Entrepreneurs, We All Need To Help Stop The War on Small BusinessRamon Ray
Insights from Carol Roth’s new book The War on Small Business, now out and available.
Small Business Survival
It’s never been harder for a small business to start, thrive or survive than it is today.
If you were lucky enough to have a small business that was deemed “essential” by government mandate in early 2020, you may have escaped the fate that befell many other small business owners. Those who did not receive a proverbial golden ticket (or perhaps, COVID ticket?) scrapped to survive. Now, many small businesses across industries and geographies are swimming in pre-COVID debt obligations with not enough business cash flow to service them, with many loans personally guaranteed by the entrepreneur.
Other small businesses are fighting for their lives and have to compete with enhanced government payouts to those not working, above and beyond traditional unemployment. Hundreds of thousands of small businesses, if not more, have been confirmed closed forever.
What may not be obvious is that small businesses are under attack and they have been long before the COVID mandates and policies that have followed. That should concern every small business owner.
We’re Born Disadvantaged and Advantaged
Being a small business means that you come into the market with some disadvantages (capital access, scale and so on), but also advantages (being able to provide personalized customer service and generate loyalty, for example). That’s all good and fair when there isn’t other interference to slant the playing field in favor of a handful of bigger players. Unfortunately, that’s what small businesses have had to endure at an accelerated pace.
From tax benefits and breaks, licensing requirements and anti-competitive legislation, more and more burden is being shifted on to small businesses, making it harder to start and compete as a smaller player. Obviously, the ante was upped significantly during the last year, when many smaller players were forced to close while other larger businesses were not. Small businesses were never properly compensated for that requirement. PPP was paltry compared to the Great Recession’s bank bailouts and to other crony handouts of the CARES Act and further “COVID relief”.
While big companies are deemed too big to fail, small businesses are always too small to matter.
Politicians Don’t Care about Small Business
With nearly half the economy and workforce hanging in the balance, why would anyone want to do this? Whether you believe it is intentional or not doesn’t make much of a difference; what does is that the small businesses don’t help the clout of politicians. It’s easier to deal with a few thousand big companies in an “I’ll scratch your back if you scratch mine” set of arrangements than to do so with millions of disparate and fiercely independent small companies. So, government gets bigger, big businesses get bigger and small business owners take on more risk to try to compete.
While we have seen this over and over, with benefits accruing to big businesses at the expense of small business from everything from government legislation to Federal Reserve actions to the US’s relationship with China, last year made it blatant. IPOs saw a record year and seven technology companies gained $3.4 trillion in value while a large part of the small business community died off and even more are on life support.
There’s more ahead; proposals are being floated, varying from increasing the federal minimum wage to the PRO Act, to raising all sorts of corporate tax rates that will disproportionately affect small businesses’ ability to compete in the market.
Small business allows for economic freedom. It allows anyone who has an idea, regardless of background to go after it in pursuit of their objectives, whether those be financial, innovation, flexibility or otherwise motivated. While we pursue entrepreneurship because we want our independence, know that not advocating for that for others compromises our opportunity, as well as the best economic “system” ever created.
Help stop the war on small business. The backbone of the economy and economic freedom depends on it.
Carol Roth is the author of The War on Small Business, now out and available, as well as a small business advocate and entrepreneur.
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