Small Business Hit With Regulatory Costs
On the eve of the newly passed small business assistance bill (TARPll?), the Office of Advocacy of the SBA released a new report on the impact of government regulations on small business. The timing is somewhat ironic in that the report discusses the onerous cost demands being forced on small business–while the new bill offers to cut taxes…taxes on what; I’m not sure.
Just for a benchmark, this new report tells us that the cost of federal regulations for all businesses has increased to $1.75 TRILLION per year, as of 2008. That number breaks down to $7,755 per employee for large firms (500 or more employees) and $10,585 per employee for small firms (fewer than 20 employees). That is a 36% difference.
Interestingly, it appears from the report that a good portion of this cost is for paperwork required by various federal regulations (and bureaucracies). For many of the regulations there is no differentiation between small firms (fewer than 20 employees) and large firms (over 500 employees). They all have to adhere to the same reporting requirements.
It just seems to me that in the face of our current economy, the bill that was just passed totally missed the boat if the intent was to get small business going in order to improve the economy. Passing a bill to reduce some of the paperwork demanded by federal regulations would have accomplished much more.
In addition, are there any small businesses out there that are not concerned about the cost of the upcoming implementation of the new healthcare reform law in 2014?
Is it any wonder that entrepreneurship in the U.S. is falling behind the rest of the world? Or, does anyone even care?
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Land of Vast Potential
When thinking about a land of vast potential, one would not likely think about Detroit, Michigan. This was struck home tonight on the evening news that did a segment on the plight of Detroit.
The city is rapidly becoming a ghost town, with the population dropping from around 2 million people at its peak, to around ¾ of a million today.
However, earlier in the day I received an email with this movie trailer of a documentary film on the people of Detroit. That got me thinking about all the possibilities for new businesses—maybe even starting a whole new industry. Take a look at the trailer and tell me what you think.
(email subscribers can view on my blog)
When the full documentary film is released, I’ll let you know where you can view it, or obtain your own copy.
In the meantime, let your imagination run with the possibilities of remaking an entire city—and then let me know what you came up with.
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Perseverance in the Face of Adversity
At age 49, Bernie Marcus and his good friend Arthur Blank, were fired from their jobs with a Southern California hardware chain. Anyone reading this who has been in a similar situation knows that in our youth-oriented society, finding another job at this age is pretty tough.
That apparently was the case with Bernie as well, so he decided to team up with Arthur and they opened their own hardware store instead. In fact, they planned on having a chain of hardware stores someday, so they found an investor and opened two stores at once, in malls that had empty store buildings.
Unfortunately, they did not have enough money to stock both stores—one of the stores looked more like it was closing, instead of getting ready for a grand opening. So Bernie called on his experience in retailing and purchased empty paint cans and boxes, and filled all the upper shelves with them. By opening day, Bernie’s stores looked like real, well-stocked, hardware stores.
The Grand Opening, however, was still not a huge success—there were no customers. Bernie and Arthur even had their kids handing out $1 bills in the mall parking lot to entice people to come in. Fortunately the drought of customers was short lived as word of their great customer service spread.
Bernie’s experience taught him what customers really wanted and he capitalized on that. But, more than anything else, it was his determination and spirit that kept both he and Arthur going through the disappointments…and lack of customers.
It did not take long until their concept caught on and they began to expand. Two years after they opened their first two stores, Bernie and Arthur took their company public, and the rest is history.
Oh yeah, the name of their company was The Home Depot.
With companies like Facebook, Twitter, and a host of other high-tech companies trying to break into a profit after spending tens of millions of venture capital, it is interesting to see the tremendous financial successes of companies like Home Depot, Costco, and others like them.
What do you think about the relative successes of high-tech vs. mundane businesses like household hardware?
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