When will regulation fit the size of business?

Posted by: John Tozzi on February 02, 2009

Crafters and other makers of children’s products up in arms over the CPSIA are breathing a bit easier this week. Many small business owners have been frantic for weeks because of new product safety regulations, set to take effect Feb. 10, that require expensive lead testing — even for materials that producers maintain are inherently safe. Friday night regulators announced a one-year stay for the testing requirement, to give “the staff more time to finalize four proposed rules which could relieve certain materials and products from lead testing and to issue more guidance on when testing is required and how it is to be conducted.”

This delay is in response to a massive online campaign that small business owners organized. The Handmade Toy Alliance, an ad hoc group formed to fix the law, said:

This is a substantial reprieve for our members, and it will give us a chance to work with Congress and the CPSC to make the law more equitable for small businesses. However, considerable problems remain and there is much work to be done. At least we have proof that our voices are being heard and the CPSC is no longer misinformed about the impact of the law on small business.

There have been lots of good suggestions about what’s wrong with the law and how to fix it in a way that balances its intent — to make kids’ products safer — with the needs of small business owners. Now lawmakers, regulators, and business owners have a year to sit down and figure it out.

Stepping back, I think something more interesting is happening here. The government is being forced to recognize that rules for mass-market industrial businesses don’t necessarily fit small, independent, or artisan producers. One of the key findings of Intuit’s Future of Small Busines Report last year was the rise of artisan businesses. You see this in all sorts of industries: agriculture, fashion, film. The Internet lets small producers and consumers connect and engage in a two-way conversation, rather than the old mass-market one-way broadcast. New business models sprout around this change every day.

But as the CPSIA firestorm demonstrates, the laws haven’t caught up with them. For example, one of the most revealing parts of the Omnivore’s Dilemma talks about how food safety laws written to regulate industrial-scale slaughterhouses actually make it difficult to for small farmers to produce their own meat on an artisan-scale. I see a similar pattern in the music industry: record labels want strict enforcement of copyright laws, but many independent artists want their fans to spread their music through file sharing.

You can bet the CPSIA won’t be the last law written for an industrial economy that bumps up against the nascent artisan economy. We need laws that work for both Mattel and Etsy crafters. So how should regulators deal with this change in how business is done? How can society balance the need for reining in abuses and excesses in the private sector without putting up barriers to entry that shut out entrepreneurs? Anyone have an example of models that work? Is there any research out there on this?

Tell us in comments, by email, or on Twitter.

Reader Comments

Sherry (Babypop)

February 3, 2009 01:25 PM

Thanks you for shedding more light on this issue. I am part of the handmade community but my business is growing and I expect the laws that are written will affect me more as my company grows. My background is from large corporate manufacturing for 14 years to owning my own small childens company. I am concerned that all parties involved need to look at the big picture. The small artesian must also campaign for there suppliers as well. We can’t just push the certification on the supplier, but we must also look at what the supplier are required to do for certification. Because if the rules are overkill to the supplier, it will affect the artisan/makers raw material prices and delivery from the suppler. We all must protect the supply chain as well as our children.

Also many import laws have been passed such as 807 or CBI where certain requirement must have been met for the manufacture to bring items into the US without or limited tariff/duty. I think we need to look at how these laws were applied, implemented, and what is were the methods in which to make them effective. Also Tommy Hilfiger the apparel company requires all its manufactures to do 3rd party testing, (due to a court ruling) . The Hilfiger company would be a excellent resource for asking what works and does not work when it comes to a 3rd party testing.

The original Law was pushed through but now all parties have to find a place where the kids are safe and everyone can grow and profit.

Argante Dillon

February 9, 2009 09:10 PM

I am a doll maker and stay-at-home mom in California. I hand-craft Waldorf (soft cloth) dolls out of domestically produced, certified organic cotton and wool. I started my business because I was concerned for the environment, the dubious safety of imported toys, and had a desire for toys which reflect my nature-loving family's values. I felt vindicated when the abuses and safety violations of the big toy companies where highlighted in the press. I hoped that my small business would benefit from a returning desire for locally produced, artisan crafted toys made from naturally non-toxic wood and cloth. But now, the laws enacted to protect our children from the unethical practices of large corporations is forcing my home-based craft enterprise out of business! I can barely pay my grocery bills, and now I'm required to pay hundreds, even thousands of dollars to test every "batch" of dolls I make! (I never make more than six of the same kind of doll at a time, usually I make one to three at a time.) It's completely ludicrous that I have to meet the same unit and batch testing standards as multi-million dollar corporations! Especially when my dolls are already made from inherently safe materials! My children are extremely chemically sensitive and I was very diligent in investigating where my materials come from. The sheep who grow the wool I use are even pastured on fields where no chemical pesticides or herbicides are used! It is ridiculous that our lawmakers wrote a law that so drastically and negatively affects home-based businesses in the US. So much so that it threatens to put many of us out of business altogether, all in the guise of "protecting" our children. How about protecting our families from joblessness and bankruptcy by writing laws that recognize and support the diversity of American businesses, not just the ones who pay to take the lawmakers out to dinner.

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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