Throwback Thursday: What Small Businesses Need To Create Jobs

Going through our archives, we came across this great post from July 7, 2010What Small Businesses Need to Create Jobsthat we wanted to share in case you missed it the first time around.

I’ve been in business for over twenty years. All of that time, I have run a small business, by choice. During those twenty years, I have had a sick husband, been widowed, had four children – so I had some reasons that becoming the next Oracle was not my priority. However, I have made a profit every year, some years more than others, and have increased and decreased my number of employees as necessary.

The more articles I read on small business in general and women-owned businesses in particular, the more I wonder how many of those organizations talking about helping small business owners create jobs include people who have actually run a small business.  Judo-Luncheon-10-7-2014-29-of-45

There seems to be a great concern about the disparity in access to venture capital. Now, that may be a concern for some small businesses but most of the people I know own consulting companies, hair salons, restaurants, retail stores or manufacture products like t-shirts. They are not attractive to VCs because they are not going to have exponential growth.

Many of these small business owners, like me and my friends, are going to be in business for ten, twenty years or more, and pay corporate taxes, payroll taxes and everything else our accountant says we have to pony up every few months.

What about jobs?

I think everyone trying to create jobs through small business should read the insightful article Andrew Grove, Intel-cofounder, wrote on this subject. Those high-flying tech firms create a lot of jobs – overseas ! One problem with the VC-find-the-next-Apple approach, of course, is that those jobs may help investors but they don’t help the U.S. unemployment rate. Many, many of the high tech, high ROI jobs end up in China and India. (Seriously, read Grove’s article. It’s great.)

Twenty years ago, my business partners and I decided against outsourcing because we did not want to employ fewer Americans and pay someone in another country a sub-minimum wage so we could be richer. I know that sounds un-American, but part of our motivation in founding a business, which still derives much of its revenue from work on reservations, was to make life better for people. Obviously, we are privately owned, so we can make those choices.

The other thing I don’t need that every agency and company seems to want to sell me is a business plan. I have a business plan. Like most companies, the gist of it is to have revenues exceed expenses. Okay, it is a little more than that, BUT – after 20 years most of the business owners I know are not kept from hiring from lack of a plan. In fact, their plan is to add workers to meet the demand. It is certainly NOT to take out loans (guaranteed or not) so we can expand and hire more workers.

If anyone really seriously wanted to help small business create jobs they would make it easier for them to get business.
I had to laugh. Several times, representatives from the same “small business services” company have called me telling me,

“We’ll help you get YOUR money from the federal government. After all, it’s YOUR money.”

and then went on to promise me we could get on the GSA schedule and agencies would be falling over themselves to just pull our name up and order a million dollars of consulting services from us. I told their representative that’s not the way it works and he assured me it was and they had done that for lots of companies. I told him to email me the name of one. I’m still waiting.    bags of money

I am not sure where the stimulus money went. I see some signs that the roads are being upgraded with Recovery Act funds, so that is a good thing. I don’t actually know anyone who got any of that $200 million that went to the NIH in grants, although I know a lot of people who applied, but that all went to universities any way.
I may actually bite the bullet and complete the section 8(a) application this year, although it grates on me to do it. The time I spend on that will take away from billable hours so it will actually COST me money. I’m still debating on it.

Don’t get the idea that we’re sitting around here whining. We have work enough to keep the people we have employed and I am now looking for new contracts. We’ve already turned down a few over the last year, which may sound inconsistent, but it’s not.
We submitted one proposal in May, a second in June. We have too much current work to take time away to do a proposal this month. I’ll submit one or two in August and September, depending on how tired I feel.

Taking a six-month or shorter contract that takes up all of your time and keeps you from bidding on multi-year contracts is not good business. Just bidding on everything that comes down the pike isn’t too bright, either. We look for a match between our capabilities and what the client needs, for areas we can really do excellent work. That way, they are happy and come back to us again and again. After a quarter-century in business, we DO kind of know what we are doing.

I hear a lot about tax breaks for small business. Well, we pay a hell of a lot of taxes and that would be nice. Even though we will probably be exempt from the requirement to provide health care, I have always offered that as an option to employees and our costs may go up a little. Taxes and health care costs are not what keep me from adding employees.

It seems like the people aiming to help small businesses are sincere. However, it’s like the old cliche that when the only tool you have is a hammer, every problem is a nail. Because most of these organizations have people who know how to write business plans, fill out loan applications, apply for certifications of some status or another and lobby on Capitol Hill, that’s what they see as the way to help small businesses.

Most people who have been in business for decades don’t need some consultant to help them develop a business plan before they can add jobs. If their business has been around a long time, they already have a line of credit. I’m not sure what they need is tax cuts or worse health care coverage for their employees.

What they need is work.
I’m surprised I have to explain this to you.

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