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Member News: C.C. Eship / NACCE Journal Spring/Summer 2009

Helping Small Businesses Help Us Out of the Recession

Thursday, July 2, 2009   (0 Comments)
Posted by: Matthew Montoya
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By Randy Nelson
Director, AWC Small Business Development Center
Arizona Western College, Yuma, AZ
As with the last few economic downturns or recessions everyone seems to be pointing to small business creation and growth to pull us out of our current situation. Why not? This strategy has worked very well and now small businesses create more jobs, higher sales, and more new technology than ever before. So if small business creation is to be stimulated, how and when will this happen?

First of all what would make owning and operating a small business more attractive to those currently, or recently working for corporate America? To me the attractiveness of corporate America lies in the following areas;

1. Health insurance

2. A steady rate of pay with chance for improvement

3. Retirement benefits

4. Educational opportunities

So if you see the following things happen, small business creation should explode in both creation and investment;

1. Mandatory health insurance

2. Decreases in current levels of pay

3. Current retirement opportunities lose significant

4. The cost of current educational opportunities

becomes unaffordable

You can probably see where I am headed now; the climate for small business creation is becoming more and more favorable. At the beginning we will probably see people who have been downsized or have had their earning power greatly reduced as those interested in self- employment. The momentum will probably build until we see more and more of the individuals with resources (financial, experience, and education) looking to create their own business as a viable alternative to working for the traditional Fortune 500 company.

What will be very important for the policy makers to remember is that their actions may have a very negative effect on small business creation. One of the trade-offs of working for a large company is that your job does not have to do everything. Someone else is always there to handle HR, marketing, accounting, safety, production, management, technology and whatever else they are paid to do.

Entrepreneurs are much more efficient and effective when “red tape” and other compliance issues are minimized. I have seen more and more individuals thinking about small business ownership scared away once they understand all the compliance responsibilities that go along with their business opportunity.

Unfortunately, the other potential killer of entrepreneurship is the politician, especially in an era of declining tax revenues. A few years ago our city was considered a boomtown of economic activity. Every politician enjoyed the additional revenues brought forth by an exploding economy. In many ways the cities and counties struggled to keep up with the growth and encouraged strategies like impact fees, aesthetic overlays, zoning delays, and many other barriers to entry for the small business person. With reduced tax collection we should be looking at reducing the barriers to entry for the businessperson. We have seen larger corporations relocate some or all of their operations overseas once the cost of doing business in the U.S. outweighs the challenges of conducting business from a more favorable location, or the costs of international trade is lower than local manufacturing.

Fortunately educational opportunities are still available through community colleges, small business development centers and others to help the entrepreneurs help us out of our current economic downturn.

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