchen to make that the sweet and sour sauce. And, that is what I tell my entrepreneurs. If you just fall in love with the romantic idea of running a business that is your dream is going to be,

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you will lose sight of the ball. You need to have a plan. You need to have a business plan and forget about this fancy idea of what a business plan needs to like. You can pay somebody 20,000 dollars to write a business plan for you, and that business plan is going to do you no good. You might as well use it for kindling and light it on fire. Because if you don’t know what lives in it, you are not going to adhere to it. A:

Right.

But you can write a 5-page business plan that talks about your marketing strategy. That talks about the product you are going to sell. That talks about your operations, the permits that you need, and how many days you plan to work and how many staff you think you need. And, that takes into account the viability, the financial viability of that business. And if you can get to those four points to speak to each other, you can arrive at a conclusion to either give it a shot or modify your concept, so that you feel confident enough that you should give it a shot. And so that for me means that if you want to open a catering business, or if you want to open a pickling business, you need to go down to the Department of Public Health and sit in front of somebody and say “I want to do this,” “how do I do this?” And then they are going to give you an answer. And it is not going to be sufficient. I know it is not going to be sufficient. It might even be wrong, but you are going to chase down that lead and get another answer and get another answer; until you finally get to understand the process a little bit, and then you are going to decide whether or not you think it is something that you can do or handle.

Yeah.

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That is easier said than done when you have a file handle of the English language and financial resources to get you there…

Or the time, you know? Because most of the entrepreneurs don’t leave their nine to five job for their entrepreneurial initiative until they are off the ground. So if before they need to invest all of this time doing that – sometimes you just don’t have the time to do - as you said – the appropriate amount of research.

Yup.

Oh, God. This is very, very intriguing.

(laughter)

I just wanted to ask you one last question. It is a little bit more related to employees. OK? Most entrepreneurs don’t start with employees. However, it is a part of their growing process. Right? Every entrepreneur wishes to have employees soon that can help them manage all of this burden and that they can focus on the business end while they have you know as I say little minions that help you on the back right? So, I was wondering what are your best recommendations once you entrepreneurs come and say ok, I am ready to take the next step and start hiring people.

Yeah. I think you are going to hate my answer. It is going to be the same answer as I gave you before. RESEARCH!

(Both laugh) A:

OK! Actually, I don’t hate it. I love it! Because what you are saying… I mean if you keep repeating the same things that’s because you truly believe that that is what they should do. And as my research has gone by I have also found that that is the most important thing to do. So we are on the same line. I don’t hate your answer at all.

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Great! But yeah, that’s it. It's research. Employment law is a very difficult thing. Again varies from state to state. From county to county in terms of minimum wage and from year to year. So it’s a, it’s a…

and by the size of business to the size of other business. Like it is not the same to have five employees than fifteen than twenty-five.

Exactly! Yeah! So it is a difficult thing to get a handle on. Umm, it is not an impossible thing to get a handle on, but it is a difficult thing. And I think – you know… What I tend to say to my folks is first and foremost brush off on the key bare necessities of employees. How to bring them on? What are the forms you need to collect? Or what are the forms you need to have them fill out? What is the paperwork you need to collect? What are the best practices about how to store those? - For safekeeping – what are your responsibilities to your employees? And what are their responsibilities to you? And then beyond that, the only other thing that I say is that if you are not ready to have a payroll service, then you are not ready to have a paid employee. It's impossible…

Love that!

Well not impossible, I guess, but unless you are a CPA it should be close to impossible to write somebody a proper paycheck and a payroll processing company can do that for you, and ensure that you are not getting yourself into trouble. Thus by under or overpaying your employees, or underpaying the IRS when you report the taxes of your employees.

Yeah, I agree. And now that you bring that up – because what you are saying is to hire someone to help you; how often would you say you guys recommend for your entrepreneurs to hire an attorney to help them - you know – make sure that they are in line?

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So what we do for the entrepreneurs is that we actually find pro-bono resources, so we have… just in a couple of weeks, we are going to have an HR workshop, in which an attorney comes and really teaches our entrepreneurs what they need to do to properly onboard an employee.

Yeah.

So we don’t cover absolutely every last thing, but we concentrate on what do you need when you onboard an employee. So how do you give them an offer letter, how do you make sure they sign that letter so that it states their hourly wage, and if they are at-will employees, which means that… see here come the misconceptions. If you have an at-will employee, you can fire them at any point for no cause. And then, so we cover that on our workshops, and beyond that, we cover the legalities about clocking-in and clocking-out and tracking such a thing. You know we make sure that we teach our entrepreneurs that any shift over four hours requires a 30-minute unpaid meal break and any four-hour shift requires a 10minute paid meal break. We talk to them about overtime, and how you have to pay timeand-a-half for every hour worked over eight hours. And what that overtime transitions into when you have an employee work for more than twelve consecutive hours or seven consecutive days…

So, does all of this information come with – like – the curriculum you were talking about in the beginning, or is it just “on the side” advice?

we give all this information on the curriculum.

Ok. Cool, cool, cool. Ok, so it is part of that training process that these entrepreneurs go through.

Exactly

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Perfect.

And umm, outside of that training process – because we realize that it is sort of information overload – right? We give this information usually months before they hire employees. So as much as they are in class and paying attention and running with it – you know if you hear how fractions work you don’t necessarily remember it (confused line of thought) – you know it goes in one ear and out the other.

Yeah.

So what we do is that three times throughout the year, or about that, we host these workshops in which we have an attorney come in. And we would say to the entrepreneurs: “Hey, so and so, you are about to bring on employees. You definitely need to come to this workshop now; because all of those things we talked about five months ago – that you barely remember – we have to cover them again, and then in two weeks from now you are going to hire somebody and know exactly what to do.”

Perfect. That sounds great! Like literally I want to come by and be a part of La Cocina!

(Both laugh) A:

You can help me with my Guacalitos.

Ok! I like it!

Well, I guess we’ve covered everything Emiliana. You pretty much nailed all the questions that I had for you, so I guess I’ll let you go now. But not before I thank you for taking this time and really putting everything in context for me, and… I learned so much from you that I really appreciate it. Thank you.

Thank you, my pleasure.

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I hope we can catch up soon again, and that I get a chance to come by, visit you in San Francisco, and keep up the good work! I love it!

Thank you!

Talk to you soon.

Both: Bye, bye.

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Appendix F2 Interview #2 Transcript – Fedeline Ferjuste Interviewer: A=Andrea Sosa Interviewee #2: F= Fedline Ferjuste Brief: The following transcript is as a verbatim replica of the recordings obtained during the conversation maintained between the Interviewer, Andrea Sosa, and the Interviewee Fedline Ferjuste the morning of May 9, 2019, at 11:30 am (EDT). The interview was conducted via telephone since the both, the Interviewee and the Interviewer, were at work. The conversation was recorded using the voice note app from an iPhone and transcribed by the author using Microsoft Word. The total duration of the recording is twenty-four minutes and thirty-four seconds (0:24:34).

–Beginning of the Interview – A:

Hold on, let me put on speaker. OK. Are you there.

I am here.

Ok, Cool. So, to put you a little in context. First of all, I would like to tell you that I am recording this conversation just for the purpose of transcript for my research ok. – Hold on I am looking for you, oh here it is ). So, I am recording this, and I would like to have your consent.

Sure.

Great. To start, I would like to thank you for your time. As I briefly explained to you over the email. I am working on my thesis, ok. And the working title is “Entrepreneurial Empowerment: Breaking through the U.S Red Tape.” To put you a little in context, the study is about finding potential solutions to entrepreneurs to manage and handle the

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excessive regulations that they face when starting up and running their small businesses. This is relevant for me because for the past two years I have been trying to get some businesses going, and every time I do this I find that the regulatory frame is being like a burden to me. Ok. So I did a lot of research on you, and I found that you are… you have worked for the IRS, and since in the United States there is nothing more certain than death and taxes, I would like to start with you talking a little bit about taxes regulations. F:

OK.

So, as you know, tax-related regulations are one of the scariest for entrepreneurs. They apply to capital gain, to employee wages, and benefits packages. They affect sources of funding, and they are present in every transaction that a person does. Not only at a federal level but at a state and local as well. In fact, a recent study from the National Small Business Association revealed that the IRS was ranked first amongst thirteen other agencies as the most difficult to work with when it comes to regulation and compliance. So, since you worked for them, I wanted to hear, like how do you feel about this finding? Do you agree that complying with the IRS is complicated?

Compliance with the IRS as far as the tax laws go?

Yes, like trying to keep up to date with all the little changes. You know the federal code has increased exponentially over the past decades. Every year new regulations come out. Old regulations change. Like dealing with all of this, how do you feel that entrepreneurs find the IRS as the scariest of all agencies and that they are very aware that they have to comply with it, but they just don’t find the way to do so.

Mmm. Difficulty in compliance. Well, it depends. A lot of people use a tax professional to handle their tax matters. So compliance to me might be slightly easier for those individuals

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because their only requirement – in that sense - would be providing the factual information needed in order for their profession to reach the requisite insert for them, I don’t know, I don’t know if that makes sense. A:

Yeah, yeah, it does.

So if you went to a professional, as an individual or business owner, you do not have a lot to worry about as far as “do I have to keep up with the latest laws and changes and what the internal revenue service indicates is” – of course, they decide. Now, if you do it yourself, of course, it can be burdensome because tax law is not an easy subject area because there are a lot of old laws that are still applicable in addition to the new laws. And in fact a lot of the old laws not just die, they are modified as time goes.

Yeah

Yeah so it can be very burdensome trying to keep up, trying to run a business, trying to keep up with all the changes… because in business you don’t just have to worry about taxation…

Correct

You have to worry about running your business.

Correct

So you have so many hats you have to wear as an entrepreneur - I think that the best thing always as a business owner is not to do it yourself but to get the help of other professionals that specialize in that subject matter. For that reason.

Well, that is like, not obvious. I think that it is a super valid recommendation. However, I think it is relevant also to keep in mind that most of the time these entrepreneurs don’t have money or, yeah the resources to find this additional help – so do you have recommendations

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as to other ways that they deal?. Because I know the IRS has some free advisors. However, I don’t know how much, I mean I am not familiar, and maybe you are about, how much you can rely on them? And what other tools are available for entrepreneurs that they could seek?. F:

Ok. So as far as tax goes, there are services out there. Several nonprofits and the IRS has this thing called the VITA*. V-I... Voluntary Income Tax… I forget what the A stands for, I apologize.

No worries. I’ll research it. No worries.

Yes! Those sorts of programs are available for individuals if they meet a certain income bracket. So, let's say for example if the income bracket threshold for this year is 66,000 dollars or 56,000 as the case may be because it changes every year for inflation then a lot of services are available to a lot of taxpayers if they fall within those income brackets. Now, I mean the government sets these limits – I have no ideas what goes into the considerations as to why we set these income limits for, who is eligible for these types of programs or not. It is usually based on you know poverty line, staff upon their agencies so that they can make their numbers, but the idea is that I think tax maintenance is like a car. Maintenance is less expensive than repair.

Correct.

So, a lot of people will not seek the help of a professional until something is extremely wrong.

Yeah

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And in the long run you could have probably saved a lot of time and money by seeking the help of a professional, to begin with, because for me I don’t find tax professionals to be that expensive on less you are in trouble.

Yes. Exactly

So I think it is a very affordable process. If you have enough money to run your business, then that is a cost of doing business. So when you do your business plan, and you do your assets minus liabilities equals owners’ equity, that is a liability.

Yes

Just like leasing the car, paying the employees, paying the insurance, that is a liability because it is an essential, an integral part of business getting the tax, the accounting part correct.

Yes. Love that answer. That is exactly what I am trying to prove. I am definitely including them in the recommendations. Love that answer, thank you. I also wanted to… Doing a little bit of research on your background, I found that you are from Haiti, and as you know, I am also an immigrant from Venezuela. I know you moved here when you were eleven, so probably you are not as aware of the regulations over there, but I wanted to get your insight… Like for example, in Venezuela, there is a lot of entrepreneurial initiatives because there is no policing of the regulations. I mean regulations exist, but they are not being applied or supervised. So there is a huge amount of entrepreneurship initiatives in Venezuela, and that has helped the society cope with the tough situation that the country is going through, so I was wondering – since Haiti is doing really bad as well, and I am sorry for that - do you think that less regulations improve in a way for entrepreneurial initiatives. (confused thoughts) To what side would you side? Do

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you think that more regulations are better or less regulation is better? I think that is more the question. F:

More regulation. Wait, for Haiti or in general?

In general. I just wanted to use Venezuela and Haiti as potential examples of how the lack of regulations could you know work.

Ok. So from personal experience…. I go to Haiti a lot, of course, I remember a lot about Haiti because I used to go to school in Haiti. In Latin America as a general rule of thumb from personal experience, it is not easy to penetrate the business market unless you are- you know – some certain name, from some certain houses. I think it is very old school in that’s sense. I think it is a very unique thing that we all share being part of Latin America. With that being said, I think that the people who are in charge or have been put in charge can make your life very easy or very difficult because there are rules, there are laws in all the countries. Because as we know, these countries do not just exist today, they have been around for hundreds of years…

Of course,

And they were conquered by different types of systems. The question is, who are the laws enforcement again? I don’t know. What if the button is triggered? I have no idea. I have several friends that live in Haiti and do business in Haiti, and they seem to be doing OK, and I have never gone and ask questions as far as the difficulties as far as the red tape and the paperwork. Now, do I think that we need more regulation or less regulations? Well, that depends because sometimes when you leave things to people to do them themselves, we don’t do it themselves because not everybody has the initiative to distinct their selves.

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Exactly.

So, sometimes, we need to be told what to do. And you need to be told what to do not in our own way but in a uniform way. So I think that law provides uniformity. So wherever you are. Let's say you need to file an income tax return that is a general rule that applies to everybody across the board. It doesn't matter who you are, what you name is, where you are from, its just a general rule across the board. And when it comes to enforcement, it is the same way. Because I worked in tax enforcement before income tax, I got suffocated after a while because it really didn’t matter to me who you were I was just looking at the issue. So when we have too many laws, of course, it is a bad thing because it becomes burdensome and if you don’t feel free that you can do things. At the same time when you have the right laws in place, it is also problematic because everything is subject to interpretation by each person, and we know each person has its own way of interpreting things and that can be chaotic.

Yeah

I mean, we do need laws to prevent chaos. I just don’t know how much we need.

But then I know you are… I mean I read your paper, the one you published in 2011 about how the eleventh circuit of Florida needed to create more regulations to protect the farmers and so from there you can see that your personal stand is pro-regulations ok because … And yes I agree with what you say that sometimes regulations provide that uniformity and makes people that not necessarily are willing to be the bigger person or act in a correct way, provides a frame for them to stay within. However, I still feel that these laws, and I don’t know if you agree on the same, are being treated more as a remedy than a preventive mechanism. You know what I mean? Like because we found out that in the case of your

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paper, we found that farmers are finding a loop in the law and therefore are exploiting these farmers then we need to create a new regulation. An then they don’t really take care of how everybody else is already having all of these costs associated with complying to those regulations, and these new regulations might mean having to fire more employees. You know what I mean? F:

I know what you mean. Ok so, of course, I am not going to say that am not pro law because that's the entire purpose of my degree, but when we talk about the paper that I wrote… ok, there is a law to protect migrants and seasonal workers. The issue is that laws are subject to interpretations as we know, and I interpret it one way, you interpret it one way, the only way that matters is how the court interprets it. No matter how you and I feel about it. Right?

Yeah

So there is a law that is meant to protect migrant workers. However, I don’t feel that the law is sufficient. I don’t feel that it is broken just that it is not sufficient.

Ok.

Because of the way is being interpreted by the court. So my solution was instead of looking after this law to protect these migrant workers, let the law be, but require that certain people have insurance as far as bonding. Being bonded.

Yeah. Like the construction…

Yes. You know so that when someone gets into a crash in these fields, they at least have recourse as far as a monetary recourse.

Sometimes, the law is interpreted, but you need something else to bring it to life. I don’t know if that makes sense, for the lack of a better word.

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Yeah. Ok if I asked you my next question, then we will be in a whole different issue because I was going to say that if it is about interpreting the law, then maybe the problem is starting at business schools. Because if everybody is interpreting it in a different way and you are seeking advice from lawyers, then the problem is that they are not being trained to interpret it the way it is meant to be. Maybe? I don’t know.

That’s a very good question. That the thing… I think that having different opinions is great because it drives up conversation; it drives up change. You know if we all had the same thought process, if we all think the same way we would be static as far as movement so it is good that we have different things and forces that drive diversity, drive change, innovation, I think that that’s good. So, as far as interpreting law goes, of course, there is the plain language of the law. Sometimes the law is written – thought it is in plain English, it doesn’t sound very plain – because it's like, what did they mean by that?

Yeah. I was going…

So, no matter how you feel about it. And I know you see this a lot because of your tax law… So, sometimes we are at the mercy of the court, and we don’t know what direction to go because they are the only ones in charge of that duty of interpreting the law as written by the legislative.

Now that you speak about how you interpret and how complicated laws tend to be written, the language is not plain, is not straight. Do you feel - I mean you have worked for the DOJ and you have worked for the IRS, and you teach the non-law student. What would be your opinion or what would be your recommendations for these entrepreneurs that are starting to read about all of these regulations that they need to understand and literally make them part of their processes to ease understanding the law if that makes sense.

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That’s a very good point. So I understand your question. So the question is how do we make non-attorneys understand the law better.

Exactly! (Laughter).

So it depends on the law because there are so many laws. For example, if we get to talk about tax law, for example, there are so many code sections, and it goes on and on, and the tax law is huge. None, even people who practice tax law, we do not know all the answers in the back of our heads. We know the general things, we have to research and look, and a lot of times what we do is that we look at case laws to interpret what that they mean by this because the case law will tell you what’s justified because that’s what judges have to do.

Yeah

A lot. Speaking of a subject matter, there are a lot of things written about a lot of things. You can have a lot of… a lot of… law review articles, you can have case laws on a certain area of the law, sometimes there are publications as far as periodicals and newspaper articles, or editorial written about a subject matter. I think that’s a good place to go to understand the gist. Not become an expert but go, “OK, where am I?” what do they mean by this? I just want to get the big picture. I think those are a really good place to get the big picture.

Yeah. Ok. Ok. Ok. But again, that would take a lot of your time, and that increases the costs associated with compliance. You know?

It is. Is very time-consuming. Or somebody can take a class, maybe. And the classes don’t have to be for you to become an expert in the area. You just want to understand broadly what is meant by that. And, you know, with the online courses these days you don’t have to leave your home you can take them anywhere, and sometimes they can recommend a

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book for you to read and that book can just sum up everything down to, you know plain English. A:

Right. Then maybe you and I can become associates. I’ll bring my entrepreneurs, and you can teach them about law… (laughter).

Ha! That would be fun!

Yeah. Definitely. I would love to work with you… So, to wrap it up just to not take up any more of your time. If I asked you to give your experienced advice to… just give me your top advice for entrepreneurs in terms of compliance, and what would be the top three resources that you think they need to have in their back pocket at all times?

Ok. That’s a very good question. I tell that to my students; I tell that to business owners, I think that one of the things that people overlook or undermine when they are starting their business is the finance and accounting part in taxation part. They think it is just one tax. And I think as I said earlier in my opinion people don’t do that unless they have a problem. Because as you know finance, accounting and taxation go hand in hand. Finance is about looking at the future projections. What are my goals? Where should I be? Where should my company be the next year? How profitable am I? And when you are looking at accounting, you are saying what did we do last year? How much money are we bringing in? What our expenses are? And in the taxation part, you need all those parts to make the taxation part work.

Correct

Because there are some credits available, there are certain deductions available to you there are some deferments available to you, there are certain tax brackets or tax breaks maybe that a business owner can take and until this parts aren’t in place you cant take full advantage

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of that. Most people seek the advice of a tax professional only when they have a problem they don’t see it as a part of the business, and I think that’s a mistake. So my advice is, do it upfront do it at the beginning. Just as you do your business plan, it needs to be a part of your business plan. A:

I remember at the beginning of your class when I said, “I am definitely getting an attorney before doing anything else”! (laughter).

Or an accountant. A good accountant. You need to have those tools.

Yes, Yes.

In terms of resources available to small businesses. Of course, I think the SBA is a good place – the Small Business Administration – I am sure you’ve heard of them.

Yes

I think that a very good resource to have. They have a wealth of information, and they can probably help with raising capital. Another important resource that I think a lot of people don’t use is going to your local chamber of commerce. The local chamber of commerce is made up of so many people of so many industries that not only they can be your mentor and help you but if there is a problem they probably already know how to resolve it, or they probably have an accountant that they can refer you to. Or some kind of advantage that you can have as far as your business.

Yeah.

Another thing that I think small business owners do not do is that they don’t know who their politicians are, and I think that that is very important.

I agree.

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Because when you have your business, there are so many regulations that you are subject to and these are the people that are making those regulations, so when you think about it, that’s part of that system. So you have sales tax. You have income tax. You have licensing fees. You have insurances. And you don’t know who your councilperson is; you don’t know who your major is, you don’t know who your commissioner is, you do not know who your senator is, you do not know who your legislature is as far as the federal side or the stateside.

Yeah

You have no idea who these people are. So sometimes there are grievances that you can stop because you are being… your business is being hurt in some way, and these people could have probably could have helped you. Or you could have brought your grievances to their offices, and they probably could have alleviated your problem.

Oh yeah, that’s a good one. And it is probably in their interest too because they want their reelection to. So, they probably are going to dedicate time to hear what it is that you want to say, and about what’s going on. I agree

Now that you know what’s going on, you have connections with the people, people of the community that you see every single day so as a business owner you may know more about the voters than the politicians do.

Yeah. That’s true, that’s true.

And you have employees and employees have a paycheck, and they spend it in the community, they pay taxes in the community their children use the school system… so yes the small business owner has so many connections in the community that they undervalue not connecting on a different level with the politicians.

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Yeah, they don’t recognize the value they can provide the government instead of the other way around.

Correct, a lot of thing change because a businessperson said. Ok, we need a Publix here, we need a gas station here. As a business owner, you are going to do these things you are going to bring revenue to the city you are going to bring jobs into the city and then maybe there is something that they can do for you.

Yeah! I agree. I agree. That’s awesome. I like that! Ok, so I guess that’s pretty much it. Just wanted to hear your input and your recommendations which I always find very valuable not only when I was your student but now for my capstone. I think I will let you go, but not before formally inviting you to my capstone presentation if you are willing and able to… and yeah I think that all, you did a great job and I thank you very much!

Thank you, Andrea, very much. And send me an email with the date of your capstone.

Yes, definitely. I will. Have a great day

Thank you

Bye. Bye.

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Appendix F3 Interview #3 Transcript – Ms. H.P.S. Interviewer: A=Andrea Sosa Interviewee #3: Ms. H.P.S. (wishes to remain anonymous) Brief: The following transcript is as a verbatim replica of the recordings obtained during the conversation maintained between the Interviewer, Andrea Sosa, and the Interviewee the morning of May 13, 2019, at 8:30 am (EDT). The interview was conducted face to face in Doral, Miami. Was recorded using the voice note app from an iPhone and later transcribed by the author using Microsoft Word. The total duration of the recording is twenty-eight minutes and thirteen seconds (0:28:13).

–Beginning of the Interview – A:

As I was explaining to you a little bit, I have to record this for transcript purposes, it will be appropriately disposed of after, and this is just going to be transcribed. You wish to have a pseudonym so we will choose one. Thank you for your time, and if in any opportunity during this conversation your “true” identity comes in, don’t worry, it will be blacked out. Ok. So, I wanted to talk to you a little bit because you handle all the human resources of this company. But, before we get into that, I would love to hear a little bit about you, your background, and what it is that you have done, and what build you up to the point you are right now in your life.

Oh, wow, that’s a lot!

(Both laugh)

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I mean, not like in deep detail. Just like, how do you came to manage what you are doing right now?

Ok. Well, I think it is just part of like anything, is the trajectory that you take plus also a little bit of serendipity… I was doing more logistics in my previous job. I was handling employees and – more contractors that employees –

Perfect

But that was more on a basis because I was on a rotating scale, and I was working on a campaign. So, it was hard to call the office which had everything, so I was the direct supervisor and the direct person that they will come with all their first complaints or requests or anything. I can’t make it to Michigan; we are in New York right now – you know. I make sure that all the guidelines were said about, and everything was completed. At that point, I didn’t run any payroll or anything like that.

Ok. So, you were more the logistics part of human resources.

Yes, I was more into logistics because I was on site, and I was also doing another aspect. Um, the PR aspect. So, because I was doing those two things.

What was the business about sorry?

The business was actually a campaign – a political campaign.

Oh! Cool! Fun!

Yeah, so we got to travel a lot through the U.S. you learn a lot. When everything is mobile you have to have somebody there to be able to handle – like “I lost my gas,” or “the tire exploded” and stuff like that.

Yes, of course. Cool. Very fun. And then you came straight here from the campaign?

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Actually, I took some time off because campaigning can be like … fourteen or eighteen hour days for months at a time. I would be home for about one week in a month.

Oh, wow.

I would work straight through the weekends and stuff. So, after you’ve worked those things, by the end of it, depending on how exhausted you are.

If you can retire, you should retire. Maybe that’s why presidents end up not doing much after they get elected.

(Both laugh) H:

I can understand. After they’ve served their time, I can see why they mostly go on – in other adventures. I was honestly done

They retire to play golf

(Both laugh) H:

I mean it is also, a very different lifestyle when you get elected than when your campaigning.

Yeah

It’s a rougher lifestyle. So, by that time I took some time off and then I came here.

I think a month or two, something like that, just to like be fresh. And, I wanted something stable, something not moving me around, and this opportunity came about.

So, I guess my first question is. How do you like to work with entrepreneurs? A self-made, or an entrepreneurial company.

I like it a lot. I get to learn a lot. I feel that we are always students so we are always learning and the great thing is … There are two things that you learn from a large corporate and from

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small businesses. The smaller businesses feel more familiar, and you see all the different aspects. In a large corporation, you are cogged. And You go in, you do your one, two, three, and that’s where you end. You never know anything else unless you see in the press, or a memo that comes out and you see it. It is very, like, segmented. A:

I agree.

So there are benefits to that and negatives to that but the one thing that I like about having a small business is like you have so much more room to grow, and find something else that you like and that you are good at and that you can.

Yeah, Yeah, since you can learn from every other part of the company or whatever, maybe you can find “Oh I like that much better, let me start learning about that and then maybe transfer.” That’s awesome. So, Right now, you are handling most of the human resources of the company. I know you do multi-tasking and we have connected through all human resources aspects of the company. As you know, my capstone is about how regulations are inhibiting entrepreneurial initiatives, and most of the surveys state that most fears that entrepreneurs have especially also small firms is about regulations concerning labor law. And so, what I wanted to ask you is. Do you have tips about how to manage the whole regulatory department of the labor laws? Because since it is so burdensome, small companies inhibit from growing just because they don’t want to take the additional step and have to deal with all these regulations or they change because they became out of fifteen employees to seventeen employees and that changes the whole ball game. So, with that change, you have to readapt the whole process.

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Even before you get to the 17, once you have a certain number of employees there is workers comp and all those things. I think there is a balance between both I think you have to take into consideration: Yes, the goal of an entrepreneur is to create a business. To have it flourish to have something that advances the country and everything, but at the same time, you are also talking about people’s livelihood, their lives. So, there has to be a balance to which the person working feels comfortable and know that everything is how it should be as well as you feel that the person working for you is helping. So, for me, the first thing is what exactly do you need. Because there is a huge difference between, I am at a point in my business, and I need employees, or I am at a point in my business that I need help. And could that be contracted help? A lot of times, businesses think that the only option that they have is to go straight to full-time employees. And although it is a great advancement, and that is one way to go about it… A lot of the times you have these business that are like a person in their room doing something or making something, and they don’t have a location yet, and they don’t have anything, and now they are thinking “Oh I need employees.” So that comes to like a huge bothersome. But what you have to do is go step by step and then realize what your goal is and how big you want to get and then be able to find outside counsel to help you find it. Whether it is starting with your accountant. Your accountant will tell you what the rules and regulations are money wise. Can you afford this? Can you not afford this? What’s going on. And, if you have no idea in the employment area, then you have to go to a firm. We use ADP here. Or, you can use a regular lawyer that does labor law or anything like that. When you do those things, and you get that information, you feel a little bit more comforting, because it is uncharted territory for you. And is not like you want not to follow what’s said, is just that

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it is so much being said, so much being changed that you need it. That that will be costly? Yeah, I think that’s a little bit of a burden on the company. But at the same time is a burden that does not help in the beginning. Hence you need to know exactly where you want to go. Unfortunately, when you are an entrepreneur, you don’t know because you are depending on either on your product if it gets approved for this; then I can do this, and this. So, I think that is where the big challenge is, that going into the aspect of the employer - employees is based into so many other facts of the business going well, and you don’t know if that’s going to go well. And another problem with entrepreneurs is that you don’t know if in two or three years you will be doing the same thing, so you are hiring, having all these rules, and laws, and everything but you don’t know where your company is going to be at. It feels like a lot of the times the law is being made for companies that have been here for 20 years and will be here for twenty more doing the same exact thing. There is no transition to the new entrepreneurship, which means “I see a need, and I am going to fulfill it.” It is more like “I want to open my little shop, and I want to sell key chains every single time.” A:

You have mentioned four key points for my capstone. So let me just go back to that awesome response you gave me and pinpoint them back.

The first thing you mentioned is being able to separate having or choosing a full-time employee vs. a contractor. One of the issues right now, and it actually became an issue last year with the new regulatory environment about eight regulations came out saying how to identify if it is a contractor or a full-time employee because the times changed. That is if a contractor works for you for more than X hours right now is considered – even if it is not

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in-house – it is now considered a full-time employee. So what would you recommend for entrepreneurs to be able to track how much time that person works for you? I’ll give you a specific example. Uber just lost a massive lawsuit against one driver because the driver got into this specific change in the law saying I have worked for you more than XX hours a week and even though I am a subcontractor in my contract, I am now a full-time employee, and therefore you have to give me all my benefits. But Uber’s business model works and is profitable because they don’t have employees. So how would you track that person since you cannot see it? It is not like a person coming in or going out. How can you give them a suggestion on how to track that person and be careful that they don’t overstep. H:

It depends on what you are asking the person to do. There are certain contractors that you hire them for a job. That job may be taking two days because… we outsource our IT, so we have a contractor whenever something happens. We have a server we have QuickBooks, a lot of things because must f our e-commerce or half of us are online…. Can I put a hold? I need to take this call.

Sure

(Recording paused) H:

Let's continue,.

So I was asking you about being able to separate a contractor from a full-time employee.

Oh, I was mentioning our IT department. He will come in two days, or maybe three, but it may be spread out… Like we have seen him this year twice maybe, so you know pretty well who your contractors are. There are certain contractors that will do just one job, on and off, and that’s it.

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So your recommendation would be just to do it for specific purposes even though you can hire him multiple times and having it very clearly stated like I am hiring you to do this job.

Because you are going to be having the person and a lot of contractors will give you an invoice or something saying I did this work and for this work, I am billing you so much. It’s not like I am paying you so much every certain time or anything like that because then you will be dictating the conditions and that can get into trouble waters like Uber. So, what we do a lot of the times there is also that area where you have – it’s such a grey area – because you’ll have certain people that we pay on a monthly basis just to have as a retainer in case we need them. And that isn’t an employee, that’s an agreement that you have with them.

In that case who drafts the contract, would it be the company or would it be any other person on behalf of the other person?

It depends on what the scenario is. If you are hiring like a marketing firm, or something like that, or a law firm and you wanted to be on your payroll - not on your payroll – you want them to be on a retainer. A lot of times would be an agreement between the two parts.

So it would be like a custom-made contract.

Yes, it would be a custom made contract if you are working for an actual firm. A lot of firms have their own contracts, and so you say these are the conditions? Ok. But I don’t agree with this, and then you modify that to meet your company standards, and from there you are hiring them for a job that the company you are hiring. You are not necessarily a hiring person or anything like that it is what you are doing. You are hiring a lot of the time you are not just one person managing it. Its, ok I am going to

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give you my services, but “A” is going to be doing coding or whatever, “B” is going to be doing “picking up or something here” or something like that, and that is how it works. For a single user, like an independent contractor that are entrepreneurs themselves… in that case, I would go case by case. Like what do I need you for? Have you done what I needed you for? So the job has been completed so if I need you again – I mean you’ll always want to go back to the person that actually completed the job well –. A:

Exactly.

(Both laugh) H:

Like you don’t go to the restaurant that you don’t like to eat and that the food is bad and the service is bad. So you have also to be cognoscente if they fix all my problems well if they do the job well if they are within my budget, then why not every time an issue arrives but is not like a daily notion.

Well, yeah. I guess now that you have mention that probably for an entrepreneur be like to have a recommendation what would be subcontractor then always have the invoice?

Having the legal invoice all the time

That could be what makes it different between a payroll, like in my case, for example, I don’t bill you monthly. But if I were a subcontractor, maybe I would bill you monthly to cover my expenses. That would be a difference. Right?

If it comes monthly is like I needed you in January you bill me in January for what you did and I haven’t seen you since June because I don’t need you. You were doing your own things. And, that’s what happens a lot with contractors you call them up and say I need you can you come, and they come in.

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You also mentioned that dealing with the employees and dealing with all the regulation associated with employment or labor law is highly costly for a small company. That’s actually an entire chapter of my capstone. So how do you feel – working from your personal experience – like, what are the key costs?

The key costs are just having everything that has to do with running payroll. First, being regulated, and paying everything that needs to be paid whether you are hiring another firm to actually be doing your payroll and keep everything.

Do you guys use that?

Yes. So everything that entails all of that. Making sure that when contracts and negotiations between the employee and employer are being made, you have a presence or at least a knowledge of what the agreement is. You don’t need to have it in writing, but something in writing protects the employee and protects the employer. It has transparency in what’s going on between them. Not every position requires a contract but maybe just a letter saying: I am going to pay you this, how we pay it, your supervisor is this person, and you are going to be starting this day. That way, because a lot of the times what happens is that “Oh yes, you are hired, start tomorrow.” But when you have to run payroll “wait, what’s the first day? Because I told them when to start, but they come in three days later. So when you start does kinds of conversations, the best thing is to define what is your first day, and in that way, you can protect and then have all the other regulations that you go about having the I-9 the W-4s

Does the payroll services do that for you?

No. You have to it. The payroll service does whatever you want them to do. As much or as little, you want them to do. They can do everything to a certain point, but certain things that

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have to be done in-house. A lot of paperwork, because we are not going to have somebody here and sit with the employee and have him fill out the papers, so you always have to have someone to compute and put in the information. A:

So would you say that one of the expenses would be time?

One of the expenses is time and knowing like.. yeah time and knowing.

And if I asked you just in general. Your best guess. You would say that taking care of one employee will demand who much time? Do you have an idea? Like. For example, you work in a firm that has what? Ten, fifteen employees?

Less than ten here.

And you work full time managing the payroll?

No.

Or do you just work three or four days or a month?

Alt the point that I am right now everybody has been hired. Everybody is in the system. All I have to do is every paycheck. Sorry, can we pause again?

(Recording paused for a phone call). H:

Since everybody is already in the payroll when anybody needs something that takes time, and you cannot have a metric because it depends on what the employee is and what is the need. Sometimes, is “Oh, I have doctors appointment” so that a simple 5 to 10-minute conversation with them. Sometimes is “I have this problem” or “I need to do this,” or “I need to do that” or “I have a complaint.” I am not used to getting a lot of complaints, but I know a lot of people in HR that get complaints, especially because of the environment we live now with the #metoo movement on both genders, and there is a lot of protection so that everybody feels safe. Everybody is felling they have been understood.

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We live in a country that has a lot of cultures, a lot of customs. So somebody from the middle of the country may perceive one notion different to like one person from New York; and if you add an international base to it, and how the international person might react as well… So you have to sort it out and be able to understand. A:

Totally, I agree. You need to take that?

Yes

(Recording paused for a phone call). A:

Two more questions and I’ll let you go. How did you learn to manage all these things that you have to learn to manage for human resources? You didn’t do that before. What were your best resources of information?

The company that handles our payroll have a lot of sources. They are open to questions like a lot of the time the problem is that you are scared that you are doing something wrong that you don’t ask. And a lot of time you ask, and they go “no, you can't do it ABC or not,” or “no, you can’t do that.” And then that’s the end of it. So, it is having a source and knows about this and is reputable so you can bounce off. That the most important

If you ever make a mistake, what would be your recommendation to how to manage it, what would be your steps?

That’s a bit broad. First, figure out that you made a mistake because sometimes we think we made a mistake and we didn’t. So figure out that there really is a mistake and that it has to do with the employees itself. Let them know, fix the problem with the employee. The most important is that the employee feels that they are heard, satisfied that they are ok with the standing and then go from there.

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So if you make a mistake, you handle it first with the employee, and then, you go through the government or is it that you go to the person that handles your payroll? Or would you go DOL?

It depends on the level of the problem. Sometimes it is a very small problem that can be solved in-house; sometimes you have to touch upon and go the route that they inform you. As I said, they might tell you, “you did this; this is not how you are supposed to do it.”

Do you think there will be fine if you are upfront with the problem?

It depends on what it is. Sometimes, they will probably fine you. And there will be some kind of repercussions on what you are doing. But sometimes, as I said, you think you made a mistake, but you didn’t make a mistake like you didn’t click the right box, and now you just have to click another one, and that’s it. So you have to go on a one-on-one basis, and the most important thing is to have good communication with the employee. Even if you are a small business or a large business is that interpersonal relationship that you have to be aware where are you standing if they are happy or not happy or have problems, not necessarily happy with their lives.

How is managing been handled in-house?

With how everything is, we, you, and the employee have to have an agreement. That agreement may vary, that agreement may change. That agreement may be adopted by their needs and by your needs. As long as you both are aware and communicating, that is priority number one.

I love that. You mentioned before we started recording. That “when I have a meeting, I ask you to send an email with the interpretation, and then I read it, and then we see if we are in the same page; and if we are not then we meet again.”

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Yeah. A lot of the times what happens is that problems arise when there is a confusion… It's like when you have a meeting, and then you do a minute. Hey this is just to confirm, or they will say this is what I got A, B, and C … because sometimes you say I thought you were coming at 9:15 but you came at 10:00 so that is where the predicaments lay and the problems arise.

Ok, so I won’t take up any more of your time. Thank you so much for doing this for me, and yeah I’ll let you go. Thank you.

Thank you.

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Appendix G Appendix G1 Table G1– Sources for Content Metadata Analysis SITE ID # 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

WEBSITE LINK https://www.noobpreneur.com/2018/06/21/entrepreneur-101-how-to-deal-with-regulatorycompliance/ https://www.entrepreneur.com/article/280717 https://www.entrepreneur.com/article/284701 https://startupnation.com/start-your-business/compliance-tips/ https://www.sba.gov/business-guide/manage-your-business/hire-manage-employees https://www.businessnewsdaily.com/11028-small-business-growth-regulations.html https://www.forbes.com/sites/insights-deloitte/2018/02/05/3-ways-to-excel-at-regulatorycompliance-and-new-business-models/#613374352275 https://www.sba.gov/blogs/starting-business-10-steps-every-entrepreneur-needs-know https://www.mycorporation.com/learningcenter/entrepreneur-checklist.jsp https://www.isoutsource.com/blog/best-practices-regulatory-compliance/ https://waterwelljournal.com/hr-best-practices-small-businesses/ https://mashable.com/2012/02/08/legal-steps-start-business/ https://beinetworks.com/7-ways-to-stay-current-on-compliance-regulations/ https://adrem.com/stay-current-compliance-regulations/ https://www.thebalancecareers.com/changing-employment-laws-1917681 https://medium.com/the-seek-blog/how-to-stay-on-top-of-compliance-requirements-andindustry-standards-8cf9d02f7db1 https://www.linkedin.com/pulse/practical-tips-how-keep-up-regulatory-changes-ina-kroi-ll-m-/ https://www.enhesa.com/flash/six-tips-ensure-corporate-compliance-2020 https://healthcarecompliancenetwork.com/7-tips-for-compliance/ https://venturelegalkc.com/2016/09/12/startup-law-101/ https://www.business.com/articles/common-legal-mistakes-newbie-entrepreneurs/ https://compliance.cioreview.com/cxoinsight/8-best-practices-to-support-regulatory-compliancenid-9689-cid-54.html https://www.metricstream.com/insights/5-best-practices-ethics-compliance-program.htm https://techgeek365.com/cut-red-tape-business-tips/ https://missouribusiness.net/article/break-through-red-tape-start-business/ https://mccloudlawgroup.com/lawyer/2014/11/10/Business-Law/Common-Legal-MistakesMade-by-Entrepreneurs_bl15378.htm https://www.inc.com/aj-agrawal/the-dumbest-legal-mistakes-early-startups-make.html

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28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

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https://smallbiztrends.com/2018/09/small-business-compliance-tips.html https://www.bizjournals.com/bizjournals/how-to/growth-strategies/2017/10/top-compliancetips-for-small-businesses.html https://www.myfrugalbusiness.com/2016/11/cut-through-legal-red-tape-startup.html https://www.yodlee.com/blog/abcs-regulatory-compliance-startups/ https://www.trinet.com/insights/are-business-regulations-driving-you-crazy-here-are-3-tips-tomaintain-compliance-and-your-sanity https://www.fundera.com/blog/startup-legal-checklist https://aaronhall.com/company-legal-compliance-checklist-ensure-your-business-is-legal/ https://www.smbnation.com/content/news/7-common-legal-issues-entrepreneurs-need-toconsider-when-starting-a-business https://www.traverselegal.com/blog/legal-checklist-for-startups-and-founders/ https://www.fundera.com/blog/small-business-regulations https://www.businessnewsdaily.com/10204-local-state-business-regulations.html https://www.eeoc.gov/employers/smallbusiness/10tips.cfm https://fitsmallbusiness.com/federal-labor-laws/ https://www.entrepreneurmag.co.za/advice/franchising/researching-a-franchise/compliance-forentrepreneurs/ https://hbswk.hbs.edu/item/top-ten-legal-mistakes-made-by-entrepreneurs https://www.upcounsel.com/blog/most-expensive-legal-mistakes-made-by-entrepreneurs https://www.forbes.com/sites/allbusiness/2013/10/03/big-legal-mistakes-made-by-startups/#1e9783e3497e https://www.entrepreneur.com/article/288649 https://www.ventureatlanta.org/top-3-legal-mistakes-most-startups-make-in-the-first-year/ https://niclahore.lums.edu.pk/8-legal-mistakes-entrepreneurs-should-avoid/ https://www.nolo.com/legal-encyclopedia/start-own-business-50-things-30077.html https://www.businessnewsdaily.com/4686-how-to-start-a-business.html https://www.fundera.com/blog/small-business-taxes

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Appendix G2 Table G2 – Content Metadata Analysis by Search Term Websites' Content Analysis

tips for dealing with compliance for entrepreneurs

S.T. SID 1 1 1 2 2 2 2 2 2 2 2 3 3 3 3 4 4 4 4 4 5 5 5 5 5 5 5 5 5 5 6 6 6 6 7 7 7 8 8 8 8 8 8 8 8 8 8 9 9 9 9 9 9 9 9 9 9

TIP STATETEMENT “Get Familiar with Your Responsibilities” “Get Your Employees in Line” “Get the Help You Need” “Understand your role in compliance” “Stay ahead of federal regulations” “Mitigate your compliance risk with education” Follow industry news via social media and online publications. Subscribe to bulletins and updates Consult with your peers and mentors Attend conferences and industry events related to compliance. Develop a compliance monitoring strategy. “Designate an owner.” Determine your risk tolerance, and align your priorities. Budget time and resources. Speak with peers and trusted advisors. Get your business papers in order Obtain proper insurance Post a surety bond Ensure you have appropriate employer documentation Compliance with health and safety requirements Get an Employer Identification Number (EIN) Find out whether you need state or local tax IDs Decide if you want an independent contractor or an employee Ensure new employees return a completed W-4 form Schedule pay periods to coordinate tax withholding for IRS Create a compensation plan for holiday, vacation and leave Choose an in-house or external service for administering payroll Decide who will manage your payroll system Know which records must stay on file and for how long Report payroll taxes as needed on quarterly and annual basis Make a cost assessment Hire a professional Employ software tools Don't be afraid to grow Think Ahead Of The Game Use Compliance To One’s Advantage Don’t Be Distracted By The Regulatory Environment Step 1 – Write a Business Plan Step 2 – Get Help and Training Step 3 – Choose Your Business Location (zoning regulations) Step 4 - Understand your Financing Options Step 5 – Decide on a Business Structure Step 6 – Register Your Business Name (“Doing Business As”) Step 7 – Get a Tax ID Step 8 – Register with Tax Authorities Step 9 - Apply for Permits and Licenses Step 10 - Hiring Employees A 'Doing Business As' (DBA) Name Business Licenses Insurance A Registered Agent Your Articles of Incorporation/Formation An Operating Agreement or Corporate Bylaws Trademark and Copyright Protection An Online Presence The Right Team and a Federal Employer Identification Number A Calendar “

CONCEPTS LEARN TRAIN FIND HELP LEARN BE PROACTIVE LEARN STAY UP TO DATE STAY UP TO DATE STAY UP TO DATE STAY UP TO DATE STAY UP TO DATE DEFINE DEFINE PLAN FIND HELP FILE PROTECT PROTECT FILE LEARN FILE LEARN PLAN BOOKEEPING SCHEDULE PLAN FIND HELP PLAN BOOKEEPING FILE PLAN FIND HELP USE TECHNOLOGY DON'T BE AFRAID BE PROACTIVE BE SMART BE PROACTIVE PLAN FIND HELP BE SMART LEARN DEFINE FILE FILE FILE FILE DON'T BE AFRAID FILE FILE PROTECT PLAN BOOKEEPING PROTECT PROTECT PROTECT FILE SCHEDULE

TRAIN BOOKEEPING

FILE FILE

FIND HELP LEARN SCHEDULE

PLAN

LEARN

USE TECH

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business tips for cutting red tape

“coping with regulations best practice”

“tips for meeting regulatory compliance”

18 18 18 18 18 18 19 19 19 19 19 19 19 20 20 20 20 20 21 21 21 21 21 21 22 22 22 22 22 22 22 22 23 23 23 23 24 24 24 24 25 25 25 25 26 26 26 26 27 27 27 27 27 27 27 27

Know what you have to comply with Compliance through collaboration Technology is there to help Corporate standards Manage change Assess your program Use staff meetings to emphasize the practice’s commitment to legal and regulatory compliance. Have senior leadership and physicians together deliver the compliance message. Make sure that all internal matters are handled equitably at all levels of the organization. Deliver consistent messages to all areas of the practice related to compliance and ethics. Adopt a hire to retire attitude. Make employees comfortable with coming forward with legal, ethical or compliance questions. Reward staff for their adherence to ethical values. Business Types & Formation Intellectual Property & NDAs Employment/Contractor Law Contract Law Securities Law Incorporating Equity arrangements Protecting your IP Complying with securities laws Vesting schedule Procrastinating on legal problems Identify Regulatory Stakeholders and Engage Them Effectively. Get to Know your Organization’s Regulatory Environment Mine Exiting Documentation for Foundational Understanding Model Business Processes to Improve Understanding Build Repository of Common Compliance Requirements Document Traceability between Regulations and Requirements Don’t Short-Change Analysis Have Tooling that Supports Requirements Analysis & Management Be Proactive in Managing Compliance and Ethics Adopt and Communicate an Ethical Profile Train Employees on Compliance Policies Adopt a Risk-based Approach to Compliance Management Stay On Top Of Everything Use The Right Software Automate Hire Someone Else To Do It Step 1: Decide on the type of business structure Step 2: Register your business name Step 3: Determine your taxes, license and other requirements Step 4: Get a federal employer identification number (EIN) Choosing the Wrong Business Structure The “Gentlemen’s Agreement” – A Handshake and Your Word Adding Partners Without a Written Agreement Sharing Ownership 50/50 Not Having LLC Member Agreements Choosing the Wrong Corporate Entity Failing to Keep Proper Records Using Someone Else's Name Comingling Accounts Not Protecting Intellectual Property Failing to Take into Account Employees Not Thinking about State Laws

203

LEARN TRAIN USE TECH DEFINE STAY UP TO DATE MONITOR

PLAN BE PROACTIVE

TRAIN TRAIN BE SMART MONITOR TRAIN BE SMART BE SMART LEARN LEARN LEARN LEARN LEARN FILE PLAN PROTECT USE TECH SCHEDULE BE PROACTIVE TRAIN LEARN RESEARCH PLAN DEFINE PLAN STAY UP TO DATE USE TECH BE PROACTIVE TRAIN TRAIN BE PROACTIVE BE PROACTIVE USE TECH USE TECH FIND HELP PLAN FILE DEFINE FILE PLAND PROTECT PROTECT BE SMART PROTECT PLAN BOOKEEPING PLAN PROTECT PROTECT BE SMART LEARN

PLAN BOOKEEPING

BE SMART

SCHEDULE

DEFINE BE SMART PROTECT PLAN BE SMART PROTECT MONITOR

“tips 4 “us compliance cutting comp..." manual startups” red tape

“how to comply for small businesses”

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checklist for startups business law compliance (part II)

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Decide on Your Business Structure Register Your Business and Obtain Business Licenses Be Aware of the Constantly Changing Laws Keep Your Important Contacts List Updated Understand tax code and HR requirements Take a number “an employer identification number (EIN)” Create a preventive policy Keep up to date Hire a Qualified Lawyer Hire a Business Consultant Reevaluate Your Finances Become familiar with who your regulators are or will likely be. Apply a risk based approach to compliance. Demonstrate that you have put thought and effort into formulating a compliance plan. Document and maintain key compliance information. Prepare for Growth – Scale your Compliance Program. Identify the compliance items outside your area of expertise Find trusted partners Never stop paying attention Ensure no conflicts of interest exist in business relationships; if there are any, make sure they are disclosed. Have a written agreement that is fair, legal, and in writing for all business and business relationships. Comply with all contract provisions entered into. Verify compliance with all representations and warranties. Make sure agreements contain protection from liability for defective products and services. Ensure compliance with all environmental obligations. Have policies and procedures that ensure all data, including client data, remains protected and private. Ensure that all relations with competitors and others are in compliance with antitrust obligations. Comply with the Consumer Product Safety Act. Ensure compliance with all loan covenants. Review insurance coverage. Non-disclosure agreements. Future of the business – the what if’s? Vesting. Intellectual property. Trademarks. Compliance. Business structure. Entity Formation/Initial Set-up –Form entity (corporation, LLC, partnership, etc.) –Anticipated financing path (amount needed, growth anticipated, multiple financing rounds) –Rights of Founder(s) (vesting?) –Equity compensation for employees/consultants/advisors (vesting and repurchase rights) –Involve CPA/tax advisor early –How much will you need? –Disclosure Contracts/Agreements –Employment/Independent Contractor/Advisor Agreements (work for hire) –Non-Disclosure/Non-Circumvention/Non-Use –Website Agreements (Terms of Use, Privacy Policy, Copyright Policy, Disclaimers) Trademark –Protect your house mark and brands –Trademark Availability Assessment/Clearance –Register domain names (Defensive registrations) –Social Media, including online reputation management Copyrights –Personal ownership of IP versus ownership by entity (licensing issues) Patents and Trade Secrets –Assess opportunities and risks

204

DEFINE FILE BE PROACTIVE BOOKEEPING LEARN FILE TRAIN BE PROACTIVE FIND HELP FIND HELP PLAN LEARN PLAN COSTS TRAIN BOOKEEPING PLAN LEARN FIND HELP BE PROACTIVE

STAY UP TO DATE SCHEDULE

STAY UP TO DATE

BE SMART

STAY UP TO DATE TRAIN

BE SMART BOOKEEPING BE PROACTIVE MONITOR PROTECT RESEARCH

PLAN

PROTECT BE SMART RESEARCH MONITOR PROTECT PROTECT PLAN PLAN PROTECT PROTECT PROTECT PLAN PLAN FILE PLAN DEFINE DEFINE BE SMART DEFINE PROTECT PROTECT DEFINE PROTECT PROTECT PROTECT PROTECT RESEARCH FILE MONITOR PROTECT PROTECT PROTECT BE SMART

PROTECT MONITOR PLAN

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checklist for startups business law compliance (part I)

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Designate the proper business entity Check which licenses, permits, and registrations your business needs Make sure you are paying proper business taxes Do proper bookkeeping Get a founders agreement in writing Set a vesting schedule for all founders and early employees Get your employer identification number (EIN) Protect your intellectual property Classify your workers properly Purchase workers compensation insurance Make sure you’re in compliance with securities laws Follow email regulations Make sure your investors are accredited Establish a privacy policy Create a company handbook Hire competent legal counsel Abide by fair employment practices; no discrimination on the basis of race, sex, religion, or national origin. Maintain an employee handbook with protective policies against discrimination and sexual harassment. Obtain appropriate documentation of all employees’ citizenship. Appropriately classify each employee as either an employee or an independent contractor. Meet wage standards. Make sure all workplace posters and notices are posted. Prepare and maintain records of serious occupational injuries and illnesses in compliance with OSHA. Verify filing of Department of Labor (DOL) forms. Hold employment contracts with non-compete and confidentiality clauses and protect at-will employer status. Ensure lawful termination of employees. File all federal and state taxes, including employment, sales, privilege, excise, and franchise taxes. Retain complete and accurate financial records, including records of income and expenses. Ensure that the company is engaging in truthful and non-deceptive advertising. Obtain and/or verify the status of trademarks, trade names, and copyrights. Ensure that appropriate terms and conditions are posted on the website. Obtain third-party consent for use of third party content. Make sure domain name does not infringe on another organization’s trademarks or service marks. Ensure that the company is lawfully registered with clear ownership. Keep up-to-date copies of Articles of Incorporation and Bylaws at the company’s principal place of business. Verify that state corporate filings have been made, including annual reports. Make sure directors have been lawfully appointed and officers accurately elected. Prepare minutes for all shareholder, board, and committee meetings. Maintain adequate and correct books and records. Ensure compliance with securities laws when selling stock and other investments in the business. Ensure that the company is properly registered in all states the company Secure current licenses, both state and federal. Obtain current permits for all business operations. Make sure confidential trade secrets are protected.

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What laws and regulations do I need to comply with in business?

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Top 10 employment laws to know

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Setting Up Your Business Size regulations Licenses and permits Taking Care of Your Employees Overtime Job-protected leave Minimum wage Workers’ comp Workplace safety Running Your Business Paying taxes Classifying your employees correctly Reporting pay data Protecting the environment The Clean Air Act The Clean Water Act The Resource Conservation and Recovery Act Collecting sales tax via the Internet Antitrust laws Promoting Your Business Advertising truthfully Email marketing CAN-SPAM Act Minimum wage increases Data privacy and security “ Sexual harassment policies and training Pay equity legislation Paid leave laws Healthcare reform State collection of online retailer sales tax State retirement plans Look at the facts, not the faces. Race, color, religion, sex Provide reasonable accommodations Develop a strong anti-discrimination policy before discrimination becomes a problem. Ensure that employees understand their rights and responsibilities at work. Be alert to potential harassment or discrimination. Stop, address and prevent harassment and discrimination. Ensure that employees are not punished for reporting discrimination, Post an EEO poster at your business. Keep employment records as required by law. File an EEO-1 Report if you have 100 or more employees. Contact the EEOC to request assistance, information or training. Law 1: Fair Labor Standards Act (FLSA) Law 2: Immigration and Nationality Act (INA) Law 3: Occupational Safety & Health Act (OSHA) Law 4: Title VII of the Civil Rights Act Law 5: Americans with Disabilities Act (ADA) Federal Labor Laws If You Provide Benefits Other Federal Labor Laws Where to Find Free Labor Posters Compliance legislations that govern businesses Which legislations apply to your business? Product and services: What problem are you solving? Assess the service or product offering of your business and determine what specific legislation applies to it. Organisational Design: What are your daily activities? Determine the functions of your business and the strategies you have in place to manage them. These include finance, sales, marketing, branding, human resources and operations. Each function is associated with legislation. Operations: How do you perform your activities? Examine input, output and production processes. Industry standards and certain Acts will apply and create requirements that need to be complied with. Stakeholder management: Who are the participants? Governance, industry best practice and labour laws, such as the Labour Relations Act, will apply. Putting it together: Establish a simple compliance universe

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tips for small busines tax filling

entrepreneur legal mistakes

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42 # 10: Failing to incorporate early enough. 42 # 9: Issuing founder shares without vesting. #8: Hiring a lawyer not experienced in dealing with entrepreneurs and venture 42 capitalists. 42 #7: Failing to make a timely Section 83 (b) election. 42 # 6: Negotiating venture capital financing based solely on the valuation. 42 #5: Waiting to consider international intellectual property protection. #4: Disclosing inventions without a nondisclosure agreement, or before the 42 patent application is filed. #3: Starting a business while employed by a potential competitor, or hiring employees without first checking their agreements with the current employer 42 and their knowledge of trade secrets. #2: Promising more in the business plan than can be delivered and failing to 42 comply with state and federal securities laws. 42 #1: Thinking any legal problems can be solved later. 43 Not Defining a Founder Agreement 43 Not Forming the Business under a Legal Structure 43 Not Having Good Standard Form Contracts In Your Favor 43 Not Protecting Intellectual Property 43 Not Having the Right Legal Counsel 44 Not making the deal clear with co-founders 44 Not starting the business as a corporation or LLC 44 Not coming up with a great standard form contract in favor of your company 44 Not complying with securities laws when issuing stock to angels/family/friends 44 Lack of employment documentation 45 Not using an attorney 45 Failing to set up the right business structure 45 Not having terms and conditions policies to which customers agree to be bound 45 Failure to have a privacy policy 45 Failure to follow business tax laws 45 Inappropriate/incomplete contracts with outside vendors 45 Failure to get the proper documentation on employees 45 Failure to get nondisclosure and non-compete agreements 45 Not getting copyrights, patents, and trademarks 46 Adopting the “Fix it Later” Mentality 46 Relying on a Handshake 46 Not Securing Professional Backup 47 Ignorance towards early Incorporation 47 Shares without Conferring 47 Hiring an inexperienced lawyer 47 Negotiating investment based on estimation. 47 Unveiling ideas without a nondisclosure agreement 47 Hiring or getting hired by possible opponents in the market 47 Overselling and failing to deliver 47 Ignoring legal concerns 50 Know How to Pay Small Business Taxes depending on organizational form 50 Know How Often You Have to Pay Small Business Taxes Know How to Calculate What You Own in Quarterly Estimated Small Business 50 Taxes 50 Know How to Prepare for Your Small Business Taxes 50 Know What You Can Deduct on Your Small Business Taxes 50 Find a Small Business Accountant 50 Stay organized throughout the year. 50 Don’t let tax deadlines sneak up on you. 50 Ask for help when you need it.

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Step by step guide for entrepreneurs permit

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Evaluate and Develop Your Business Idea PLAN Set up a basic marketing plan. PLAN Choose a Name for Your Business DEFINE Register your business name FILE Register your business name with a DBA (Doing Business As) FILE Prepare Organizational Paperwork BOOKEEPING Incorporate Your Business FILE Business Buyout Agreements (also known as a buy-sell agreement or stock PROTECT agreement) Find a Business Location PLAN File for License and Permits FILE Obtain a federal employment identification number by filing IRS Form SS-4 (unless you are a sole proprietorship or single-member limited liability company FILE without employees). Obtain a seller's permit from your state if you will sell retail goods. FILE Obtain state licenses, such as specialized vocation-related licenses or FILE environmental permits, if necessary. Obtain a local tax registration certificate, a.k.a. business license. FILE Obtain local permits, if required, such as a conditional use permit or zoning FILE variance. Obtain Insurance PROTECT Determine what business property requires coverage. DEFINE Contact an insurance agent or broker to answer questions and give you policy FIND HELP quotes. Obtain liability insurance on vehicles used in your business, including personal PROTECT cars of employees used for business. Obtain liability insurance for your premises if customers or clients will be PROTECT visiting. Obtain product liability insurance if you will manufacture hazardous products. PROTECT If you will be working from your home, make sure your homeowner's insurance covers damage to or theft of your business assets as well as liability for businessPROTECT related injuries. Consider health & disability insurance for yourself and your employees. PROTECT Set Up Your Books BOOKEEPING Decide whether to use the cash or accrual system of accounting. DEFINE Choose a fiscal year if your natural business cycle does not follow the calendar SCHEDULE year (if your business qualifies). Set up a recordkeeping system for all payments to and from your business. BOOKEEPING Consider hiring a bookkeeper or accountant to help you get set up. FIND HELP Purchase small business accounting software TECH Set Up Tax Reporting BE PROACTIVE Familiarize yourself with the general tax scheme for your business structure. RESEARCH Familiarize yourself with common business deductions and depreciation. LEARN Obtain IRS Publications 334, Tax Guide for Small Business, and 583, RESEARCH Taxpayers Starting a Business. Obtain the IRS's Tax Calendar for Small Businesses. RESEARCH Refine your idea. DEFINE Write a business plan. PLAN Assess your finances. DEFINE Determine your legal business structure. PLAN Register with the government and IRS. FILE Purchase an insurance policy. PROTECT Build your team. BE PROACTIVE Choose your vendors. BE PROACTIVE Brand yourself and advertise. PROTECT Grow your business. DON'T BE AFRAID

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Borland J., (2019, January 3). Social Security Benefits Increase in 2019. USA Social Security Administration. Available at: https://blog.ssa.gov/social-security-benefits-increase-in2019/ Borenstein, M., Hedges, L.V., Higgins, J.P.T., & Rothstein H.R. (2009) Introduction To MetaAnalysis. John Wiley & Sons, Ltd. ISBN: 978-0-470-05724-7. Available at: https://www.meta-analysis.com/downloads/criticismsofmeta-analysis.pdf Bureau of Labor Statistics, (2019, March 19th). Employer Costs for Employee Compensation – December 2018. U.S. Department of Labor. USDL-19-0449. News Release. Available at: https://www.bls.gov/news.release/pdf/ecec.pdf Committee of Economic Development, (2017, September 27). Regulation & the Economy - The Relationship & How to Improve It. The Committee for Economic Development of The Conference Board (CED). Available at: https://www.ced.org/reports/regulation-and-theeconomy Crain, W. M., (2005 September). The Impact of Regulatory Costs on Small Firms. Small Business Administration. Office of Advocacy. Available at: https://www.sba.gov/sites/default/files/The%20Impact%20of%20Regulatory%20Costs%2 0on%20Small%20Firms%20(Full).pdf Crews, C. W., (2018, October 23). Trump Exceeds One-In, Two-Out Goals On Cutting Regulations, But It May Be Getting Tougher. Forbes. Available at: https://www.forbes.com/sites/waynecrews/2018/10/23/trump-exceeds-one-in-two-outgoals-on-cutting-regulations-but-it-may-be-getting-tougher/#59a5a1563d40

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https://www.acus.gov/publication/sourcebook-united-states-executive-agencies-firstedition Long, E., (2019, March). Break America’s Regulatory Log-Jam. New Ideas for a Do-Something Congress No.7. Progressive Policy Institute (PPI). Washington, DC. Available at: https://www.progressivepolicy.org/wp-content/uploads/2019/03/PPI_Break-AmericasRegulatory-Log-jam_V4-1.pdf Lopez, N., (1999, July). Barriers To Entrepreneurship: How Government Undermines Economic Opportunity. The Institute for Policy Innovation. IPI Policy Report#149. Lewisville, TX. Available at: https://www.ipi.org/docLib/Barriers149.pdf-OpenElement.pdf McLaughlin, P., and Sherouse, O., (2018) RegData US 3.1 Annual (dataset). QuantGov, Mercatus Center at George Mason University, Arlington, VA. Available at: https://quantgov.org/regdata-us/. McLaughlin, P., and Greene, R., (2014, May 8). The Unintended Consequences of Federal Regulatory Accumulation. Economic Perspectives. Mercatus Center. George Mason University. Available at: https://www.mercatus.org/system/files/McLaughlinGreene_RegAccu_EP_050914.pdf McLaughlin, P., Ghei N., Wilt. M., (2018, November 14). Regulatory Accumulation and Its Costs. Policy Brief. Mercatus Center at George Mason University. Arlington, VA. Available at: https://www.mercatus.org/system/files/mclaughlin2c_ghei2c_and_wilt__policy_brief_-_regulatory_accumulation_ep_update_-_v1_1.pdf McLaughlin, P., (2018, November). How Regulatory Overload Can Make Americans Less Safe. Policy Brief. Mercatus Center at George Mason University, Arlington, VA. Available at:

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U.S. Small Business Administration Office of Advocacy (2016), 2016 Small Business Profile. U.S. Small Business Administration. Available at: https://www.sba.gov/sites/default/files/advocacy/United_States.pdf U.S. Small Business Administration Office of Advocacy (2018), 2018 Small Business Profile. U.S. Small Business Administration. Available at: https://www.sba.gov/sites/default/files/advocacy/United_States.pdf The White House – President Barak Obama (n.d.) State & Local Government. Available at: https://obamawhitehouse.archives.gov/1600/state-and-local-government Wayne, C., (2017, August 15). How Many Rules And Regulations Do Federal Agencies Issue? Forbes. Available at: https://www.forbes.com/sites/waynecrews/2017/08/15/how-manyrules-and-regulations-do-federal-agencies-issue/#386027f1e647 Welch, M. (20118, February 8). Democrats these days hate deregulation, but once upon a time they loved it. Los Angeles Times. Available at: https://www.latimes.com/opinion/oped/la-oe-welch-deregulation-carter-20180208-story.html Williams, A., Benton, K. B., Graham J.D. (2017, April). A Smart Regulatory Process for Entrepreneurs and Small Businesses. American Council For Capital Formation. Center of Policy Research. Washington, DC. Available at: http://accf.org/wpcontent/uploads/2017/04/ACCF_Regulatory_paper_05-FINAL.pdf Williams, R. and Konieczny, C., (2018, January 29). It’s Time to Rethink the Nutrition Facts Panel. Public Interest Comment, Mercatus Center at George Mason University, Arlington, VA. Available at: https://www.mercatus.org/system/files/williams_and_konieczny__pic_-_cover_letter_on_nutrition_labeling_-_12.14.2017_jf_with_attachments.pdf

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Williams, R., (2016, August 17). Federal Regulation of Food Safety. Congressional Testimony. Mercatus Center at George Mason University, Arlington, VA. Available at: https://www.mercatus.org/system/files/Mercatus-Williams-IOWA-testimony-v1.pdf Williams, R. Richards, T., (2015, November 04). More FDA Spending Does Not Necessarily Mean Better Results. Mercatus Center at George Mason University, Arlington, VA. Available at: https://www.mercatus.org/system/files/Mercatus-Williams-IOWAtestimony-v1.pdf Winegarden, W. (2015) The 50 State Small Business Regulation Index. Pacific Research Institute. San Francisco, California. Available at: http://danabeigeldesign.com/wpcontent/uploads/2016/02/SmBusinessIndex_UpdatedVersion2_web.pdf World Bank Group, (2019) Doing Business 2019: Training for Reform. 16th edition. The World Bank. Washington, DC. Available at: http://www.worldbank.org/content/dam/doingBusiness/media/AnnualReports/English/DB2019-report_web-version.pdf Zarate, M., (2015 December 8). Regulation, Innovation, and Entrepreneurship. Regulatory Studies Center. The George Washington University. Washington, DC. Available at: https://regulatorystudies.columbian.gwu.edu/sites/g/files/zaxdzs1866/f/downloads/RegIns ight_AMZM-regulation-and-Innv%26entrep-literature-review120815.pdf