Written by: Sarah Johnson | September 22, 2014

What
So, what is a regulated industry?

  • Fusion Alliance defines a regulated industry as an industry that is significantly regulated by the state or federal government. Well yeah, but what does that mean?
  • Regulation is defined as a rule or law designed to control or govern conduct. It is usually a statist law (state implemented not natural) that constrains a right, creates or limits duty or allocates responsibility for something.
  • An industry is defined as a department or branch of craft, art, business or manufacture, especially: one that employs a large personnel and capital especially in manufacturing according to websters.

So what are you to do if you are in a regulated industry? Check out  BillTrack 50’s regulation tracker!

Why
Tens of thousands of new laws are enacted across the states every year. Industries are becoming more and more regulated as time goes by. There are more concerns with health and safety, the environment, lawsuits and so much more. But even with the best intentions and popular goals in mind, regulation can be difficult because no one wants to be told what he or she can or cannot do. It is never ideal to wake up one day to find out that something that one of your business practices, which has been in place for years, is now illegal and “good luck” coming up with something different. So why has regulation become such part of the American corporate landscape? Some would argue that our history of monopolies, dishonest practices and endangerment to humanity and environment spurred the government to take action to protect its people, land, and indeed, the very industries being regulated.

Who
People tend to have mixed feelings about regulation. No one likes the government breathing down his or her backs, but last I checked, no one likes being poisoned from improperly disposed chemicals either. Different regulations can lead to increased risk or reduced profits along with the possibility of benefiting some operators and other factors.

Small businesses tend to have little power over the increasing regulations within their industries, especially because historically the regulatory process has been so difficult to access. Big players are at an advantage just because they can usually marshall more resources when important issues are on the table.

The most regulated industries include healthcare, financial, construction, energy and utilities, processes (mechanical and chemical), technology, marijuana, gaming, guns and cosmetics.  Here is a link to a list of all U.S. Industries the FDA significantly regulates, for example.

This infographic shows one example of how regulations could change many different aspects products that a consumer may take for granted and not even realize may endanger them. Click here to go to the European Commission page and see the article about how Europe mandated these regulations in 2013.  Here is a link to the U.S. FDA regulations on cosmetics.

 

The Impact of Regulations

The good
Sometimes, the lack of government regulation has posed problems for small businesses because regulation can give smaller businesses the opportunity to prosper in the face of monopoly. Regulation has led to safe disposal of chemicals and materials, protection of U.S. land and resources and better health for citizens. Although some regulations decrease jobs, they can also create new jobs in a different area, such as banning a process and implementing pollution clean up.

For example, here is a FDA infographic showing how regulation has helped impact youth tobacco use in the United States. Link to webpage.

The bad
Remember when I said that regulations can help small businesses?  Well, that is only when they are written  with aiding small businesses in mind. On the other hand, regulations can also tilt the playing field in their direction by creating onerous requirements that are expensive to comply with, substantial licensing and permitting fees, and other barriers to entry. That being said, big business is still business and a very influential part of the American way of life. Even though regulations are ideally imposed to better society, they can also sometimes benefit a select group or have unintended consequences. Also, regulation can restrict many people and businesses from various practices because of a select few doing something wrong, which resulted in regulations punishing everyone.

And the what the heck?
Some regulations leave Americans scratching their heads regarding how they came to be and how they could potentially better society. Here is a link to an article with ridiculous regulations that often are a complete inconvenience to the people, with little or no benefit.  Here is another, very opinionated, article that shows how regulations have upset the lives of many. It speaks to the amount of control that the government is implementing.

Regulation of any industry will always be a difficult subject. There are always pros and cons to be considered, but it is necessary for safety and the environment. If you are in a regulated industry you need to stay up-to-date and be informed about decisions that the government makes that could drastically change your business,  so you can wade into the fray and join the debate when new regulations are being considered and so you can stay on the right side of the law when new regulations are implemented.