By Mark Blackney
President/CEO
America loves to celebrate its heritage with holidays. We have religious holidays like Christmas and Easter and days off to recognize our presidents and other icons. On Veterans and Memorial Days we pay respect to our service men and women who should be honored every day.
We even recognize America’s workers on Labor Day. But there is no holiday to pay tribute to the largest group of unsung American heroes – our small business owners.
When we ask our students in the Young Entrepreneurs Academy why they want to own their own businesses, each one says, “To have control over my own life so I don’t have to work for others.” That’s a brave thing to do. That’s why entrepreneurs are special people. They are where the buck stops for every decision, good or bad. They enjoy great successes but also face the consequences of misjudgments and mistakes, yet they continue the pursuit of their dreams.
Small Business owners are the backbone of our economy. Defined as having less than 500 employees, there are 28 million operating small businesses in the country that employ over 62% of all workers. Since 1990, big business has eliminated 4 million jobs while small business has created 8 million new jobs, over 65% of net new jobs since 1995.
Starting a new business can be a daunting experience. Often newly minted business owners only think about potential successes – hundreds of people lined up at the door, media coverage and all that money to count. Then reality hits as they discover the hoops they have to jump through to collect that first dollar.
Before they can make money, they have to spend money – a lot. The financial stress on new business owners is tremendous. They either are leaving the safety of the employment world or starting from scratch. Either one requires a huge financial commitment. Most dip into personal funds while others solicit outside funding with strings attached. Not only is there a financial sacrifice there is also a “time” sacrifice. A set schedule is not in an entrepreneur’s lexicon.
Entrepreneurs are risk takers. They must always be prepared to change course to adjust to the marketplace or their financial situation. Smart ones make sure to follow best business practices and be constantly on top of their financial footings. They also hire the best people.
The greatest risk a business owner takes is hiring employees. With their family assets at stake, entrepreneurs take a chance on the character of the stranger across the desk who wants a job. Hire the right person and your sales go up. Make a mistake in judgment and you can suffer for years as your now ex-employee waltzes off to wreak havoc on another company that you can’t warn.
The employer/employee relationship is an interesting one. A person is hired to work to make money for the boss who in turn rewards said employee with raises or benefits. The boss expects his employee to follow the rules, show up on time and give good customer service – all to make the company run smoothly and be profitable.
Most employees are a great asset to their company. However, over the years employers have seen a steady decline in employee loyalty and work ethic. This trend is occurring all across the board from white to blue collar in high and low skilled occupations.
The greatest nemesis in the employer/employee relationship is the 5 inch thick Labor Law Manual. Its complexities and magnitude make it impossible to follow every regulation. Many employers need the assistance of human resource personnel or even attorneys to navigate around all the rules. And waiting like the Sirens of Greek mythology sits the Labor Board for employees that treats employers as guilty until proven innocent.
Smart and successful business owners treasure their employees as their most important assets and treat them that way. They recognize that much of their success is a team effort.
Business owners are heroes because they have to put up with a government that has no understanding or appreciation of the private business sector then creates regulations that interfere with and, quite frankly, hurt business. Over 2,000 bills are proposed in Sacramento every year with a vast majority as anti-business. As one of our members stated, “I feel like I always have a target on my back.”
As I have often written, the problem with government is that it doesn’t recognize the concept of profits or efficiency. Its funding is not earned through customer service or frugal financing, but is confiscated from the public.
Government actions do not accommodate the differences among private companies. When a one-sized-fits-all mandate such as the minimum wage is imposed on private companies, it just doesn’t work. Each business owner knows his financial status including profits, the monetary value of each employee and most importantly, what he can afford. When government forces an increase in expenses, it upends the individual owner’s business plan. He is forced to make changes that in many cases hurt his business.
Mandates such as health care that effect only certain sized companies, diminish business growth. In the case of the ACA, hiring the 50th employee puts the company into new requirements that are extremely costly. Often the company has to stop growing or make major financial adjustments.
Small businesses are at another disadvantage when facing giant mandates and programs. They can’t afford legal and professional advisors to navigate the rules thus facing huge fines and penalties. Large corporations on the other hand are able to handle the complex regulations.
Small businesses are often targets of class action lawsuits especially here in California that has been designated the Number One Litigation Hellhole for 3 straight years. So many of our members have been victims of American with Disabilities Act lawsuits with a minimum price of $4,000 per charge whether true or not.
Unfortunately, many of our small businesses haven’t survived the current recession and had to give up yet we have also seen an increase in new businesses being created by people making life changes and deciding to finally follow their dreams. They’ll face the same problems and issues. Some will make it and some will not. But they can always brush themselves off and try again.
Hats off to our economic heroes, our small business owners.
