Small business up against the wall

This from a recent article in the L.A. Times: “In every recession over the last three decades, it has been America’s small businesses – those Lilliputian companies with fewer than 100 employees – that stepped forward, began hiring and pulled the country out of the mire. Not this time.

“Small firms are on the sidelines, and it’s not just because of tight credit from the financial meltdown, as the Obama administration and others have been saying. Rather, a host of factors – some well-recognized and others seemingly unnoticed in the national debate over economic policy – are converging to restrain small-business owners from hiring.”

The article goes on to list a dozen or so reasons small businesses are going into the tank. All of them are valid but they do not tell the whole story. I’m convinced that we made a huge mistake in bailing out “too big to let fail” corporations while neglecting the small business. The money that was squandered assisting large corporations would have been much better invested by using it to fund small local enterprise and new technology startups.

My own business is almost parked at this point and thank god I have another business that I operate with my wife which actually has the potential to get over the top. Most of my woodworking these last seven or eight months has been devoted to learning to make art turnings, something I always wanted to do. But I sure would not want to have to depend on that to make a living!

You can read the entire LA Times article at http://www.latimes.com/business/la-fi-smallbusiness-jobs-20100704-2,0,2662903.story

D.D.

COMMENTS

  1. R Bagnall wrote:

    As long as the government keeps reaching further and further every day into every aspect of business, there is simply not enough stability to risk hiring.

    For example, virtually every week new details are released about the healthcare reform bill. It was voted into existance without most of the specifics known, so we find out a little more each week. But it is impossible to formulate a business plan without knowing what benefits you can offer, how much they will cost, or what your fine will be for not offering them!

    Until small business owners, and those who might wish to start small businesses feel that stability has returned to the regulatory environment, they will continue to be exceedily cautious. Unlike the Government, the money at risk is their own!

    RW

  2. Pat Gilbert wrote:

    The LA times is the last place to look for facts.

    This is nothing new, the only new thing is the degree of government intervention but even that was paralleled during FDR’s administration, he had 3 terms to get it right and only produced a depression.

    We are in the aftermath of the fair-housing act, repeal of the Glass Stegal act, corruption at Fanny and Freddy and incompetence by Greenspan. Which resulted in the inflated price of housing in So Calif.and other places. When the abundant supply of credit dried up so did the price of housing in So Calif et al. Then as you have said the bailouts exacerbated the problem.

    The only Real solution in the past has been to shrink government and taxes (especially in Calif.), as has been Proven under Reagan and Coolidge.

    I’m not opining these are the facts.

    Pat

  3. Douglas wrote:

    It does seem that our government (local and federal) do not want the small “mom and pops” that built this country to thrive and survive.

  4. HM wrote:

    I really don’t think most politcians understand what has made this country great in terms of business. They have never started a business nor have they operated one. On a daily basis, they host big corporate America lobbyists and feed at Big Businesses’ tables during re-election times. They are indeed out of touch and are a far cry from what our founding fathers in terms of character and work habits. We need a part time Congress.

  5. Bob wrote:

    Very well put. Big government never has helped anything. I am like you, let the buggers fail. Never makes sense to give money to the ones who have it all, Wall street, insurance and banks.
    bob

  6. Mike Olson wrote:

    An anecdote I heard recently explains the mentality of big government supporters. A Wisconsin DNR Agent told my brother-in-law he thought the theory that small businesses are the backbone of the economy was B.S. He believes government programs make the economy grow.

  7. Anthony Hillman wrote:

    I’m getting the feeling that anytime the mismanagement and waste of local and Federal Government gets too costly, government, especially Local Gov’t.just raises taxes on the homeowner,and businessman, no matter how bad the economy is.

  8. Kirk Breakey wrote:

    If you all want to really affect the situation instead of postulating about the effects, then boycot products from the East and force reinstatement of manufacturing back to the west. The cost of manufacturing in China is rising along with the education and resulting awareness of the work force there. It is prime time to look forward…the economy of our nation will never be what it was until we start to produce and not just consume. Bite the bullet and be willing to pay for quality instead of taking the ‘cheap road’. We are all responsible for allowing the ‘Walmarts’ of the world to dictate the declining quality of products that we use on a daily basis. The Government is not going to bail out the small bussiness folks, we need to stand together and do that ourselves. If that means paying that extra percentage at the local store or buying the rare western made product, then so be it. The strength of our Nation was built on an attitude of independance and ‘can do’ creativity…let’s not let an attitude of complacincy and blind acceptance replace that.

  9. Jon Walpole wrote:

    Please thank God with a capitol “G”. Otherwise I’m Guessing that your talking about the sun-god or moon-god or something.
    Jon

  10. A.J. Hamler wrote:

    Jon… As long as we’re criticizing spelling, what exactly is a “capitol” G?

    A.J.

  11. Pat Gilbert wrote:

    There are two schools of thought regarding the economy.

    One is Keynesian economics that believes the government can control the economy, think FDR or the current administration. They believe that for every dollar spent by the government you get 1.5 dollars of economic activity. This has been disproven by empirical(common sense) knowledge FDR, using this policy produced an 11yr depression and unfortunately the current administration is about to prove it again.

    The other is the free market, think Adam Smith or Milton Friedman. They believe that people left to freely exchange with each other with out government intervention will establish what is valuable to others. As John Stossel says the “thank you thank you” moment where the supplier wants the money more than the product and the consumer wants the product more than the money. This process establishes the value of the product and has its own morality or ethic. This has been proven to work over and over. Have you ever heard of the recession of the 1920′s? Harding took office in 1921 with unemployment of 20% (probably real current unemployment rate) and runaway inflation. Harding instituted free market policies that led to roaring 20′s.

    http://en.wikipedia.org/wiki/Roaring_Twenties#Economic_policies

  12. Don wrote:

    My cabinet/furniture business is ok but certainly not going gangbusters. I’m making just enough to live on. I see a lot of our tax dollars going to big business slush funds and corporate parties. All these companies that bellied up to the government pig trough should be required to pay it all back – with interest.

    Another way to send a powerful message to local, state and federal corruption officials is to vote for challengers across the board.

    It doesn’t matter what party you belong to, it’s time for the corrupt and entrenched politicians to go. VOTE FOR CHALLENGERS in the upcoming election. VOTE OUT INCUMBENTS! They’ve earned it. This is the only way to send the type of message that politicians seem to understand. FIRE THEM ALL and hire new people!

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