White House Plans for Small-Business Aid Focused on Wrong Things

Many of the small businesses on Main Street are drowning. If you wanted to help a pool of drowning people would you push more people into the pool? This is what this 'freed up credit' plan for the most part does: It nudges banks or politely asks them to come on and lend some more money and free up some credit. Most businesses that are newly launching are the ones that need big batches of credit. This plan mostly ignores existing small businesses.

Diners, hair salons, pizzerias the list goes on of real life, main street businesses that could use help. Here is a small list of the most annoying things involved with running a small business. Dear Government, feel free to help:

Insurance - The Federal Government in the new health care battle decries the greed of big insurance firms and blasts them for consistently raising rates through the roof - which we all love (everyone hates Insurance Companies). Ironically though, the Government points on the other hand and mandates things like workman's comp insurance to small businesses. It would be fine if rates were reasonable but they're not. The rhetoric has also caused the big insurance companies to attempt to make up for possible future short-falls. Has anyone else noticed all other insurance ie umbrella & Workman's Comp has been rapidly increasing? Small business owners will cheer on health care reform as we're tired of seeing employees that have gone far too long without treatment because they have no health care and have suffered mentally and physically for it. We've personally paid for multiple employee's medical procedures out of our own pockets, many times. Many non-entrepreneurs will say - well don't you offer health insurance? Health insurance isn't remotely affordable for main street businesses that have hourly workers. Most can't survive as it is now. I think this is part of the problem "small business" as a classification is too wide ranging. People and Government are considering the pizzeria in the same grouping as a 50 employee software company with 7 MM in revenue. Different universe, although both are considered small business.

Of course even as we all want health care reform and hope for the change that is needed, small business owners everywhere are bracing for the implications. Insurance companies will get their revenue from these other streams and they will be ratcheted up. Small business will be taken to the wood shed as their other mandatory insurance sky rockets. Will Government help with this? It's also mandatory in most strip malls to have a minimum umbrella insurance plan of a Million dollars or more.

Payroll Tax - Another strange entity that non-entrepreneurs have no concept of is payroll tax. The taxes employees pay out is matched by the employer - comes right out of the small business checking account. It's funny when you tell people that didn't know that, they're always shocked. If you're a small business owner cutting yourself a check - you in essence get double taxed. Funny that the 50 employee software company can claim most all of their tech staff as contractors thus avoiding payroll tax but the 7 people trying to keep the pizzeria afloat must tag their part timers as "employees" and thus be slow bled throughout the year.

The Sea of Paperwork from Governmental Agencies/Bureaucracies -
The Government's inefficiencies and sea of paper pushing is affecting small business negatively. First you take the time to open the envelope and see another $10 invoice from the D of L for God knows what. Then you get a $45 invoice from their neighbors down the Hall. I actually called them once and asked the Government employee at the other end of the line, "what is this for?" The answer - I'm not kidding: "I'm not quite sure". Back to the mail. Then you get your retail sales tax booklet. Then you get your "tangible tax" from the city. Don't even get me going on tangible tax - basically a tax for literally existing. Next the city will tax you for breathing air in your store. Well it was the city's air. Tangible tax is like a never ending sales tax on your equipment over and over again every year - that no one in government or your accountant can fully explain. Don't get me going - I'm still opening my paperwork. Then I get my seemingly weekly "QTRLY TAX and Wage report" from the State. Sadly all this information is supplied by ADP directly to the State. Every year you could fill a suitcase with the wasteful paperwork they send for this even though it's taken care of on the back end electronically. The pizzeria must be buried with the extra "food preparation" paperwork. Back to the mail. Then we open our new bill from the boiler inspector. There's actually a Department of Boiler Inspection. Not sure if it was recently created as a new revenue generator or if its always been there. Wait a minute there's another piece of mail from them as well. The first letter says "2007" in one of the line items with a bill and the other doesn't have a date but another bill for a differing amount. Well let's take some more time out of our busy day to call this glorious Department. After a few back and forths I find out that they missed the bill for 07' but the good news is they will be billing every two years now hence the 2009 bill currently in our lap as well. They apologize that there was no description whatsoever on the invoice and let me know that many, many business owners have called about that. Wow - how much productivity was lost that day by just the little old boiler department? Back to my mail. Uh Oh - this one is also from the state. - The Workman's Comp Unit. It's a Stern Letter with Bolded text and in a nutshell tells us YOU WILL BE SHUTDOWN IN SHORT TIME BECAUSE YOU DON'T HAVE WORKER'S COMP INSURANCE! Threats of shut-down are scary to any small business. The only thing is WE DO HAVE Workman's Comp Insurance. We take some more time out of our busy day to see what the Government is up to now. After some back and forth over the course of a couple days we get a response from that office "We're sorry - you do have Workman's Comp Insurance, your file got lost in the shuffle somehow." Back to the mail, and we're full circle - A separate letter from our friends at the Workers Comp office. Looks like an auto-generated letter. It's Entitled: WORKER'S COMPENSATION INSURANCE REQUIREMENTS. There was a "requirements" section and there was a more ominous "penalties" section. At quick glance it was basically a notification letter explaining that every employer must have workman's comp. insurance.

This is just the mail from our company PO Box. I'm off to the store where there will be additional mail at the businesses physical location. Some of it will be duplicates of what I've already read - other Government Departments must be heard. There will be some time left to monitor the business with my remains of the day.

As I pull into the strip mall I'm happy to see the cars in front of our store and the action, but it's short lived and bittersweet as another of our neighbors in the mall has cleaned out the last of their wares and has moved on. I think about the TARP money. I think most of this "credit push" will go unused. I think about last month's letter from the strip mall saying the city has really hurt them this year and the RE Tax bill will push close to $300,000 for them, meaning we will all suffer a little more but they intend to fight for a reasonable tax.

The strip mall is almost half empty now. The credit push doesn't seem to be back filling the vacancies down here on the street. Some of the other survivors are the usual suspects, McDonalds, Dunkin Donuts, and a cash advance store.

It's lonely being the boss. It's lonely being one of the survivors.


White House Plans Small-Business Aid - WSJ.com