What makes a neighborhood, a community, a city, and a state vibrant, alive, and a great place to live? What gives a place that special flavor, what makes it unique and a good place to work and raise a family? In large part, local small businesses give a community its character, its sense of growth, and its optimism.

This is especially true in Illinois. The most recent data shows just how important small business is to Illinois families. Here, small business continues to create new jobs. According to the recently released Small Business Profile for the States and Territories by the Office of Advocacy of the U.S. Small Business Administration, small businesses added 53,500 net new jobs in 2004, the latest period studied.

But as they say in the infomercials, “that’s not all!” The updated profile also shows that in 2006, Illinois had an estimated 1,121,300 small businesses, of which 290,600 were employer firms. Those small businesses employed 50.7 percent of the state’s non-farm private workforce (in 2004).

Further, diversity of business ownership is bringing more of the state’s minorities and women into the economic mainstream. The latest available data (from 2002) documents that Illinois has 44,500 Asian-owned firms, 68,700 black-owned firms, 39,500 Hispanic-owned firms, 3,400 native American-owned firms, and 660 native Hawaiian and Pacific Islander-owned firms. Moreover, women-owned firms total 285,000 and generate $46.9 billion in revenue.

The 30,230 new firms with employees in 2006 showed just how optimistic Illinois’s entrepreneurs are about the future. More importantly, those firms are driving the economy. Office of Advocacy research has shown that new business creation is key to the state’s ability to increase gross state product, state personal income, and total state employment.

Unfortunately, because the businesses are small and individually don’t appear to be important, policy makers tend to overlook them when discussing and implementing regulatory, tax and economic proposals. Because they are overlooked, some do not understand how their programs, rules and regulations can harm small business.

The result is that small business faces an uneven playing field. According to Advocacy research, just complying with federal regulations costs the nation’s smallest firms $7,647 per employee each year. That is 45 percent more than the per-employee costs of their larger counterparts.

As the years have gone by, the total annual federal regulatory burden on the economy has grown to enormous proportions. Complying with all federal regulations now costs our economy $1.1 trillion per year—that’s more per household than the cost of health care.

It’s time to help lighten that load by streamlining and updating outdated and ineffective regulations.

The Office of Advocacy’s new Regulatory Review and Reform initiative (r3) does just that. The initiative encourages small business stakeholders to identify current rules that are outdated or ineffective and recommend targeted reforms.

The result will be an annual “Top 10” list of current regulations that are ripe for reform. Advocacy will work with the relevant federal agencies to make sure they understand the impact of those current regulations on small business. In addition, we will provide them with training in how to review and reform outdated and ineffective rules.

We are calling for nominations of federal rules and regulations in need of review and reform, and we need your help to make r3 a success. You can make them by visiting the r3 website at www.sba.gov/advo/r3, sending an e-mail to advocacy@sba.gov, or calling Keith Holman at 202-205-6936.

Small business is what makes neighborhoods, communities and states strong. Small business creates jobs, develops innovative products and services and brings diversity to our economy. By leveling the playing field and supporting small business with regulatory relief through the r3 initiative, we can keep our communities a great place to live for our children and grandchildren.

Ray Marchiori is the Midwestern Regional Advocate for the Office of Advocacy of the U.S. Small Business Administration. He is the direct link between small business owners, state and local government agencies, state legislators, small business. Contact him at 312-353-8614 or raymond.marchiori@sba.gov