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Quote of the Day: Will Small Business Survive?
“I have run two small businesses in Kansas, and I have seen how government can crush entrepreneurism. That’s why I ran for Congress. It just so happens that there are a lot of people in south central Kansas who agree with me on that.” — Mike Pompeo
My initial reaction to Secretary Pompeo’s quotation is that he was not your average legislator. He actually knew something about running a business:
As a businessman, Pompeo is perhaps best known for co-founding Thayer Aerospace with some of his classmates from West Point. A specialized aircraft machinery manufacturer based in Kansas, Thayer expanded through investments from venture capital groups including Koch Venture Capital, a fund run by billionaire investors Charles and David Koch. . .
Pompeo later served as president of Sentry International, a manufacturer of oilfield equipment, from 2006 to 2010. Pompeo earned $238,364 in his final year in that role, the New York Daily News reported.
His experience doesn’t guarantee that he could understand the plight of small businesses today, but most of our legislators have no clue about the struggles of small businesses in today’s environment. And if Pompeo decided he would run for office again, his experience would be a plus in understanding how small businesses and entrepreneurs need to be supported.
What is the current state of small business? It’s pretty dire:
For small businesses, what’s really scary is the unholy alliance between ‘big government’ and ‘big business.’
While politicians of both parties give plenty of lip service to helping small businesses, ‘big government’ (or even ‘small government,’ for that matter) seems committed to giving ‘big business’ a competitive advantage.
The disadvantages for small business are a result of their limited ability to make campaign contributions, inability to take advantage of tax breaks, limitations on reducing health care costs, dependency on local labor, and demands of regulations. In addition, the other increased costs, the impact of inflation, need to reduce inventory, supply change shortages and the disenchanted customers add to their burden.
We must shift our understanding of the role of small business:
If we don’t get this right, we have the recent past for evidence of what will happen. During the Great Recession of 2008 and shortly thereafter, the net number of new firms created in the United States was negative: More companies closed than were being started. The result was 117,000 fewer companies in 2014 than there were in 2007. Entrepreneurship rebounded, but only in a few places. In the 30 years leading up to the Great Recession, 80% of metro areas saw an increase in the number of firms annually (a period that includes prior recessions). This trend was completely reversed by the Great Recession, after which only 20% of metro areas have seen an increasing number of companies created.
Our entrepreneurial spirit unites America. When it falters, our divides grow.
Now is our moment to change how we’re handling the substantial need that exists across the American business landscape. It’s not about either/or decisions. It’s about rebuilding the infrastructure of community finance and taking advantage of all the assets and conduits we have to help small businesses. It’s about getting funds into the hands of America’s vast and diverse set of entrepreneurs who can help rebuild us out of this crisis.
And finally, let’s not forget all those small business owners who lost everything through the violent and hateful destructive acts in the summertime riots two years ago. Who stands for them? Who helps them through the wreckage? Who heals their hearts? Or those who are still victims of smash and grab crimes even today?
Although there are people who refuse to give up their dreams to be entrepreneurs, we are making their reaching of their goals almost insurmountable.
Are we coming to the end of entrepreneurship in America? Or can we resurrect the American dream?
[photo from unsplash.com]
Published in Economics
Entrepreneurship is not dead. BLM became a highly lucrative for-profit hustle selling indulgences to corporations. The entire green energy racket is thriving. The left has turned their ideology into a profit center.
The problem is that sellers are providing that which very stupid consumers seem to want, including overbearing, inefficient government. At a grassroots level, America needs to fix stupid so that these distortions can dissipate.
Point taken. But I don’t follow your comment here . . . are you saying the “sellers” who keep selling us on our terrible government? That I get. Now we need to figure out how to fix stupid . . .
As an independent consultant and trainer, I mostly worked from my home, although I rented office space for a year or two. I mainly facilitated team problem-solving activities. It was a thoroughly rewarding time of my life: I could define my own parameters for the work I wanted to do; select the customer base I wanted to focus on; even refuse to work for a customer after the contract was signed. (I insisted that all the city council had to attend a facilitated process, and when one person cancelled at the last minute, I cancelled the whole thing. I had interviewed everyone to prepare, but I respected the city manager who was beside himself with frustration, and I said there’d be no charge.) I even reached a point of telling prospective clients that unless they were prepared to make some internal changes, there was no point in hiring me. No one refused to work with me, and in fact I think my declaration was repected.
This is the freedom that an entrepreneur can enjoy. Of course, sales and marketing are the pits, but we have to take the good with the difficult!
The politicians who offer to bribe us with our own money and “solve” problems enabled and abetted their leech class enablers are offering a product people are choosing. I would rather buy from the guy who sold Jack those magic beans than anything Paul Krugman endorses–better odds of a good outcome and cheaper.
And further let’s not forget that many of the Covid-inspired government regulations explicitly favor big business, and actively shut down small business.
Bigger or more government is inherently anti-small business.
Every new law or regulation or government agency “guidance memo” is another brick in a wall that stands between the entrepreneur and his business opportunities. That individual brick may not be significant to a large long-established business that had already figured out how to get over or around the wall in its way. But to the entrepreneur who has to figure out for the first time how to get over or around the wall, that new brick just adds to an already monumental task. Often large businesses lobby government to add legal and regulatory bricks to the wall specifically to prevent entrepreneurs from entering the field.
Every person who advocates for new laws or regulations (bigger or more government) should recognize that doing so is arguing against new and small business.
Nothing is ever over until it’s over.
During Trump’s presidency, we were doing such a great job of reducing regulations; the govt. even required that for every new regulation enacted, two had to be eliminated. Oh well . . .
We need business environmental impact statements for each new law and governmental budget.
Works for me!
And that is what makes America great! Too stupid to quit!
Florida is showing the other states how it’s done! All DeSantis’ defiance against the feds and support of our state is paying off big-time! Let’s see if the other governors are smart enough to figure it out.
There’s nothing that small businesses do that government can’t do
betterin ways that create more government jobs, and job creation is everything right now, especially since people can now get 2 or 3 jobs and they all count in job creation.Thinking back over my 25-year purchasing career, the job that was the best and most fun was my first. I was the sole purchasing agent for a small local electrical control-panel builder, with perhaps 25 employees. It was a job shop, and every job had a different bill of materials with different parts and pieces that I had to source, buy, and have delivered in time for the assemblers to put everything together. The company was failing when I started, though I didn’t know that at first. I learned all about electrical stuff from my suppliers, and kept the company afloat for months longer than they would have, since I was able to cajole suppliers to sell us parts they knew they wouldn’t get paid for. But I’d do it again if given the chance.
Pompeo IIRC was one of the more effective leaders in the Trump Administration. In “ordinary times” his presidential candidacy would be a welcome contribution to the democratic selection process and, however, it turned out would strengthen the resulting ticket by honing a message attractive to the constituency that Pompeo, even if a failed candidate, has. But these days there is too much opportunity for contentiousness and deep wounds. I pray we get through this. It will be tough enough to achieve restoration even if completely united.