Publisher's Note: Pump up small business
By Jody Reese
There is some agreement that small businesses will be the employment engine that gets America back to work.
To that end, the federal government is pushing banks to relax lending so small businesses have enough credit to start building their business again.
Unlike personal credit, business credit is really a necessary part of building a business. For example, if you’re a cabinet seller and get a larger order there is a financing gap between when you get the order, deliver that order and get paid for that order. In that space, a small business needs credit to support that transaction. Tax rules also make it necessary in many cases to borrow for large purchases of equipment, such as printing presses or buildings (there are some exceptions).
While the federal push might free up a little cash, it’s unlikely to do much. At the same time the federal government has clamped down on bank lending because of the financial crisis and the lax lending that led to a run-up in asset values. For lending, the federal government is caught in a bind and it’s unlikely we’ll see much help from it.
But that doesn’t mean government can’t be helpful.
In fact, it can do a lot — though it’s not the federal government that can help. For small businesses the federal government is not much of a factor. Most pay little or no taxes to it and aren’t regulated by it. For small business all government is essentially local.
In New Hampshire the state exercises some control, especially on the tax side, but if you’re starting a business or expanding one, it’s likely your local town government is the one you’ll be dealing with. And frankly, it’s the one that is most harmful to small businesses.
So how can town and city governments be more helpful to small businesses?
While saying “get out of the way” is far too glib and unrealistic, the answer is closer to “help along the way.”
As it is, most small businesses are confused and intimidated by the various local agencies that must be dealt with in order to open a small business.
The biggest hassle comes when a small business needs to open a location. This can be as small as an office or as tough as a restaurant. That small business will be dealing with four or five departments with conflicting rules and local officials who don’t have the time to guide the small business owner through the process. The only advice you can expect is to hire a specialist.
Unfortunately, the whole definition of a small business is that you generally can’t afford a professional architect or general contractor. In small business, you do the work yourself or you don’t go into business. Especially now when loans are harder to get, if you want to open a restaurant, you get a hammer and figure it out yourself. But that is at direct odds with how local governments handle permits, inspections and approvals.
Add the fact that everything now has to go through a local fire department, and small business is up a creek of regulations that most fire inspectors don’t fully understand (it’s a huge book of rules, how could you expect them to?).
If small business is going to be the engine that brings back our economy, local government needs to lead the way by streamlining and simplifying the process of opening a business.