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Small Business Ownership In America Is At An All-Time Low
Submitted by Michael Snyder via The Economic Collapse blog,
According to the Federal Reserve, the percentage of American families that own a small business is at the lowest level that has ever been recorded. In a report that was just released entitled "Changes in U.S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances", the Federal Reserve revealed that small business ownership in America "fell substantially" between 2010 and 2013. Even in the midst of this so-called "economic recovery", small business ownership in America has now fallen to an all-time low. If the economy truly was healthy, this would not be happening. And it isn't as if Americans are flooding the labor market either. As I detailed yesterday, the labor force participation rate in this country is at a 36 year low. That would not be happening if the economy was actually healthy either. The truth is that the middle class in America is dying, and this new report from the Federal Reserve is more evidence of this very harsh reality.
In order to build wealth, middle class Americans either need to have their own businesses or they need good jobs. Sadly, the percentage of Americans that own a business continues to decline steadily. In the report that I mentioned above, the Federal Reserve says that the proportion of U.S. families that have an ownership interest in a small business fell from 13.3 percent in 2010 to a brand new all-time low of 11.7 percent in 2013.
This is one of the factors that is increasing the gap between the extremely wealthy and the rest of us in this country. And of course another of the major factors is the steady decline in good paying jobs.
The U.S. Competitiveness Project at Harvard Business School is chaired by professors Michael E. Porter and Jan W. Rivkin. It just released a new report entitled "An Economy Doing Half Its Job", and it addressed the fact that the middle class is deeply struggling even though many large U.S. corporations have been thriving. The following is an excerpt from an article in the Boston Globe about this report...
In a statement, Porter added: “Shortsighted executives may be satisfied with an American economy where firms operating here are winning without lifting US living standards. But leaders with longer perspectives understand that companies can’t thrive for long while their workers and their communities struggle.”
Unfortunately, this is not likely to change any time soon. In fact, that same report discovered that Harvard Business School alumni foresee "falling pay and fewer openings for full-time jobs" for American workers in the years ahead...
U.S. workers face a dim future, with stagnant or falling pay and fewer openings for full-time jobs.
That's the picture that emerges from a survey of Harvard Business School alumni.
More than 40 percent of the respondents foresee lower pay and benefits for workers. Roughly half favor outsourcing work over hiring staffers. A growing share prefer part-time employees. Nearly half would rather invest in new technology than hire or retain workers.
The Obama administration continues to tell us that the unemployment rate is "going down" and that the economy is recovering, but that does not match the reality of what most Americans are experiencing on a day to day basis.
As David Stockman recently so aptly put it, outside of health and education the U.S. economy has not produced a single job since mid-2000 even though our population has grown greatly since that time...
In a few deft seconds, a “no jobs” nobody who apparently doesn’t actually have one himself, essentially explained the contents of the chart below to his silenced CNBC hosts. Over the course of 170 “jobs Fridays” since mid-2000, the latter have apparently never noticed the single most stunning fact embedded in the monthly BLS report. Namely, that outside of health and education there has not been one net new job created in the American economy since July 2000! Yes, not a single new job—as in none, nein, nichts, nada, zip!
In addition, most of the new jobs that are being "added to the economy" each month are part-time jobs. Right now, we still have 1.4 million fewer full-time jobs than we did in 2008 even though more than 100,000 people are added to the population each month.
What this means is that the middle class is shrinking.
We are witnessing an increasing concentration of wealth among the ultra-wealthy, and most of the rest of us are getting poorer. As a recent CNN article detailed, the Federal Reserve has also discovered that the gap between the rich and the poor in America is larger than the Fed has ever recorded before...
In its Study of Consumer Finances, released every three years, the Fed found that the wealthiest 3% of American households controlled 54.4% of the nation's wealth in 2013, a slight increase from its last survey in 2010. It's also substantially higher from the 44.8% they held in 1989, showing how quickly the income divide has been growing over the past decade or so.
At the same time, the share of wealth held by the bottom 90% fell to 24.7% in 2013. That's compared to 33.2% in 1989.
How close does the share of wealth for the bottom 90 percent have to go before we admit that we have a major problem on our hands?
Is there anyone out there that would be okay with it hitting zero percent?
One of the big reasons why the wealthy have been doing so well is because the stock market has been soaring. The money printing policies of the Federal Reserve have sent stock prices to unprecedented heights. This has overwhelmingly benefited the extremely wealthy...
According to recent data from the Federal Reserve, America has the lowest level of stock ownership in 18 years. Yet stock ownership for the wealthy is at a new high—and that has accounted for most of their good fortune compared to the rest of America.
In fact, the Fed says that the wealthiest top 10 percent of all Americans now own 81 percent of all stocks...
Stock ownership is even more concentrated when it comes to share of total stock holdings. In 2010, the latest period available, the top 10 percent of Americans by net worth held 81 percent of all directly held or indirectly held stocks, according to Edward N. Wolff, an economics professor at New York University who specializes in inequality and Federal Reserve data.
Wolff said that share—which has not been released yet for 2013—has probably gone even higher than 81 percent since 2010.
Since the last financial crisis, the Federal Reserve has been very good to the elite.
But most of the rest of us have had a really hard time.
Until more Americans start getting good jobs and building small businesses, things are not going to turn around for the middle class.
But the policies being pursued by our politicians continue to kill good jobs and continue to kill small businesses, so I wouldn't expect significant changes any time soon.
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Without robust small businesses there will be no real growth in the economy.
Small business ownership does not fit into the communist game-plan. So there you have it.
just outlaw them already
we don't even need a "top 500"
one corporation is sufficient
now eat your fucking vegetables
scuse me. that was profane.
A world without small businesses is a monopolist's wet dream.
small business ownership in America has now fallen to an all-time low.
--------
Easily explained by...
ObozoCare regulations and requirements...
Obozo Admin choking-level red-tape, taxes, and interference.
Not that the Fed team of Greenspan/Bernanke or Harvards Summers/Reuben had anything to do with it.
To foster some much needed growth in this valuable sector perhaps Barry can redefine 'Small Business' to include hookers, dealers and people begging at traffic stops...
Just classify every disemployed person with an Ebay acct...wholla!
Bravo. That is some first-class, hedonic thinking there my man. What did you say your day job was again??
Why own a small biz when you can start a new f'd up social networking site or sexting app with zero or negative revenue and get a $200billion evaluation over the weekend?
AssBook, anyone?
D00D, did you see that obesity chart on the other article? I'm no sure that's a good idea.
What this means is that the middle class is shrinking.
The new middle class is an EBT card, section 8 housing and obama phone. Everybody else is either upper class or living out of a shopping cart.
The death of small businesses, crony capitalism and excessive government regulation are all inter-related.
Try to open a small business. Go on. I fucking dare you. You can't be a damned hairdresser without a degree, a cert, an all manner of health inspectors breathing down your neck. And that's just the tip of the iceberg.
MOST careers that would typically fall under the "small business" arena require some sort of (government) licensing or certification nowadays. And that's just for YOU. Got employees? You got a whole new batch of laws, regs and regulations to comply with from day one, before you've earned your first dollar.
ONLY AFTER you earn your first dollar, then you have the distinct privilege of having to deal with tax problems.
What we used to call "barriers to entry" are ridiculous in most industries these days. WAY better to take a run at it illegally/under the table and see if you can get the business off the ground before the vultures descend on you. If they have their way with you BEFORE you get airborne, you'll never get it off the ground.
Amen, brother. ++
"The death of small businesses, crony capitalism and excessive government regulation are all inter-related."
You hit the nail on the head with that one. If you are a big business you can afford the acountants, lawyers, consultants etc. to be able to comply with the bazillions of existing regulations on the books most of which you probably don't even know about. You can even ship all your production overseas where you don't need to comply with anything, pay the workers next to nothing, and offshore your profits to a country where you pay next to no taxes.
If you are extremely large and politically connected like BP you can even bypass ALL of the legally required paperwork and drill a cheap oil leaking shithole in the Gulf of Mexico with the full permission of the MMS while Obama's Chief of Staff lives free in a BP lobbyists "basement" apartment.
http://www.freerepublic.com/focus/f-news/2529230/posts
And when it leaks 50,000 barrels per day the government you own will back your claim that it's only 5,000.
If you are a small business however you are in their crosshairs and they will ride your ass until you are dead.
It's their job.
You nailed it, NoDebt.
Saw this on Drudge the other day:
More Angelenos are becoming street vendors amid weak economy
http://www.latimes.com/business/la-fi-street-vendors-20140907-story.html#page=1
But some kid opens a lemonade stand in front of his house and he gets a visit from the Code Protection Team.
Well said, I remember the IRS audited my sole ownership, one man shop for 1999. The auditor told my accountant that nobody could live on that little money in Cali and added 40,000$ to my gross, thusly making me liable to an extra 21,000$ liability for that year. I asked the accountant if they could do that, he said oh yeah, he can estimate. As of this date, it has no doubt not improved since then.
Idaho potato head;
Holy f*ckin shit. I ain't naive, but damn that was witness.
"WAY better to take a run at it illegally/under the table and see if you can get the business off the ground before the vultures descend on you."
The "better to ask for forgiveness" routine doesn't work anymore. Too late to ask after the fucking SWAT team flash bangs your children to death, shoots your dog, puts boot prints on the necks of anything left living, and tears your place to pieces. Comply, bitchez!
This country is soooooo fucked.
Easier to compose a 5 part fugue for piano than to start a small business and succeed ...
NoDebt:
You are the real thing.
"The death of small businesses, crony capitalism and excessive government regulation are all inter-related."
Fuck It. I have links to support you statement.... it mirrors the decline of US Farmers over the last 100 years.
Without small business there is no democracy, free speech, whistleblowing, or patriotism.
This is key to democracy.
This is a reason to die.
This is the keystone to Keeping US Constitution.
Ignore this and lose your lifestyle and country. This is Prime for Freedom & the Concept of the "USA".
FU if you disagree!!!
LOL here in Sweden we got a cure for that illegal business you are talking about.
Welcome to the cash free society!
All gates are sealed now..enjoy the ride!
Individual autonomy, self-sufficiency and reward for ambition and merit do not fit into the Communist game plan.
Centralized control demands centralization of control which means.....if they can get every employee in the land to work for ONE employer, then they have successfully centralized their control. Guess which employer will be the last one and only? Small business, much less self employment is as far from this concept of centralized control as one can imagine...and must end.
Guess which employer will be the last one and only?
Service Corporation International?
When David Stockman states that the U.S. economy shows job increases only in the education and medical fields, Stockman conveniently leaves out the giant growth in jobs relating to sanctioned government corruption. Specifically, the "fixers" who go under names, such as lobbyists, consultants and legal counsels. Look at New York City, where builders of high rise super expensive apartment projects ride roughshod over the city government to get variances. Companies such as the Related Company, Trump, Forest City Ratner and Extell get height and density variances and, in the case of the Extell's One57 advertised 90 story apartment house on west 57th street, a tax abatement of at least $40 million obtained by buying off Governor Cuomo and the the state legislature. Donald Trump set the standard for creating jobs that "grease" the wheels of government: his Hyatt Regency on 42nd street could only be built in 1978 after the Urban Development Corp. evicted all the leaseholders at the site, once the Commodore Hotel. That usage of the eminent public domain to enrich private developers was perfected in New York City under the administration of Mayor Koch , who was organized crime's front man, the crimelords who controlled the city's concrete supply business back in the 80s. Now, even a hospital like St. Vincent's is demolished to make way for a high rise building, creating jobs for ex-politicians turned consultants and all the other lice hired and paid to run roughshod over building laws and laws regarding government corruption in approving contracts to certain companies. Construction corruption is a vast and growing job creator in places like Mew York City.
oudinot:
You've Got It.
"Without robust small businesses there will be no real growth in the economy."
Small Business is the Core of the US Economy... in fact the US Federal Government had contract programs set up to strengthen small business contractors in DoD... but think the government is now Fascist and moving away from this "Old Program"
http://research.stlouisfed.org/fred2/series/LNS12027714 (self employed unincorporated)
http://research.stlouisfed.org/fred2/series/LNU02048984 (self employed incorporated)
If you think it can't get any worse than this, you ain't seen nothing.
At zero % interest, credit is cancelled. Current US economy is a reserve based economy like communism, not credit based.
This is gonna get worse and worse and worse and worse.
Some folks are going to feel some pain.
I deal with small business on a day to day basis and I will tell you they have little reason to be optimistic. Small business, with two to ten employees, are becoming an endangered species in America. The family business once the backbone of this country is under attack from the unintended consequences of the many laws and mandates passed in recent years.
Inspections, a plethora of permits, licenses, taxes, insurance requirements, and regulations make it almost impossible for a small business to open, compete, and operate legally. Big government has become toxic for small business. More on this subject in the article below.
http://brucewilds.blogspot.com/2012/03/small-bussiness-under-attack.html
Keep up the good work. This place sucks without Fonzanoon. At least I get to read some decent posts from time to time.
What happened to Fonz?
...apparently he bailed. Smart move.
http://www.zerohedge.com/users/fonzannoon
Still active account.
He's taken a break I guess
We can hope, ekm1.
DoChen as well, but he left a sign-off message. He hasn't updated his blog since then, either.
Damn I missed it, Do Chen was a good person. I hope he has done well enough in bearings to have a nice quiet retirement. He's in Peru, correct?
I think he split his time between the US and Peru. Perhaps his exit reflects a permanent relocation, we don't really know.
If anyone is interested in coming over to www.gunsgrubandgold.com you are invited. Trying to get the forum off the ground and looking for members and mods... thanks...
AT, same here as I deal with small businesses each and every day. I watched in horror as while Wall Street was bailed out in 2009 (think GM, AIG, etc.), Main Street was told to bend over the rail, drop their pants, and take it like a man. Here's some additional thoughts on the state of small businesses:
- Those that were too weak to weather the storm over the last five years, have simply closed shop.
- Those that made it, stablized, and rebounded (usually by going "all in" with their personal wealth) have either sold out as they have no interest in experiencing another torch job, are considering selling, or are taking advantage of what's left of the weak and have become middle sized companies. I've directly assisted a number of companies with selling the last two years and specifically to larger organizations, with cheap Fed money, that are consolidating industries. There are almost no what I consider horizontal buyers (a small time business person that has the means and interest to acquire a small business and grow it).
- The capital required to form small businesses is nowhere to be found. We're not talking about VC/PE/Inst funding tech and life science companies. Rather, we're talking about hard working men and women that want to start a business but have no real means as if you remember, first they lost everything in the home they owned in 2008, then their investments in 2009, and then their steady income with job losses.
- If capital is available for small businesses, it is brutally expensive and comes in the form of ruthless lenders, with embedded interest rates of 50% to north of 100%, preying on the unsuspecting and weak and backed by, you guessed it, large banks looking to exploit the hard money lending environment. Corporate America has the Fed and its free money to finance M&A's and stock buybacks at basically no cost. Small businesses, well they have Vito Corleone down the street.
- Now let's throw on to this pile the fact that competing for quality labor is damn near impossible (given the packages offered by large companies again backed by cheap money), sales increasingly difficult to generate as the average consumer is strapped, and a regulatory environment (especially here in the socialist republic of California) that favors everyone and everything but the small business owner, and you have the perfect storm for killing the very Golden Goose that represented the basis of the American dream for over a 100 years.
One other point in the article as it missed something. The middle class's path to wealth was not just based in jobs or business ownership but in addition, home ownership. These three elements provided for wealth accumulation by the masses, all of which have been virtually eliminated as we know quality job growth is dead in the water, this article supports the trend everyone already knew related to small business ownership, and over the past five plus years, the middle class are now renters as oppossed to owners (again, paying their hard earned money to the big funds backed by cheap Fed money).
During the 20th century, America was without question one of the greatest producers of wealth, innovation, and real standard of living increases the world has ever witnessed. Over the past 20+ years, America has been "finacialized" by Wall Street and now is nothing more than the greatest transforer of wealth the world has ever experienced. This country has really produced no real wealth over the past 20 years but it certainly has transferred it from the masses to the few.
Of course what will be real interesting is when the Zombies start to turn on one another for food as the masses have nothing left, no money, no wealth, no homes, no pride, nothing. We can only hope and pray that they quickly destroy themselves with their excessive greed, egos, and immoral actions so we, the people, have a chance to start again.
delivered
Your point about lending:
There is no Vito Corleone. That's a fake invention of Hollywood.
Here is a youtube about actual organized crime. Hint: "Murder, Inc." wasn't Italian. It's a longer video, but give it a watch. It's fascinating.
http://www.youtube.com/watch?v=wMbw5X_eeJg
fuck you anti-semite. posting david duke garbage troll.
teslaberry
Whoa! Where did that come from? I'm not antisemitic. If I was I would just say so.
Why would you say that about me?
teslaberry
Dude, seriously? If we were both to repeat the meme that Sicilian-Americans are gangsters, would you shriek about racism (toward Italians)?
Are you actually telling me that there is no data (you know, actual facts) to show that a lot of organized crime happens to be, you know, a particular ethnic group?
Can we stick to actual facts?
What are you afraid of? It's ok to say that about the Italians? But not, you know, the others?
You have it spot on. I barely survived 2008-2009. Lots of others in our industry, both locally and nationally did not. Since then, it has been a struggle. The F'd up thing is we make MORE money than ever before, but the cost of parts/supplies/insurance/overhead etc have gone way up, parts profit has shrunk and labor cost is already at the max of what our market will bear... its been eye opening (and sickening) to actually watch in real time the destruction of the buying power of the dollar. And hiring qualified, EXPERIENCED personell is extremely difficult. The big dealerships can provide the benefits spread out over 1000's of employees that we simply can't match, even if we all know its fluff.. Love the business i've been in for 20 years, but if i thought i could get a good price for my business, i'd probably sell it and go do something else.
You nailed it. One other thing I rarely see mentioned as a cause of small business failure is the inexorable advance of the min. wage. Many small business owners would be happy to pay some high school kid $3-$4 an hour to come in for a few hours a week and straighten up a stock room, clean the bathrooms, sweep floors, etc.. At $7-$8/hr (effective rate ($10-$11), it ain't gonna happen. So, they either have to do it themselves and work another 20hrs per week, leading to burnout, or add it to the tasks of other employees, leading to unhappy, disgruntled workers.
What makes you think the consequences are unintended, pray tell?
ekm1;
You don't post links or documents. You are more of a Director than an educator/trainer.
- You posted a Great Statement above. Clearly you are contrarian or a Bear (to my amateur eye at least). I'll have to continue to read your to see what your philosophy really breaks down to be.
- FYI I am a lousy short term investor and probably slow like Jim Rodgers (who I Like).
- Why would I buy Bonds or Stocks in this Environment? No reason. Why buy Government Bonds? No Reason. Why keep my money in a US Bank? No Reason. Why Support either Democrats or Republican in the face of ZIRP, LIRP, NIRP? No Reason. Revolution. VOte with your Feet, Money, Banking, and Housing... live in small houses, group in houses, live with family, live with friends, give up on paying Tuition, Give Up on Spending & Consuming. *%@#%
http://research.stlouisfed.org/fred2/series/LNS12027714 (self employed unincorporated)
http://research.stlouisfed.org/fred2/series/LNU02048984 (self employed incorporated)
data back to 1984 decline in number of us banks:
Commercial Banks in the U.S.
2014:Q1: 5,743 Number (down from 14,400 in 1984)
Quarterly, End of Period, Not Seasonally Adjusted, USNUM, Updated: 2014-05-21
http://research.stlouisfed.org/fred2/series/USNUM
I pontificate.
Simply my opinion and analysis.
Living within your means is the least depressive way to live, agree
America is the greatest and richest capitalistic society in the world, yet we should note that our entrepreneur class that is surprisingly small and shallow. According to the Small Business Administration only 10% of Americans own a business and 80% of these are single self employed businesses. This means only 2% of all Americans actually employ at least one non-relative employee. For more about this very small group see the article below.
http://brucewilds.blogspot.com/2012/01/only-few-are-entrepreneurs.html
I am in that 2% and let me tell you its a freaking nightmare.
I sold out of my 2 small businesses last year. That is what it took to kill Freddy Kruger,
http://research.stlouisfed.org/fred2/series/LNS12027714 (self employed unincorporated)
http://research.stlouisfed.org/fred2/series/LNU02048984 (self employed incorporated)
That is just nonfarm employment. Farms have been steady decline from pre 20th Century.
I also read some place that the avergae age of farmers in this country is 60+. Wonder who's going to be growing our food in 10-20 years.
I'm with you Tetons. Except I couldn't even sell my business. Just liquidated and closed up shop. Cost me a lot, including a bankruptcy, but I sleep better at night these days.
anyone that has a business with employess is crazy. the big guys have made the barriers to entry so cumbersome for the small guy that it is way too much trouble for the risk. employees just compound the madness of trying to make a buck. besides trying to get them to work the paperwork and regulations are way too much trouble.
Offshore corps for the win!
Mission accomplished.
'De-CoMission Accomplished.'
Small businesses have NO CHANCE in 2014. I've Been an entrepreneur since 1990s and unless I'm getting dumber, it's now become impossible "above ground"
Small business failures should receive a lot more attention then they do, we will see a lot of these in the near future as people have started down this path when unable to find a job. Small business is hard, going into business is risky, and many people are not up to the task.
As a property owner that leases space to many start-ups I have a keen interest and knowledge of the microeconomics that occur.Just as important is the effect, long and short term on the economy. With most business start-ups having a very short lifespan of just months or around a year, the short term burst of spending is quickly followed by the longer term negatives. More on the toll taken on all of us when a small business fails in the article below.
http://brucewilds.blogspot.com/2013/03/small-business-failures.html
Jesus can you please pimp your shitBlog somewhere else?
Dick.
could you elaborate how its becoming more impossible?
As a small business employing between four and six people for thirty years, its easy to explain. Every expense that I am forced to have is going up. My health insurance has gone up 46%, my liability insurance went up 35%, my waste disposal went up 50%. Everything that is a nonelastic expense id going up, plus added taxes and enforcement (you have to understand that enforcement of regulations is a backdoor resource for added revenues). Unfortunately I build custom high end furniture which no one has to have (a purely discretionary expense) so I cannot increase my prices. We are still operating at the same rate of 12 years ago. $50/hr shop rate with easily half a million in equipment not including the building. The only small business that can succeed are those who sell things, not make things, and even then, sell things that people MUST have and the seller is afforded limited permits or license to limit their competition. The only path to riches is to eliminate competition or purchase a license to steal.
I also spent my decades in manufacturing and am now retired as a lot of us born during the Truman administration are. I lost so much business to China and other cheap labor countries starting in 1985 it's crazy. I clearly remember the shock as a contract manufacturer when back in '85 our biggest customer received their first container of product from China and we were forced to lay-off 158 people on a Friday. We were kept completely in the dark about their outsourcing plans. That sucked and the $3 million dollars we had invested to expand our facility to accomodate their lines went down the drain as a loss.
And selling things is getting harder, as well. In large part due to Big Corporate lobbying efforts that create restrictions to small businesses. My wife, as an example, had a very successful importing business for close to 20 years selling products made in the EU to the American market.
Some of the products were food related in a very small niche that she and other small businesses were successful in growing a market here in the States for the products. Then the FDA came out with these rediculously stringent labeling requirements that were obviously thought up by a bureaucrat with too much time on their hands. I smelled a rat...
And sure enough, just about the time it got so a small business could not afford the regs and still make a profit those same products show up in Wal-Mart for the first time. Apparently the market had grown enough to get on the rader and legislation was passed that all but eliminated the small business person's ability to comply profitably.
A big company though could comply due to scaler dynamics. The road block, of course, was to first legislate the smaller competition out of the way via ridiculous regulation. It's the 'New Amerikan Way".
Small business used to be able to compete with large as our ability to be agile and adaptable gave us leverage to their efficiency of scale. Today they have paid the government to lock us out. When we hear people like Buffett talk about taxing the rich we know he is not talking about himself. These people seek to kick those on the ladder rungs below them off. They are about competition and winning and will use all tools available to do so. Fairness never enters their mind unless it gives them advantage. Small business is done. If I can last another five years it will be a miracle. At this point Jesus could be president and not be able to overcome the momentum of the bureaucracy in place.
I've had small businesses since the mid 80s, and fixed costs due to regulatory requirements is absolutely killer.
It's not so bad when times are good, but they're generalliy fixed costs, so a recession comes and they don't scale and you go underwater fast. My brother's business got killed due to fixed costs and hyper-regulation (he did automotive recycling, and the city he was in basically did shakedowns for environmental compliance -- he ran a legit shop and the compliance inspector apologized but absolutely no one would get a pass without paying at least a $600 fine. At first it was a visit every couple years, then in '07-'08 it was once a year, and then they were showing up every few months. Just one example.)
I made it 15 years without ever needing a lawyer for more than corporation paperwork, and then suddenly I was getting hit with tax bills from California (I'm not in California and have no business presence there whatsoever) and then a client gets sued by the government and suddenly my tiny business needs legal representation -- for no reason, basically, other than to tell them to go away, but they won't go away if it's you telling them, so you're paying $500 an hour for someone else to.
Health care costs are just icing on the cake.
Fortunately in the '01 recession I was in a position of shutting down my physical offices and laying everyone off, so I did, and I work by myself from home now. A year after I'd shut down that office, the city it was in sent me a bill for past-due "generic" professional license dues from prior years -- they'd tried to hit me with sales tax collections, but it was proven I didn't have a single sale in the city or state, so they switched to plan B.
In a nutshell, the government wants all your fucking money, and will do whatever it takes to take it. This is just on the legit business side, you should see the shit going on with crap like civil asset forfeiture.
I'm willfully 'self-unemployed' as I chose to no longer burden Uncle Sam and the IRS with my laborious and expensive tax returns and just closed up shop. I guess in the long run I'm saving them 'money'. I know I sure am.
Listen. Hey 'merica. Why put all that effort in when your laws to qualify for 'DISABILITY' have recently changed.
It's 'VERY' easy to qualify and then you can sit home all day and read your Stormfront.
So you are actually trying to embarrass yourself in an open display of your abject ignorance?
Racist pig.
Listen. I didn't mean to insult 'YOUR' favorite web destination. Carry-on chap.
(Random insult gen app) 'CHOKE ON A BAG OF DICKS, YOU CHUBBY-MARGINALIZING, SMALLFAT-NORMATIVE ESSENTIALIST!' (this is tax-free and 'carbon-neutral')
Of course ... small business owners are not typically psychopathic elitists.
Speak for yourself. I've been honing my skills for years.
I wonder how much small business is done off the books and under the table? (cash & trade)
There is no doubt that if there is any growth it is in the Greek template.
From what I've seen (my biz can't work that way, but others I know do) it's increased, but the increase off the books is nowhere near the decrease of on the books business -- which makes sense, or small businesses wouldn't be dropping like flies.
The sequence of decline I've seen seems to be: fully-equipped, fully staffed business -> staff reduction -> relocation into smaller facilities and sell off some equipment -> staff reduction to minimum essential -> partial shutdown/selloff and closure of storefront -> relocation to owner's home/truck with minimum equipment, owner working full time -> owner part time/semi-retirement/multiple jobs -> fuck this shit, which amounts to part time cash only work when the money's right. Revenues seem to take a 15-20% hit each step. Profits, however, hold flat and actually spike up on the relocation steps since they coincide with big drops in fixed costs.
Short answer is a lot of small businessmen were killing themselves for very little take home, and most discover once they lose employees and building expenses, they can have the same or higher takehome with a lot less headaches. What I'd love to see is how many of the remaining small businesses have downsized to 1 employee/owner and zero storefront/building presence -- my guess is that you'd find a huge shift in the number of employee towards "1."
make thy dwelling a place of profit.
go totally outlaw no licenses. cash only.
never ever ever bring in a partner or
employees. (they fuck shit up and ssteal)
stay small..lean..quick on your feet
never ever rent anything esp not bricks n mortar.
keep your head down.
keep the faith. walmart will soon be the next sears.
very soon
Please elaborate on the "never ever rent anything" comment...
Renting something triggers ALL KIND of government regs, if you rent a place of business, need to get a business permitt, inspection then occupancy permitt, sometimes from multiple local government agencies, MUST HAVE liability insurance or the lawyers will eat you the first time some jerk falls down in your business, etc. etc. etc.
One small visable example: Haven't you noticed the vast inrease in the amount of food trucks in your area? Some local parks down here even have "Food Truck Friday's" where the local trucks gather at a public place and have some kind of event. All of these "Food Trucks" would normally be storefront, but, simply can't aford the cost of entry anymore due to regulations and insurance.
With 30 year mortgages 7 year auto loans 1000 dollar monthly phone, cable and Internet fees, 30% in food and oil inflation you aint nothing but a fucking slave! Not much different from the Egyiptians that build the pyramids!
'recovery" yeah right! Small business whats that?
If you can't make a small business work in any econominc environment you haven't a clue about what's in demand and how to market to a demographic and have no business trying to start a busuness. History is littered with failed dreams and aspirations, most don't have what it takes. This slide downward in small busines has more to do with education and a lack of understanding how to reinvent yourself in congruence with economic conditions.
.... and if you don't belive me check the list of companies that started during the Great Depression that are still around today, many of which began as a small biz. Bitchez!
Few businesses of the great depression had the regulation and insurance requirements of today. Its a big nut to cover of you are starting out so unless you have a rich uncle coming up with a financable business plan is tough. Sure if you are lucky enough and smart enough to bet a new high tech IPO candidate off the ground you may have something. The reality is that most small businesses are anything but. Generally stuff that requires little overhead and that just doesn't exist anymore. I have a $20k liability insurance premium before I sign my first deal.
Get a grip, I started with a bet on a 12k limit credit card, 5 years later I'm breaking 1m in profit per year for the last three. Don't start a biz, you have no idea.
Sorry. I've been a custom furniture manufacturer for thirty years and only had two years of over one mill gross. Obviously I don't know what I'm talking about. What you describe is not typical and while you may be a fucking genius, there is a far better chance you are just dammed lucky. Try not to be so full of yourself. Shit can turn on a dime. Especially if you are a financial services guy.
just based on your assumption after assumption you've already proven your worth, not much. Good luck with the wood, I have a friend in the UP of MI who does the same that probably does fantastically better you based on your innane comments.
Fuck off.
I'll second that, no room for know it all douchebags at ZH. Especially when they try to berate ZHers that actually have character.
yourmom, here 23 weeks, a business genius, as real as a plastic fuck doll.
While admittedly I am not the consummate businessman, I take pride in my work and try not to think that everything is about money. The circumstances and conditions I describe are not imaginary and most every other business person I know enjoys them as I do. What I do is not cheap and would suggest that few can afford it, so yes my market is narrow. I cannot advertise as my work is very exclusive and by referral only, so it does not follow the template of many other businesses. Those that choose more marketable businesses will no doubt enjoy a greater financial success, but circumstances can change for any of us and while my work is well regarded I also acknowledge that I owe a great deal to luck. People that most here would recognize own my work. I am proud of my work, my reputation, the fact that everything I own is paid for, and that I do not have to lie or exaggerate to make a living. But yes, there are many that have done much much better than me.
With all due respect you sound like an academic who's never met payroll. And your examples of Depression era businesses is a bad analogy in today's climate. You seem to imply that regulations were the same then as today. I'm sure the pages of regulations have grown exponentially since then. Heck, even Henry Ford did business on a handshake back then without the use of lawyers.
Try that today and see how fast your ass gets handed to you.
With all due respect I started solo and now have 9 employees. What have you done?
Well, I moved out of my mom's basement for starters...
j/k
YMB, I retired 3 years ago at age 46 and got the fuck out of dodge as it was OBVIOUS what was coming down the road. I am now reinventing myself as an organic farmer in a land far far away. You are in for a VERY rude awakening. You have been very lucky the last few years obviously, but your self-righteous attitude belies an ignorance of epic proportions. You are going down in the next 5 years because the whole shit show is going down. Maybe you will squirrel away enough to walk away after your newly created little empire gets swept up in the coming carnage (it has not even started yet brother), but something tells me you are the type of guy that drives expensives cars and throws your new found wealth around like a moron - kind of like you holier than thou opinion!
It is very difficult to compete and establish yourself in an "essential" service business, but possible. Nearly impossible selling products. And almost impossible for successfully starting a non-essential service business, unless one is willing to take great risks by skipping insurance, taxes, labor laws, bank laws etc.
If you ever get launched in the right business and provide superior service and value, you can prosper. There is very little competent competition for experienced, diligent, ethical pros.
Fully agree! I started a "non-essential" "service" businees "selling products" at the lowest point of the Great Recession in early 2009, apparently "impossible" doesn't apply because I broke even in 2 years and have seen nothing but a rise in profit every year since. And everything done by the book. What's that saying? 'can't stand the heat, get out of the kitchen', right? No knock to you friend with all the quotes, but you get my point.
So these statistics are bullshit? Some work harder than others and some are just lucky but when you see these kind of stats it means something and we can see it all around us. And how many people can afford to break even after two years? How far could you have made it if you had no savings or backing? I'll never forget a wealthy business guy who owned a bunch of franchises telling how he started with nothing....just a few hundred thousand. I had to laugh as I started with a van I was making payments on and a few tools. Never discount the power of discretionary income!
Not total bullshit, but it doesn't include the reason for the failed business, just the economic side of it. If someone had a great thing going and lost it those statistics don't reveal poor planning or an inability to reinvent. Kind of crucial in this debate. Realize a lot of people got shut down, I don't believe for a moment in the victim, they're just bad business owners. Simple.
A business person is largely a problem solver so yes its never easy and not everyone can or will do it, but it is getting harder to do, in part due to the economy but the economy is the result of government policies. We will not see a reversal in small business formation until government changes and we will not see a change in our economy until we have small business formation. More power to anyone who can do it, even if its Greek styled off the books stuff.
It is so patently obvious you do not never have had or never will have a small business.
Your3 understaning sounds it came from from touts little pamphlet flogging home working.
You have not even shown a shred of evidence of evidence of what you are spouting in such a glib way.
There are fundamental changes that are orchestrated by crony capitalists and politicians that do have a direct impact on SME's and fortunaely there are ways to evade the bureacratic shit storm. but not so many are finding the new routes yet as lose the business..
But it is changing
With all due respect, sir, you are full of shit. Let me give an anecdotal example of what has caused small business failure in this country:
I ran a fairly successful infant product and furniture business for over 10 years. After 8 years, Cal Work Comp decides to reclassify our business, even though we had never had a single claim. Cost of insurance increases 400%....strike one.
Government restricts the use of a certain type of wood used in our bestselling furniture line....strike two.
Super Walmart and Baby's T Us open up within a mile of our store....strike three, followed closely by liquidation and bankruptcy.
Even in the face of increasing internet competition and such we could have probably survived any one, perhaps two of the above events; aggregately, we didn't have a chance.
Interesting to note that two of the three factors causing our business failure were directly related to government anti-business actions.
Bad news. With this stat we are losing more than I feel like describing right now.
So, what the hell.
http://www.youtube.com/watch?v=a1ysc98tdD4
Gonna find my way to heaven, `cause I did my time in hell
I wasn't looking too good but I was feeling real well
After all is said and done
I gotta move I had my fun
Let us walk before they make me run
Plenty of vacant storefronts these days.
@ mom- basement
where have youve been in your moms basement for the past 30 years?! the day giant retailers like Macys , Sears, etc started mooving into small to midsize cities they all killed the small business!
Meh, I know many people who have gone John Galt. I've closed all 3 of my businesses in the last 2 years - 2 real estate companies and 1 mortgage company. No more government headaches or hassle. Life has never been better!
I own a small business and there is a lot of opportunity. I think the kind of people who traditionally went out and started businesses out of necessity, are getting unemployment and welfare instead. Really, the Free Shit Army. I don't think govt regulation is killing small business opportunity. There is just a ton of opportunity. I deal with reglations and take them all in stride. The only good thing about this country is that small business opportunities still exist.
No one would argue that no opportunities exist, only that they are becoming more limited. There are still lots of people making it, some big, depending on choices, skills and luck. What is your chosen venue of opportunity?
Out here in Port Jeff a lot of businesses have trouble making it through the winter due to fewer people shopping in town. After the rain we had a few weeks ago which flooded a lot of shops they were lucky to have long island business insurance to pump water from the shops and repair the damages. Upper port most shops are empty and for rent.