So, small businesses do not actually rank government regulations as that big of a problem for them. They are way more concerned about the state of the economy, despite what conservatives often say. With that said, there are still some who do complain about regulations, and I am sure some of them are genuine in doing so. This seems like a strange thing to be complaining about, but I think I know why this seeming error is made: I imagine that business owners often cite regulations and taxes as a problem because they are not thinking about other firms having to endure the very same regulations.
Imagine a business owner sees that she has to spend thousands of dollars complying with certain anti-pollution regulations. She looks at her own business and thinks to herself that removing those regulations would be a great boon to her business. After all, she would save those thousands of dollars. Imagine how much more profit that would be, or how much more she could expand, and so on.
But the problem with that reasoning is that it does not take into consideration that every other competitor also faces those same regulations. According to market theory, removing a certain anti-pollution regulation from all of the businesses in this businesswoman’s industry would do her no good. If the other firms she was competing with were sufficiently competitive, reducing her costs by a thousand dollars would not be a boon for her profits or ability to expand. Instead, these apparent savings would vanish as competition would require her to reduce her prices or increase wages or whatever else depending on the nature of the industry.
But the business owner probably does not think about that. She thinks about getting those thousands of dollars, not the way in which those thousands of dollars will change the nature of the competitive market she is in (which probably wont involve her just pocketing that money). So she ends up saying that regulations is costing her a lot, and making her unable to hire new employees or expand. But in reality, removing those regulations on the entire industry she is in will probably not result in a new equilibrium where she can do a bunch of expanding or hiring.
That is not to say that therefore all regulations are harmless. Removing them may not lead to more jobs or expansion of a particular firm — as the business owner thinks it will — but by bringing down prices, it could still have a net-positive effect. But that is a different argument, and it will proceed on much different grounds. We would need to discuss what the overall costs of the prevented pollution is and whether allowing that pollution to occur to decrease prices would actually increase overall efficiency.
Business owners are not thinking about things on that level though. They are thinking about their own firm. While in some marginal cases, regulations could actually be causing some issues, I suspect that in many cases business owners who complain about them are not taking into consideration the effect market competition would have on the reduced costs that deregulation of their firm would entail. The idea that the deregulation would cause everything else in their firm to remain the same, but just leave them with more cash to deal with at the end of the day is ludicrous, but an easy mistake to make.