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Politics..Personnel..Competition:
What are Your Hot Buttons?

General Business News

January 2005

Politics..Personnel..Competition:
What are Your Hot Buttons?

Regardless of who you are, where you live or what your political views, you can’t deny that the political climate, wars, stock market roller coasters, the economy and a host of other issues over the last two years have left the vast majority of us looking for a little peace and quiet. Unfortunately, that does not seem to be in the offing for most of us who have to contend with the myriad problems that confront businesses each day, and lest you think this article really doesn’t concern you, consider the simple reality that everyone is to some extent or another somewhere in the business cycle.

Let’s look at just one example. Let’s say you work for General Motors and your job is covered under a collective bargaining agreement. Obviously you aren’t a businessperson and the concerns of small businesses have nothing to do with you. Let’s face it, your problems are not related to the problems of the local Town Tavern Convenience Store. Oh, by the way, on your way home, don’t forget that your teenager asked you to pick up some milk and your fifth-grader needs some glue for her science project.

What’s that...you hate to stop at the Town Tavern because the prices are so much higher than the supermarket? If only the kids would do a better job of planning...

Hey, wait a minute! Why do you think the Town Tavern’s prices are so much higher? Well, there is the fact that the Tavern is so small it can’t buy in bulk like the big guys. Then there’s the fact that with only four stores, the health costs of the Tavern can’t be spread over as many employees as the Big Time Supermarket chain’s costs can be spread. Oh, and remember the last time you were in the store how the owner was complaining about the electricity costs going through the roof? All of these reasons and more are the reason you, as a factory line worker, are paying so much more at the Tavern than you could at the Big Time Supermarket six blocks on the other side of your house. Carried to their logical extent, these "problems" faced by small businesses are your problems because you pay for them every time you purchase something at the Tavern.

The simple fact is that when one person’s cost increases, everyone in the supply and consumer market will pay for some part of that cost. True, there are times this is not the case, but generally speaking, it is true; accordingly, it is up to all of us as the consumers to be aware of the problems of small businesses and do our best to help address those problems. While you think this may be best handled at the ballot box, over the next twelve months, we will discuss a series of topics based on the most recent survey Small Business Problems and Priorities, published by the National Federation of Independent Businesses,

This month, we will lay the groundwork and starting in February, we will begin to discuss the issues and some potential solutions. The report is based on surveys performed by the NFIB in 2004 and compiled by Bruce D. Phillips of the NFIB. From time to time, we may reference the previous survey. When we do so, please note that the date of the prior NFIB survey was 2000. If, at any time you wish to obtain a copy of the report yourself, you can locate it at the home page of the National Federation of Independent Businesses.

So what do the small business owners who responded to the NFIB’s survey list as their top concerns? In order from highest problem-priority to lowest, small business owners are concerned about the following:
  1. The rising cost of health insurance

  2. Liability insurance - cost and availability

  3. Workers’ compensation insurance

  4. The cost of energy sources other than electricity (natural gas, diesel, fuel oil, gasoline, etc.)

  5. Federal taxes on income from business activities

  6. Personal, real and/or inventory property taxes

  7. Cash flow

  8. State taxes on income from business activities

  9. Unreasonable and increasing governmental regulations

  10. Electricity costs
As we read this listing from the NFIB survey, we found the listing to be rather odd. For instance, based on the economic reporting from the past few years, indeed the conventional wisdom among many people, one would think that increasing foreign competition would be near the top of the list. In reality, competition from imported products ranked 71 out of 75 problems faced by small businesses. Exporting products is at the absolute bottom while competition from internet businesses wasn’t far behind. Borrowing on either a short-term or long-term basis also ranked near the bottom.

What does all of this suggest in the context of the coming year? First, and foremost, it suggests that we need to go into this year looking at what really drives American small business and even our own businesses, instead of what we have learned from any of the many pundits have told us. Second, it suggests that there are sometimes wide disparities between problems as defined by governmental or other policy makers and those actually experienced by the normal small business. And finally, it suggests that we have a whole year to explore what most businesses in 2004 apparently thought were the critical problems in their day-to-day operations and some possible solutions. Hopefully, it will be an interesting year.

With the drop of a ball, 2005 was born on January 1. As with all years and times, the future holds much promise as well as many challenges. Let’s explore the future together with the optimism our future deserves and, if you have pressing problems that cannot wait, don’t hesitate to call us so we can tackle the problems together.

Happy 2005 one and all!
 

These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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