Government policy and its effect on small business

PrintI received an interesting article this morning from Minnesota’s “Finance & Commerce” (via Twitter) titled Government policy and its effect on small business.

I found the following statements to reaffirm much of what I’ve learned in my almost thirty years in business development, real estate development, community development, and economic development:

Small businesses make up more than 70 percent of all businesses. Without them, there essentially would be no job growth.

I have no interest in political debates; I am fascinated with policy discussions.  However, the bottom line for me is captured in those two brief sentences.

5 thoughts on “Government policy and its effect on small business”

  1. Ross,

    This is the paragraph that stuck out to me:
    “In order to attract new businesses and retain existing ones, Minnesota needs to create a more business-friendly, affordable environment. According to the Tax Foundation’s examination of the state business tax climate in 2009, Minnesota ranked 41st out of the 50 states, and was lowered to 43rd in 2010. South Dakota, on the other hand, went from 2nd in 2009 to 1st in 2010. Minnesota government can do better for our businesses!”

    Statewide and locally we need to do better attracting businesses and giving them an environment that gives them a better opportunity to thrive.

    I also found the “stimulus” numbers interesting, I think small businesses got hosed with all this stimulus / rescue packages which were pitched primarily to help businesses deemed “too big to fail”, I just don’t buy that anything is “too big to fail”…something fails and someone else or something else gets developed to meet the demand that the failing company had…that seems like the “American way” to me…whether it’s an insurance company, gift shop, a bank, restaurant, automotive manufacturer, etc…

  2. “Too big to fail” exists alongside “too small to bother about” and I heartily concur, based on experience, that MN is not at all business friendly be it at the state or local level. This is not to discount the efforts of those significant few in government, be they elected or appointed, who do try to help. Yet, the prevailing attitude is unhelpful to say the least and is best described as “unenthusiastic indifference”.

    As for financing, these days there is no money available to borrow without endless reviews and delays or, in most cases, disappointment. None, not one cent, of the bailout money trickled down to small business. Not that bail out cash was needed by them. All small business needs is an expeditious review of the business plan and timely availability of relatively minuscule loans (not grants or free cash, I might add).

    What might help – albeit an outrageous thought – is the similar treatment of all businesses, be they for-profit or not-for-profit, with turnover of, say, up to $750,000 per annum – especially as regards taxation but also in terms of value and respect at the local level. At this level of income and expenditure the adage Not-For Profit good”, For-Profit bad” is farcical.

  3. What is really disturbing to me is the lack of Support for small or smaller, business at the local level… We hear the statistics of the %age of jobs in this country that are provided by retail and small town business, and it’s HUGE.

    But after an NDDC subcommittee, working for a year on various types of small working capital loans, and doing that work as a partner/member of the EDA process , and then taking it to the regular EDA subcommittee… it could not get past the hurdle of approval of the full EDA board. That’s a real shame…

    ANY business that is in Northfield is going to be small on a national comparison; What is this EDA waiting for? Three working capital loan programs, all allowing the biz owners to approach from a different direction, and they couldn’t get past the 5-2 Vote situation on that Board.

    Meanwhile, we hear the tune of “If we build it, they will come…” being sung by the EDA staff in recommendation for a 2010 initiative plan for the Council… Same old 5-2 vote pattern will prevail and $$ will start flowing down the pipes of infrastructure.

    Now… ask WHOSE Money?

  4. Ross, the figures of small business generating 70% of the jobs in America today is probably even light. And because of the struggles small businesses are having, we are not seeing unemployment numbers go down. When Main Street is feeling healthy and well, unemployment will drop. Until that happens, we will not create jobs. And when we don’t see small businesses creating jobs, we see: sales tax collections crash, income tax collections crash, and then following that, state and national budgets crash.

    Consumers are operating in a fear mode right now. They are not spending. Those that have jobs are afraid of the coming taxes, uncertainty, etc and are saving, not spending. When the spending stops the nation feels the pain of no taxes. It is almost impossible for governments to cut services fast enough to match the decline in tax revenue.

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