(FORTUNE Small Business) – An explosion in regulations is smothering small fireworks-makers. Since 9/11, the government has passed dozens of measures requiring them to provide extra security when transporting or storing hazardous materials. "The little guy absorbs these costs," says Gregg Smith, safety-program manager of the American Pyrotechnics Association. Insurance rates have tripled in the past five years, he adds, raising the cost of putting on a July 4 show from $3,000 to at least $10,000. "Each layer of red tape affects our bottom line," says Sue Everett, who runs Skypainter Fireworks of Clearwater, Fla., with her husband. "Our profit margins have shrunk dramatically." --MAGGIE OVERFELT