What Small Business Really Wants
Recently, I watched a rerun of What Women Want, starring Mel Gibson and Helen Hunt. Gibson has a “shocking” experience (literally) allowing him to get into women’s heads and read their thoughts. Not a great movie, but high grossing and of interest to me because it involved an advertising agency—my core profession for over 40 years.
It also coincided with Minnesota and Congressional conservatives trying to get into small business people’s heads. Conservatives continue claiming they know what small businesses need. Let’s start with common ground. We both agree small businesses are the economic drivers that will help our economy out of this funk. That’s about it.
Frankly, conservative ideas about small businesses are insulting; over simplified, if not fictional; and will do little to stimulate small business growth. Few lawmakers really know the dynamics of small business challenges; therefore, many have trouble getting “into the heads” of true small business people.
I am a long-time small businessman. After serving three years active duty in the U.S. Air Force, I was honorably discharged. In the late 1950s, a friend asked me to join his ad agency because his largest account sold communications equipment to the Air Force. A few years later, I became a partner in my own agency, and have owned several other Twin Cities and San Diego firms, over the decades.
I have been the quintessential small businessman and entrepreneur. At 77, I still own and operate my own successful Minnesota businesses, giving me well over half a century of expertise to share. That’s why I can say most conservatives’ proposals are irrelevant; and the right proposals are being ignored.
Their ideas around the tax debate are most egregious, especially claims about “this hurting small business.” In most cases it’s flat out wrong. At both the national level and in Minnesota, tax increases on high income earners would affect only a minority of small businesses.
In a recent analysis, Scott Shane, entrepreneurial studies professor at Case Western Reserve University, plotted the average revenue for all industries and businesses classified as S corporations, which many small businesses are. The average revenues were roughly $1.5 million annually, and the average income (on which taxes are paid) were about $100,500. This is far from the federal $250,000 tax threshold for wealthy. In Minnesota, 95 percent of households would not see tax increases with the governor’s tax fairness proposals.
The whole subject of taxes to me (as a small businessman) was entirely moot. I never based my growth plans, or operational strategy on taxes. Nor do most small businesspeople let taxes drive their goals for success. Should I plan accordingly, work hard and put myself in a position to succeed and make considerable profit, I’ll see a higher tax rate; the worst case scenario is I pay a bit more. But I’m also making more.
The whole discussion of trickle down vs. raising all boats is too trite to repeat here; but to me, it has been positively decided. Small businesses depend on strong consumer demand, not low taxes. In that regard, extension of unemployment benefits and maintaining worker bargaining protections fit that mold too; it is not only a humane issue, it is also economic in that it adds demand from the bottom up.
Capitalism is a demand-driven economic system. Putting more money in the hands of fewer people is a negative; what is needed is putting more money in the hands of more people—folks who are demand-driven consumers.
The other bugaboos that conservative deride are regulatory issues. I have never “feared” regulations. Some are essential and easily complied with while some are bogus.
But regulation, to a small businessman, is a moving target. Always changing, and sometimes annoying; but it has never inhibited or dissuaded me from carrying on and growing. It’s something you deal with. Especially considering how the lack of regulation winds up hurting all businesses when disaster strikes, like food and product recalls, oil spills, mine tragedies, and the Wall Street debacle.
Here are some real issues on which policymakers should focus. Right now, the biggest negative is lack of liquidity. Despite all the talk, promises, and programs to stimulate bank lending, none are working, and without the fuel (funds) to power expansion, small businesses are stuck in neutral. Take it from me, good credit, strong growth history, long term relationships, etc are not stimulating banks to lend—and it is devastating to businesses which are growing and hiring. This is an area where the SBA needs to do more.
Two major policies conservatives are attacking that are actually key to assisting small businesses are infrastructure and education investment. In the short run, small businesses must have solid transportation, good roads, and easy access to markets domestic and foreign. On the education front, small businesses especially depend on an educated, skilled workforce, because with fewer workers, better trained and more strongly motivated employees are crucial.
As a long term, successful, and experienced small businessman, I resent being told what is good for me by a bunch of politicians who have little experience in my shoes. Instead of sitting down and listening to us they’re basing proposals on political positions rather than factual suggestions that might have merit for small businesses. In fact, they’re proposing policies that might actually be harmful to such businesses.
As Minnesota and Congressional leaders move forward on budget solutions, they must take the time to listen to small business folks, elicit very specific suggestions, and try to get a true picture of how best to assist those helping drive us out of this downturn.
Myles Spicer is a longtime ad industry proprietor and occasional MN2020 contributor.