I tend to believe that small businesses have a competitive advantage over larger companies. Decisions can be made in less time. Customer service is more personalized and sincere. New ideas can be approved and implemented in days instead of months. Overhead costs are also significantly less. The list goes on. But there is one area where small businesses are not doing well: lobbying for their own interests.
Influence: Over $750,000 in lobbying expenditures per piece of legislation
The ability to influence legislation to serve one’s interests is a game played to perfection by the largest companies in the U.S. According to a recent report by the Center for Responsive Politics, a research group tracking money in U.S. politics and its effect on elections and public policy, lobbying expenditures totaled $3.47 billion in 2010. This money was spent by companies, unions, trade associations, universities and others. The U.S. Chamber of Commerce, which mainly represents the interests of larger companies, spent the most on lobbying according to the report, an amount in excess of $132 million.
When compared to the 4,604 bills and resolutions introduced in Congress during 2010, the total spent on lobbying represents almost $754,000 per piece of legislation. Clearly that amount of money buys a say.
Why small business owners need to lobby
Regardless of political affiliation, most business owners would agree that over the past several years, the volume and degree of influence exerted by the federal government over business has increased. More legislation and additional regulations have been produced by the last two Congress’ and have had a significant impact across many industries. As this legislation is crafted, lobbyists representing the interests of their clients provide research, recommendations and drafts of “model” legislation. If your interests aren’t represented in this process, chances are your business will suffer.
How does your company's industry compare?
The following industries increased their lobbying expenditures last year:
- Energy industry companies spent over $191 million in lobbying. Nearly one-third of this total consisted of lobbying expenditures from PG&E Corp. and ConocoPhillips.
- Securities industry companies spent over $100 million in lobbying.
- Air transportation industry companies spent $88 million in lobbying. Thirty percent of this total came from one company: FedEx.
- Defense industry companies spent over $59 million in lobbying. Over 80 percent of this total came from just three companies: Boeing Co., Northrop Grumman and United Technologies.
If your interests are directly aligned with the “heavyweights” in each industry, then you could consider them champions for your cause. But if you consider them to be well-entrenched competitors or think they have interests that oppose your company's, legislation that impacts your business is being heavily influenced by them.
What about small businesses?
There has recently been a series of articles in different media outlets questioning the effectiveness of some small business lobbying organizations to promote the interests of small business owners. This, however, should not be confused with questioning whether or not lobbying is important. It is. But it’s a matter of executing it correctly. Frankly, small business owners have not fared well over the past several years. Despite several important pieces of legislation that include “small business” in the title, tangible results on a large scale have yet to materialize.
What small businesses need is more lobbying, not less.