The Reason Small Businesses Are Disappearing, As Explained By A Small Business Owner

Tyler Durden's picture

Confused why despite endless daily propaganda that the US economy is getting better - after all "just look at the record high S&P 500" - fewer and fewer Americans believe the narrative, as the Democrats and Obama found out the very hard way in last week's midterm elections? Then the following explanation written by the owner of a small business - the segment of the US economy that has historically led every single recovery but this time was left behind - should help answer some questions.

The reason small businesses are disappearing written by a small business owner.

I want to start out by saying that i am a 27 year old male with a small business in Sacramento CA. I started this business a few years ago with savings of 15k. With a lot of hard work and determination i have succeeded, but it sure as hell was not easy. I am a long time lurker and have never seen anyone go in depth about what its like to own a small business and the reason why they are disappearing. Without going into to much detail, i own a furniture store so obviously things are different then other businesses but a lot of the things are the same. I wanted to begin with the things that are killing small businesses. Also only my opinion.

  1. Small Business Loans - Although they are not killing small business they sure as hell don't help anyone. Unless you are opening a unique small business you are not going to get any funding. By unique i mean something along the lines of creating solar panels. According to a recent investigation by the SBA Inspector General (ill post the article if you would like), over 75% of SBA loans went to large businesses. So basically if you want to open a normal business you need a ton of collateral and a miracle to get a loan.
  2. Permits and Licensing - In opening my specific business the first year totaled about $2000.00.
  3. Advertising - Many small business's cant afford to take out pages or flyers in the news paper or TV ads so they only have a few choices such as Yelp or the Penny-saver. (Don't get me started in Yelp).
  4. Street Advertising - While this used to be a good portion of how you get business it is now off limits. Code enforcement will not allow you to put anything outside. No balloons, signs, anything with your store name, window paint more than 50%, or any mattresses. Also delivery vehicles can not be closer than 50 feet from the curb. In my case that means behind the building.
  5. Board of Equalization - Cant go into to much detail here but they sure as hell aren't here to help.
  6. Health Insurance - Now obviously with the people that have a large work force working full time they will be hit hard by obamacare, but i wanted to give you a perspective on a single person. The cheapest rate for myself and me only, and believe me i have looked around, is $250.00/month. Some might say oh that's not bad, but let me explain what that covers, NOTHING lol. Basically if something happens to me i have to shell out 6K before insurance gets involved. Also 100 dollar co pay every time i go.
  7. The economy - While many know that when the President comes on TV and says the economy is doing great, we all know it is not, some people don't. Every month more people drop out of the Labor Force and the number of families on food stamps is sky rocketing. So for those of you who don't know the economy is terrible because of all the top stories of Kim Kardashian and whoever else, lots of people in america are struggling.
  8. Merchant Fees - This is for credit card processing machines. The machine itself costs 600.00 plus the percentages on sales and cards. Companies such as BofA charge once a year on top of the regular fees $150.00 to protect you from fraud (which they can't even stop) and yes its mandatory. Paypal or Square seem to be the best options these days.
  9. Fire Department - Yes even the Fire Department wants a piece. Starting last year you must do your own visual inspection and send them a check for 150! Basically if you don't they will come to your store and give you a million violations for wasting there time.

Something to watch out for is people who check fire extinguishers in business's. This is a huge scam where they come in without permission to inspect your extinguisher, get you a new one and bill you like 200 the following month. They have no right or permission to enter your business and jump all over you. You can simply tell them politely to get out. They dress like they are fire fighters but they are not.

* * *

The thread with the author's Q&A continues on Reddit.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
astoriajoe's picture

What is a board of equalization?

bigdumbnugly's picture

i believe its the wooden springboard used by white guys in the nba.

Divine Wind's picture

 

 

 

+1000

ROFL

I gotz me some tears in my eyes.

Ying-Yang's picture

"75% of SBA loans went to large businesses"

First thing we should do is change the SBA's name to Ginormous Business Administration.

localsavage's picture

In CA it means taxes....as does every agency here.  SBA means big businesses keeping competition out

jbvtme's picture

fire departments...homeland security owns your local fire department. https://www.fema.gov/welcome-assistance-firefighters-grant-program

NotApplicable's picture

...and police ...and 911 call center ...and health dept. ...and... well pretty much everything else under one federal banner or another.

Leopold B. Scotch's picture

AS a former small business co-operator who left that sort of thing, I am stunned that this piece could be written without includeing "absurd regulatory and tax compliance costs".   Technocracy rules the day, and while the biggies have the critical mass to comply, the small are forced to struggle, merge, or say the hell with hit.  (Look at what such complexity did to medicine and the smaller meidcal practice? Merge into the regional oligopolies, or go out of biz.)

Dr. Richard Head's picture

When we went to go get our occupancy "permit" (ridiculous nonsense in of itself) the fire department pointed out that our handicap curbs were 2 degrees off on the slope and that we had to rip out the concrete and install at the proper slope. 

outamyeffinway's picture

"Something to watch out for is people who check fire extinguishers in business's. This is a huge scam where they come in without permission to inspect your extinguisher, get you a new one and bill you like 200 the following month."

 

How about the guy that comes in your business and just changes the tag on the extinguisher? Just wathced it happen the other day. Changed the tag, VOILA. Brand new!

1fortheroad's picture

Now thats sounds like a good bussiness, checking fire extinguishers in business's.

 

http://www.nfpa.org/catalog/product.asp?pid=1013

Herd Redirection Committee's picture

Nickle and diming!  Extortion.

Reading that list, honestly conjures up images of the Mafia, and medieval extortion practices (firefighters used to start AND put out fires back in the day) of the Janissaries.

trade4cash's picture

What do you mean, "used to"?  That shit still occurs (California wild fires as one example.)

zerozulu's picture

eBay or Amazon. Two options left.

Son of Loki's picture

All the above and below reasons are why the USA is not considered one of the best places to start a business.

Shocker's picture

Current Layoff / Closing List: http://www.dailyjobcuts.com

Enough Said

underman's picture

Cali is not the place to start up a small business.  The state will eat you alive!

All Risk No Reward's picture

I have met the enemy and the enemy is us.

Well, at least us in the writ large sense.

Do you really need me to tell you how to shut down Debt Money Monopoly mega corporate fronts and promote small business?

Stop shopping at Big Business and start shopping at small business.  Yes, you will pay more...  but you won't be funding a government sanctioned monetary based Jeffrey Dahmer that is eating you and your children up.

When people start talking about systems that can work, this point is rarely brought up, but it is critical.  No system will work as long as people direct their monetary wealth to the big and powerful and...

....all at once...

...and the CORRUPT!

Power corrupts and absolute power corrupts absolutely.  The size of a business is proportional to its power which is proportional to its level of corruption.

Shop local, shop small and pay cash so the Debt Money Monopoly doesn't siphon off 3% of your expenditures at the point of sale.

Eeyores Enigma's picture

The reason that small businesses are failing is big businesses.

Small businesses do not generate fictional revenue streams that "investors" the likes of all of you here at ZH can tap into and leach off of so what good are they?

SeattleBruce's picture

I think you have the wrong impression of most ZHers.

usednabused's picture

I hope he has the wrong impreession, but then again from some posts I see I'm not so sure he isn't mostly right.

McCormick No. 9's picture

I'm not replying to you Eeyore, I'm just trying to get higher on the thread...

I say fuck 'em. I'm self-employed, a farmer, and I operate a welding business on the side. The "municipality" (bum fuck egypt- what right does this wide spot have calling itself an incorporated town?)wouldn't allow me to re-zone so I could operate a legal business. So sue me you fuckers. Or shut me down. Illegal aliens do this all the time. Permits and regs? No comprende, mucho lo siento no habla ingles. Fuck, if they can do it, so can I. It's just a matter of staying under the radar. It's time to become emergent mammalians again- tiny, insignificant omnivores the dinosaurs can't worry about. Fuck you dinosaurs, the meek will inherit the earth. Who knew Jesus was an evolutionary biologist?

AllTheMarbles's picture

I logged in just to up vote you.....what you said was right on target. Plus you are honest and plus, plus you used the term "bum fuck egypt" which I haven't heard in along time.....and I actually did..... lol.  Great post!

Escrava Isaura's picture

 

 

The Reason Small Businesses Are Disappearing…., in two quotes

 

"The greatest shortcoming of the human race is our inability to understand the exponential function" -- Albert Bartlett

 

“Anyone who believes in indefinite growth in anything physical, on a physically finite planet, is either mad or an economist.” -- Kenneth E. Boulding

 

 

 

g speed's picture

duh-- reason small businesses are failing is ---ready???   GOV'T

Escrava Isaura's picture

 

 

Business fails because capitalism is totally unworkable.

Say I have some (carpentry) skills and I open a shop in my home/garage/barn. Or, a butcher shop.

How long do you think it will take for competition on my street/neighborhood to start?

What? You’re not sure how long it will take?

Go to small towns/villages in Brazil. Look the mess that free-market capitalism really is. By the way, there are major ‘local-Turf’ politics at play.

 

Let me give you an example:

 

My hair dresser is from Nicaragua. Her uncle has 11 busses in this village. She told that he is thinking selling these busses because some new gang took over these his bus routes and he has to pay these gangs to enter their neighborhoods.

 

So, when I read some of these comments, including yours, it shows me how naive, and brainwashed, many of you are.

 

By the way, I had a business in Maryland that employed 22 people.

 

 

 

SWRichmond's picture

Gangs who take over a neighborhood, charge a fee to do business, and threaten violence?  sounds like any municipal government and the cops.

Escrava Isaura's picture

 

 

However, the government/local authorities have to be accountable to the voters. Private sector is not accountable to anyone, but the owner/insiders.

 

sylviasays's picture

"However, the government/local authorities have to be accountable to the voters. Private sector is not accountable to anyone, but the owner/insiders."

Only a delusional idiot would believe that government is accountable to voters. 

 

 

 

 

Escrava Isaura's picture

 

 

Does Richard Nixon ring a bell?

 

 

smlbizman's picture

where in maryland escrava...im in baltimore and had a sml. firm for 20 yrs. till they killed it.....unemployment insurances was 59. per man per yr...we never ld off...than 798. per, than 1600 per...this was during the 08'09' and 10'....marty owe and everyone on lifetime benes....i had 10 employees...my customers just didnt want pay that much more for us to recover our from 590. per yr. to 16k per yr...end of story

Escrava Isaura's picture

 

 

I ‘officially’ opened mine in 1999, in Chevy Chase, Maryland. I was actually living in Arlington, VA, but dating someone in Chevy Chase. Anyway, started with one employee (me) and then grew from there.

 

I didn’t have the problem in raising prices (until 2007), because our services were in real estate.

 

In 2001 I had two people working for me and I thought the whole thing was going to fail.


 

The collapse of the real estate did it for me, not the government, even that taxes and insurance in Maryland were high.

Insurances are huge frauds as far as I can tell. If I could have placed all the insurance money paid in physical gold, I would have come out far ahead, I believe.

 

Anyway, 2007 was the end of my story. Looking back, I wish I had gone in the security business, instead.

 

BeansMcGreens's picture

Was just wondering if your employees were actually sub-contractors it being a real estate company, or did you have to collect and pay taxes (matching SS and Unemployment) on their salaries?

 

Small businesses have to collect taxes by law for Local and Federal Governments just like the big ones. And it all comes first.

Escrava Isaura's picture

 

 

Both! Employees and subcontractors. I had a lady that managed all the state and federal forms. As well as the taxes for me.

Later on some employees became subs. By 2006, I was down to 4 employees. Back then I did not understand things as well as now, but I knew that was something wrong. This hairdresser that I knew bought 2 condominiums in DC. One of my carpenters had 2 houses. NO one ever call me to verify his employment status. And he was remodeling one of his houses while working for me.

Then, I visited Brazil a few times after finished granite and exotic wood for buildings…., talking about another illusion.

 

TeethVillage88s's picture

I wrote about this over the last three years. Nice quotes.

localsavage's picture

CA has compressor inspectors who drive around pearing through back doors looking for compressors. 

SeattleBruce's picture

Those aren't the only ones in CA peering through back doors...yikes...be safe out there..

darkpool2's picture

I just let them do it, and when the bill comes, put it in the shredder and tell them to go fuck themselves. They rarely return the next year. Too many business owners just arent tough enough.

Citxmech's picture

This: ^

F'n local permitting is insane.  I'm trying to change the occupancy of an old horse barn right now for commercial use and the shit I'm supposed to do is just nuts.  

The code requirements that are going to be applied to my 2000 sq/ft unheated barn with no employees would cover a two-story industrial production facility with 50+ employees.  WTF?  Handicap parking pad?  Really?  It's just my wife and I and we're going to live on the fucking property!

The end result is that my prospective "small business," if it's going to work at all, is going to end up being a "medium-sized business" after I spend the $100k just to get the faciliyt all up to the county code.

MachoMan's picture

County?  That's pretty interesting...  Here, there are city ordinances and the county is still left to mostly do whatever the hell you would like...  including, shoot guns and own livestock.

Citxmech's picture

Actually - those are some of the cool things where we're at - we can own animals and shoot guns all we want.  =]

Miffed Microbiologist's picture

When we were to have our final inspection for our solar panels, we and our neighbors were told to be prepared to be personally raped. They will use this opportunity to fine everyone with non permitted outbuildings for a nice cash sweep. Mr had built my tackroom to code but it was 300sq ft vs under 200 required for a non permitted building. I panicked " Were dead, we might as well dismantle it." He just looked at me and smiled and I drove off in an angry cloud of dust to go to work.

When I came home my tackroom was gone. In it's place was a massive pile of hay! Where did you put my tackroom? What tackroom? My tackroom, the one that was standing there this morning! Woman, I suggest you stop asking me questions I am unable to answer.

Miffed

MsCreant's picture

Your husband is awesome. I love it.

They were trying to force us to tear down our back building when my house was destroyed. The rules say the property has to be empty of buildings in order for us to lay the foundation of our house (I so don't get that). It was luck that one of the subcontractors knew a guy at code. He informally explained that the place was perfectly fine and functioning and it would make our hardship worse if they made us take down a wood and stone finished conditioned space and they turned their head the other way and let us keep the building. But we almost lost it, it would have been $25,000 or more easily to replace it. We lucked out but the rules are still in place and could stupidly harm someone else like us in the future. 

 

SeattleBruce's picture

"We lucked out but the rules are still in place and could stupidly harm someone else like us in the future."

Yeah, therein lies the problem.

12ToothAssassin's picture

Welcome back Miffed!~ What happened to your self imposed Ebola quarantine? Im glad you survived.

MontgomeryScott's picture

I panicked " Were dead, we might as well dismantle it." He just looked at me and smiled and I drove off in an angry cloud of dust to go to work.

Mr. Miffed is a real pushover, isn't he?

He just did what you said...

Mr.Miffed's picture

Sort of. After the inspection I removed the tarp over the top and restacked the hay wall that completely circled the building. I will say getting the 8th and 9th row of bales up on top did take a little ingenuity.