$1.1 Trillion! That is the annual cost to Americans for businesses to comply with mandated government business regulations, according to the Office of Advocacy of the Small Business Administration. This is more cost per household than the cost of health insurance. Think about it.

Moreover, smaller businesses bear the brunt of these government regulations and pay 45% more per employee to comply with mandated regulations, than big businesses do.

Bear in mind that these numbers are before the new regulations coming out of Congress take effect, e.g. new health care insurance. So this cost will only continue to rise.

And we wonder why small business is not hiring people, and pulling us out of the recession like it has in the past.

Of course you do know, that businesses MUST pass ALL of these costs for government regulation on to the consumers of the goods and services they provide, in order to stay in business?

Question: Isn’t this a hidden tax on every consumer, just to pay for bureaucratic bloated programs dictated by the government?

“Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.

If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.

The fifth would pay $1.

The sixth would pay $3.

The seventh would pay $7.

The eighth would pay $12.

The ninth would pay $18.

The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the
arrangement, until one day, the owner threw them a curve. “Since you
are all such good customers,” he said, “I’m going to reduce the cost
of your daily beer by $20.”Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so
the first four men were unaffected. They would still drink for free.
But what about the other six men – the paying customers? How could
they divide the $20 windfall so that everyone would get his ‘fair
share?’

They realized that $20 divided by six is $3.33. But if they subtracted
that from everybody’s share, then the fifth man and the sixth man
would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s
bill by roughly the same [ratio] amount, and he proceeded to work out the
amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings)

The sixth now paid $2 instead of $3 (33%savings).

The seventh now pay $5 instead of $7 (28%savings).

The eighth now paid $9 instead of $12 (25% savings).

The ninth now paid $14 instead of $18 (22% savings).

The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four
continued to drink for free. But once outside the restaurant, the men
began to compare their savings.

“I only got a dollar out of the $20,”declared the sixth man. He
pointed to the tenth man,” but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than I!”

“That’s true!!” shouted the seventh man. “Why should he get $10 back
when I got only two? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get
anything at all. The system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine
sat down and had beers without him. But when it came time to pay the
bill, they discovered something important. They didn’t have enough
money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how
our tax system works. The people who pay the highest taxes get the
most benefit from a tax reduction. Tax them too much, attack them for
being wealthy, and they just may not show up anymore. In fact, they
might start drinking overseas where the atmosphere is somewhat
friendlier.

FOR THOSE WHO UNDERSTAND, NO EXPLANATION IS NEEDED.

FOR THOSE WHO DO NOT UNDERSTAND, NO EXPLANATION IS POSSIBLE.

An excerpt from:  David R. Kamerschen, Ph.D. Professor of Economics University of Georgia”

Mark Gwilliam is the founder and Managing Director of the Business Advisory Services Group a professional services organisation that provides accounting; tax; corporate governance & risk management; business consulting and secretarial services throughout New Zealand and Australia. Mark’s blog is very informative for all small businesses, and can be found here.

Well, guess what! Last month I drove by the coffee shop and saw a large banner over the door that read “Reopening Soon–Under New Management.” Since then, I have stopped in a couple of times and have been pleasantly surprised by the eager greeting, the good coffee, the great service, the offer to set up a frequent coffee card, and the visibility of the manager. All the things that drove me away before have been eliminated and replaced with an attitude of wanting to make me a loyal and happy customer.

Any small business that relies on repeat business to be successful, needs to concentrate on building a loyal following…or “Tribe” as Seth Godin would call it. Now, I predict that as long as the present manager continues doing the things he is currently doing, this business will do well. I am now one of their tribe.

How are you doing with building your “Tribe?”

However, yesterday, I read a column from the Associated Press that covered Congressional hearings on the conflict and confusion being experienced by banks. Here are some summarized excerpts from the article:

Regulators at a House hearing Wednesday heard complaints from small business owners, and others, who haven’t missed any payments, but are getting their credit lines deeply cut or yanked away… “There is actually a growing anger from these people,” said Rep Spencer Bachus of Alabama”… “The reduction or denial of credit to credit-worthy customers is occurring every day across America in about every town,” he said.

“The current bank regulatory climate is causing many community banks to unnecessarily restrict their lending activities,” said Michael Menzies, Chairman of the Independent Community Bankers or America. “Actions of bank field examiners are often unnecessarily putting constraints on community bank lending,” he said.

“Banks have to lend money to make money,” Timothy Long, senior deputy comptroller in the Office of the Comptroller of the Currency, told the hearing…Scott Polakoff, acting director of the Office of Thrift Supervision, said “…there is an element of truth in the bankers complaints [that examiners have been ordered to ‘crack down'].”

Bank examiners work for the Federal Deposit Insurance Corporation and the Treasury Department. Don’t tell me this is another boondoggle by Tim Geithner!

Will the political drama never end, so businesses can all get back to work and bring our economy back on track?

Somehow, I missed all the prior controversy over a new law about to take effect: the Consumer Product Safety Improvement Act (CPSIA). But then, the mainstream media has barely mentioned it.

It seems that this act threatens to drive out of business tens of thousands of small makers of children’s products (not just toys—it appears that zippers and snaps are now considered “lethal”). Moreover, any thrift shop that sells secondhand children’s products (including clothes) will be put at risk for liability.

I am still trying to get up to speed on the elements of this new law, but attorneys are referring to February 10, 2009 as “bankruptcy day”—the day the new law takes effect. Apparently, that is when all manufacturers must “freeze” inventories of children’s products, and components of children’s products, until they can be modified (or destroyed) to comply with CPSIA. Many small businesses in this industry will not be able to afford such a drastic requirement. This could impact as many as 50,000 small businesses…not to mention the impact on retail stores and thrift shops.

It seems like Congress, in its infinite wisdom, will be putting people out of work faster than their stimulus plan can create new jobs. But then, I guess most members of Congress believe it is their duty to protect us from ourselves.

For more information on CPSIA, check out CPSIA Chronicles, February 6.

FLASH: There has been a partial and ineffective reprieve (check out the Chronicles). What’s going on in Washington makes the Keystone Cops look organized.

Unfortunately, the President must deal with a recalcitrant Congress, and Congressional leadership that promote their own agenda. Nancy Pelosi clashed with President Obama’s stand for small business even before he took the oath of office. She made it clear that she wanted to raise taxes now, not reduce them. I am afraid that President Obama’s job will not be to lead an august group of Congressional members to implement well thought-out plans for recovery—his work will be more like (as I’ve said before) “herding cats through a forest.”

If, for a moment, you can visualize the process of “herding cats”, you will quickly realize that the job will take a lot of herders. That’s where we can (and must) be of help to the President. I think it is the responsibility of every small business owner to tell our elected representatives in Congress, that we (small businesses) are the ones who will lead the economic recovery. Furthermore, that more restrictive rules and regulations (including hampering the normal functions of sound banks), and increased taxes will only make our jobs that much more difficult…and take that much longer.

President Obama “gets it”—why can’t our elected representatives?