In the closing days of the California Legislature’s 2023 session, legislation is quickly moving that will stack the deck against California’s small businesses.
SB 362, the Delete Act, would allow consumers or businesses they pay to delete their personal information used to confirm their identities and offer them customized goods and services. Not only does the legislation open the door for more manipulation of consumers’ data for identity theft, but it also effectively cements big businesses’ dominant positions in the marketplace by making it nearly impossible for small businesses to attract new customers.
Instead of the Delete Act, it would be the Delete Small Business Act.
Small businesses attract new customers in a highly competitive market in part by using consumer data to identify potential customers. Most new businesses and start-ups accomplish at least one of three things: disrupt an existing market with innovation, serve an underserved market, or serve or even create a niche market.
Regardless of the route, customer identification and acquisition among target audiences is essential to successfully gain prospective customers. Eliminating consumer data will make this connection between companies and the consumers who want and need their products or services inefficient and nearly impossible.
Without the ability to target potential customers using information like geography, age, interest, or past purchasing data, small businesses will be limited to un-targeted marketing. The cost to reach ideal customers would increase exponentially. Much of the limited advertising budgets for small businesses would be poorly spent on audiences with no interest in their products.
This does not impact the big businesses in the same markets in the same way. The legislation does not impact many of the larger corporations, and marketing budgets for other larger companies will be unphased by inefficiency.
This bill would ultimately choose large companies as the market winners over small businesses. The legislation conveniently leaves out social media companies and search engines that collect vast troves of personal information used to sell billions of dollars in advertising. This bill would further solidify this dominance and disadvantage small businesses’ ability to compete for advertising.
For example, passage of SB 362 means the new vegan deli in the neighborhood will have a hard time competing with the private-equity-backed vegan chain restaurant down the street. All the chain really needs to do is wait out the competition from the independent businesses that can’t afford inefficient marketing, and then they will be positioned to take over the market.
This is also harmful to consumers, who benefit from a competitive market.
Small businesses are the backbone of our economy, employing 48% of all Californians. That number is sure to go down if those small businesses cannot use the tools available in other markets to find new customers. Passing the Delete Act will drive small businesses out of business and push entrepreneurs and startups to states where they can build their customer bases and thrive.
California is losing population and it is primarily the largest tax contributors that are leaving. Over the past few years, we have lost several large businesses moving to other states. Adopting new policies that will hurt California’s small business growth is not good for California’s economy. Our lawmakers continually preach about Californians needing good, high paying jobs, but always throw roadblocks on those same job creators making good jobs possible. Jobs don’t come about because Sacramento says so. Jobs come from people taking initiative, ingenuity, and risk to build a thriving business.
Don’t let the Delete Act delete California’s small businesses.
Author: Sunder Ramani, President, Penta Resources, Inc. and Chair, Leadership Council, NFIB CA.
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