There is a growing belief that newcomers and immigrants are responsible for the economic pressure small business owners are feeling. It is an easy story to tell, but it is the wrong one. The real friction is not coming from the street. It is coming from the rulebook.
I see this dynamic from both sides. Regulations that feel like red tape to small businesses function as a competitive moat for large corporations. This is not accidental. It is structural.
For the small business owner working eighty hours a week, regulation feels like a nuisance at best and a threat at worst. Another form. Another permit. Another reporting requirement. Another audit. Each one costs time, money, and attention that could have been spent serving customers or building the business. These costs compound quickly when margins are thin and cash flow is fragile.
Large corporations experience the same rules very differently. In strategy, we talk about barriers to entry, and regulation is one of the most powerful barriers that exists because it behaves like a fixed cost. When a new regulation costs one million dollars to implement, it barely registers for a telecom company or a national food producer. They already have compliance teams, legal departments, and internal systems built for this kind of work. For a startup or small operator, that same cost can end the business before it ever begins.
While the regulatory moat is a massive hurdle, it doesn’t act alone. It works in tandem with unequal access to capital and the overwhelming weight of economies of scale. Big businesses can negotiate volume discounts and access cheap debt that the local entrepreneur can’t reach. But unlike market competition | which can be won through better service and innovation | the regulatory burden is an artificial tax that the small business man don’t have the power to outwork.
This is what economists refer to as regulatory capture. Rules that were designed to protect consumers end up protecting incumbents instead. When complexity rises, capital flows toward the safe bets | the giants who can afford the lawyers. It stops flowing toward the innovators who can actually solve the problems. Over time, markets stagnate. Innovation slows. Prices rise. Choice disappears. And the public is encouraged to blame the wrong people.
You can see this clearly in Canadian markets. Telecom remains effectively closed to new entrants because the compliance burden is impossible to absorb without scale. Agriculture is increasingly dominated by large players who can afford the regulatory overhead that small farmers cannot. The rules appear neutral, but their effects are not.
This is why so many small business owners feel exhausted and angry without being able to name the source. They are fighting each other while the system quietly hardens above them. They are being taxed by complexity rather than competition.
A healthy economy depends on entry, experimentation, and the ability to fail without being wiped out. When regulation becomes a fixed tax on newcomers, we lose all three. The solution is not less safety or less accountability. It is smarter design that scales compliance with size and lowers the barrier for new participants.
If we want the next generation of entrepreneurs to build anything at all, we need to stop blaming the people at the bottom and start questioning the walls at the top.
I am a Canadian insurance and investment professional and the President and Chief Executive Officer of Chazz Financial Inc. and Chazz Capital Assets. I write about leadership, markets, insurance, investing, and decision making, with a focus on how structure and incentives shape outcomes.
I hold a business degree and I am a Fellow of the Canadian Securities Institute (FCSI®), a Chartered Life Underwriter (CLU®), a Chartered Financial Planner®, a Certified Health Specialist and a Mutual Fund Investment Representative.
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