Pro-Tip for politicians: businesses need business, not loans and intervention.
Pardon this small business owner for a moment of intellectual rage against the talking point machine. There is a need to challenge the notion “small businesses need loans” more than anything.
It is true that small businesses need loans to start and expand business – however as you might notice – many places are holding on for dear life. I should know, I run a small independent new media business for the past eight years. The past two of which I took a part time job to help make ends meet because of the slow down in the economy.
What small businesses do need is an increase in business and the ability to expend our cash how we need to in order to purchase the equipment necessary to stay competitive, not a longer “life line” which could end up in our eventual bankruptcy.
Example: I needing to purchase Adobe CS 5 and upgrade my aging computer to a new 64 bit processor. The cost is not trivial if I build a machine that will last longer than two years and select the software package which best suits my company’s capabilities.
Forth coming tax increases, 1099 bruhaha and health care requirements all provide uncertainty regarding what margin is needed to purchase said equipment and stay in the black. As a result, no purchase is made.
The same can be said when businesses bid on projects at higher than dirt cheap prices.
So what ends up happening? One of three things: 1) Prices drop to get the job and pay the bills – this leads to inefficient levels of productivity with a still uncertain margin in which means purchases that are neded to expand and compete are put off to stay in the black 2) the client elects not to go with said project. Equipment is still not purchase. 3) Equipment is purchased on a gamble and the company goes into the red while prayers are offered up that enough bids are won and projects completed to eventually pay for the software.
Many government officials believe the third option looks fabulous – but in reality it is the death kneel of many businesses and our economy at large. It is also the reason why banks may not make loans to some small businesses. The same banks which took a strings attached government bail out over bad housing loans do not wished to be burned again.
With that said, if politicians honestly understood what businesses need to move forward they would focus on unleashing the power of individual and small business spending. This means removing uncertainty of Obamacare, cap and trade and numerous new government provisions which cripple our ability to make decisions for our selves and businesses competitive.
Unfortunately, many apparently desire the opposite. Otherwise the policies coming out of Washington would help increase disposable income of the individual, strengthen the Dollar (instead of weaken it) and encourage business development instead of acting as a competitve adversary at every turn.
So I offer this protip: Businesses need business – not loans and intervention.