America can't advance without small businesses

by Ed Riffle

Small businesses lead any economic recovery. My business puts me in close contact with dozens of small businesses all across the country and most of them are not even thinking of expanding ... so don't be looking for an end to the recession any time soon. Any temporary upturns in the stock market or any media reports of signs of recovery notwithstanding, most small businesses are showing no signs of wanting to expand and prosper.

The small business environment is harsh. Working capital is hard to come by. Government policies have made it impossible for the smaller independent banks that are preferred by small businesses to loan money. Two very healthy small businesses whose owners I have talked with have told me that in spite of their current sound fiscal standings (significant assets, little or no debt and long and cordial relationships with their banks), they are unable to renew their relatively small lines of credit. Without an adequate line of credit for working capital, they cannot expand their businesses.

The prospects for significantly increased costs are looming. The so-called "Cap and Trade" bill currently working its way through the U.S. Senate will dramatically increase the cost of virtually every product and service that small businesses use and those businesses that use significant amounts of electricity will see a huge increase in their production costs. In the current economic downturn, increasing prices to reflect increased costs of production is not always possible, thus businesses will face the prospect of shrinking profit margins.

Adding employees is out of the question for most small businesses right now. The high minimum wage often precludes them from hiring unskilled and untrained young workers and the prospects of government mandated and regulated benefits with unknown costs and potential liabilities makes it too risky to hire anyone new.

In recent months, government alphabet agencies ranging from the IRS to the FDA to the FTB have been on the warpath. Any small business that doubted that a single bureaucrat had the power to shut down any business at any time with an audit, a report or a leaked piece of information has had that doubt removed by virtue of stories in the media or their own personal experience and observations.

Add to all of that the current trend by political leaders to demonize all private businesses and you have the perfect storm that all but assures years of economic malaise.
What most people don't seem to understand is that small businesses are run by ordinary people who react just as any human being would under the same circumstances. When attacked, they assume a defensive position and don't move forward. If America wants to continue to move forward economically, it must first stop attacking small businesses.

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Ed Riffle is a small business owner and writer and co-publisher of OurLittleCornfield.com, an Internet based comic strip.