Throughout this book I’ve offered what I see as basic, no-nonsense advice on running and managing a business. There is a lot you as a businessperson can do to increase the likelihood that your business will be successful, but what about all those organizations that either hinder your growth at worst or are ineffective in helping you grow your business at best? In this chapter I’ll also talk about some organizations that can be beneficial to you and your company.
Entrepreneurship is the backbone of the American economy; however, there are many sectors of society that fail to recognize this and that could do far more to support the small business community. I’m talking about educational institutions, the federal government, local state government, the media, and even business associations such as chambers of commerce.
Did you know that America’s 30.2 million small businesses employ 58.9 million people? According to the latest Small Business Profile published by the US Small Business Administration, 99 percent of businesses in the United States are small businesses. And of course, these are run by entrepreneurs. In 2015, the small business community added 1.9 million jobs; 1.1 million of those people were hired by companies with fewer than twenty employees.1 Small business is the growth engine of the United States, yet it is a sector that is overregulated, is ignored, and gets little true support from the very organizations that should be providing assistance, or at least not getting in the way of growth.
I believe entrepreneurship is so important to the American economy that our educational system should teach and promote it as part of secondary school curriculum. When I say this, some people look surprised; it’s as if this is a strange thing to suggest. But to me teaching young people about business is no different from teaching art, music, and foreign languages, the latter of which is sometimes mandatory. Others claim that not every young person is going to leave school and start a business, and they are correct. But a very large percentage will go out into the business world and hope to find a job.
Now, answer me this: Given the small business statistics provided above, how many of these young people are going to be looking for a job with a small business? A large percentage, of course, so here’s another question: If you are a small business owner interviewing a young person straight from school, would you prefer them to be able to play the French horn, tell you why Van Gogh cut off his ear, or have a fundamental understanding of how the American capitalist system works and have been taught to read financial statements, understand basic accounting principles, know how marketing works, have some salesmanship skills, know common government regulations, and possess other knowledge that will help you immediately grow your business? Of course, if you’d like them to play you Mozart’s Horn Concerto no. 1, choose the former.
Don’t get me wrong. I’m not saying that learning about art, music, and especially a language such as Spanish isn’t useful. I just feel that it’s even more important for our young people to gain a fundamental understanding of how the American economy works and have the necessary knowledge to help them either launch their own enterprise or get good jobs and hopefully become entrepreneurial employees.
Here’s another thought: Did you know that more than half of the families in the United States own stocks or equities in various companies, but few understand the financial statements put out by these corporations and investment funds? To me that is a basic skill everyone should learn at school; that and balancing a checking account.
Our educational system needs to move ahead fifty or sixty years; the age of cradle-to-grave jobs is long gone, as are many of the companies that used to provide those jobs. Even those that have survived, such as U.S. Steel, are shadows of their former selves. It is time to celebrate entrepreneurship, build enthusiasm around it, and recognize its value to the future of our people and our country—for those looking to start their own business, those who own businesses, and those who want to work in or manage a business. Schools have a real opportunity to create an environment of success for entrepreneurism by giving students the skills they need to survive in the real world—the world of business. This poses the question: Is the educational system even up to the challenge?
If you own a business in the United States, you have a not-so-silent partner in your business that puts up no capital, shares none of the risk with you, but expects to regularly take a significant percentage of your hard-earned profits. All this, while at the same time making your business life a whole lot more difficult than it needs to be. That partner, of course, is the federal government.
While the government is absent when it comes to helping out with financing your business or offsetting some of the risk, it’s not so silent when it comes to telling you how to run your business. Your silent partner will tell you how your employees should be paid, what kind of fringe benefits you have to offer, what hours and overtime rules you have to follow, and which safety regulations must be enforced in your business, such as those regulated by OSHA (Occupational Safety and Health Administration). As partners go, they are like the third wheel on a first date.
Much of this also applies to state or local government. Most states have their own set of rules relative to minimum wage, hours worked, fringe benefits, and more, all of which must be followed. Where the state really gets involved is in the area of workers’ compensation insurance, disability insurance, unemployment insurance, and family leave. These are all significant financial burdens to employers.
In addition, local governments add another set of burdens on business owners, such as zoning restrictions, building permits, and high local taxes, and they very often create expensive and frustrating delays in getting businesses established due to licensing and other administrative red tape. I was involved with one business in Florida where it took us almost four months to build and open a small 1,200-square-foot location. In New York State, to its benefit, we can set up the same business in about three weeks.
My point here is that a lot depends on where your business is located; one state can make certain things easy; in another they can be burdensome. Some state regulations can be pro-business, and in others they can hinder your business’s operation. Navigating a state’s protocols can be a nightmare, only to discover federal regulations overlay those of each state.
Government always seems to make business complex and difficult. I would like to see all levels of government keep their business rules and regulations to a minimum. This would greatly help small businesses function more effectively, efficiently, and profitably. Even though the administrative and tax burdens various levels of government put in place are, in their mind anyway, well intended, they can be a significant burden on small businesses. And some are downright unnecessary, such as when the federal government introduced a few years ago a requirement that companies have to report hiring a new employee within thirty days of their starting with the company.
I have several other issues with state governments, including their desire to create jobs using government subsidies. In my opinion this is a rifle approach rather than a shotgun approach because these states provide funds to only a limited number of organizations or companies. The hope is that these fortunate companies will create more jobs, but there are no guarantees this will occur; in fact, there have been many cases of start-up companies using state money that haven’t created the jobs they predicted.
In some cases, the amount of funding is so great that the return on investment on this taxpayer-funded activity could never show a return on investment in terms of tax income to the government. I’ve seen grants amounting to $100,000 an employee. Now, how many years in the state of New York, at the rate state employees pay income tax, would it take for them to get the money back? I’ll tell you: decades!
Far more jobs would be created by lowering taxes for everyone, but perhaps that’s too simple a solution for governments who often feel a need to overcomplicate everything.
One of the reasons for what I see as a misuse of taxpayer money is that almost all states are funding this type of job creation; therefore, any state that opts out believes it will be at a disadvantage. The federal government could step in and stop the practice, but I doubt they are inclined to do so for fear of interfering with what is seen as a state-level issue. At the end of the day, taxpayer money is being wasted, as usual.
Another misguided policy enacted by most, if not all, states is financial assistance given to companies offering to locate or relocate their operations to a specific state. Companies will often pitch state against state with this carrot, hoping the subsidies will rise as the competition for the jobs they will provide heats up. CEOs are trained to do this; in fact, you might say they are obligated to do it to benefit their shareholders. Amazon has shown itself particularly proficient at what is a race to the bottom for the states involved.
As I mentioned previously, I used to own the Buffalo Sabres, and so have some experience in that arena (sorry, but that pun was intended) when it comes to state-sponsored funding. State government politicians are so frightened of losing a sports team franchise that they will do almost anything to appease the sports team owner or the league that wants a new stadium or arena. And that includes spending millions of dollars of taxpayer money. It reminds me of the days of the Colosseum in Rome, when the emperor provided entertainment to all citizens by building a stadium.
In my experience, the media sometimes has a tendency to belittle or berate businesses that experience notable success. The approach they take when covering success stories can often give the reader the impression that there was something unethical, underhand, or even illegal taking place to warrant such an achievement. It seems the media’s default is to put entrepreneurs down and cast a shadow over their successes. This is detrimental to the American psyche. Business and entrepreneurship are important to the future of the United States, and the media can do a lot more to support the growth of small businesses. More emphasis should be put on the fact that successful organizations create jobs; these companies invest the capital to build new factories, purchase new equipment, and create new services.
I believe that embracing and celebrating successful entrepreneurs and their businesses is good for the American people and the economy. I would like to read more well-researched, accurate articles highlighting entrepreneurial success.
The Small Business Trends website lists twenty-eight business associations on its “The Really Big List of Small Business Associations,”2 so there is no shortage of organizations you can turn to for support. I’ve always thought that unless the annual dues are going to cause you hardship or you believe they do not reflect the value you will receive, it’s a good idea to belong to whatever business associations are active in your community.
There are more than four thousand chambers of commerce across the United States that employ at least one full-time person and thousands of smaller operations run by volunteers from the business community. Checking in with your local chamber is probably a good place to start. From a national perspective, the US Chamber of Commerce is the world’s largest business organization. It represents the interests of more than three million businesses and local chambers across the country. It is the voice of business in Washington, DC.
Other notable associations from the “really big list” include the three-hundred-thousand-strong National Federation for Independent Businesses (NFIB); the National Business Association; Business Network International (BNI), which can often have multiple groups in one town or city; and many specialist organizations such as the International Franchise Association and the National Restaurant Association. My advice is to do a little research and discover which associations are more likely to be useful to you and have members with whom you would be interested in networking.
Becoming active in associations like these gets your name out in the community, along with your company’s profile. That is always a positive, especially in terms of being able to promote your products and services. Mixing with other businesspeople can also be a valuable learning experience. A side benefit of attending mixers and functions is that you might come across recruitment opportunities, both in terms of general employees and senior management.
This type of networking will inevitably put you in the same room, from time to time, with your competition; I suggest never underestimating the potential of building positive relationships and alliances with your competitors. It has worked well for me over the years.
One final benefit of being heavily involved in your local business community is getting to know what issues are affecting, or might affect, the local business community in general, or your particular industry.
I hope you have enjoyed this book. Writing it has been a labor of love. Hopefully you have learned a little about the ins and outs, and maybe the machinations, of running a business; the things to watch for, the things to avoid, the things to embrace. I have enjoyed my business career greatly. Watching Paychex grow from just myself, one employee, $3,000, and a well-worn credit card to a company employing 15,500 people servicing 670,000 clients has been amazing fun and a genuine privilege.
I believe entrepreneurs are extremely important to our country and to our future. I have the utmost respect for the people who take the risk to become an entrepreneur and the value they can and do create for our citizens. They should be honored and celebrated, and yes, I’m talking about people like you.
If I can pass on one more piece of sage wisdom: “Don’t forget to have fun!”