Suddenly, everyone’s fascinated with small business.
Last week the governor announced an initiative to boost the economy and assist small business by telling state agencies to clean up, consolidate and improve regulation, licensing, tax structure and other facets of the intersection – or sometimes it’s the collision – between small business and government.
That follows passage and signing at the federal level of a bill designed to open up credit for small business. A component of that bill is a $1.5 billion State Small Business Credit Initiative, of which Washington’s share is $19.7 million, and Gregoire’s executive order includes a provision for the state Department of Commerce to work with small businesses on a plan for using the money.
Cynics would point to the calendar, and the proximity of Nov. 2, as explanation for the political sector’s revived interest in the views and welfare of small business – and the cynics would be right. It’s a particularly relevant point in the case of the governor, who has been in office since 2005, and thus has had nearly six years to not only mull the question of small businesses’ challenges but also devise some remedies. The recent executive order is light on details and specifics.
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But beyond the immediate questions of politics are some big, long-term and contentious questions that have grown even more so in the financial meltdown: What attention and help should government extend to small businesses? Do small businesses even want the attention and help? And why the big guys but not them?
Time for the requisite disclosures. As a 33-year veteran of the daily fishwrap business I have covered companies running the gamut in size from sole proprietors to enormous global conglomerates, and have worked for newspapers that were both small operations and part of much larger concerns. As a freelance journalist and fledgling entrepreneur, I now find myself counted in the small-business universe.
The governor says in a news release that she’s interested in “our business owners spending less time understanding what tax rate they should pay, and more time ensuring their business succeeds,” and has directed the Department of Revenue to “evaluate ways to reduce the complexity of the state’s sales tax system.” Good. Start with the lunacy that is the “streamlined” sales tax system when it comes to a small business in one location having to charge multiple sales tax rates because goods are sent to customers all over the map, creating headaches and confusion for all involved.
Big businesses, of course, have entire departments to handle those headaches and can spread the costs of doing so over a much bigger customer base. That illustrates a fundamental point in the big business-small business standoff.
Run your local auto repair shop into the ground and no one is going to have sympathy for you. Run General Motors into the ground and you’ll be the beneficiary of massive amounts of cheap financing, not to mention intense pressure on your creditors to take a haircut or be shaved bald entirely.
Mess up a “too big to fail” bank with stuff you don’t understand, and you’ll enjoy no end of attention, patience and indulgence from the Treasury secretary and the Fed chairman. Load up the balance sheet of your local bank with failing real estate development loans and you can be expecting a late Friday afternoon visit from the banking regulators.
It had to be that way, proponents of TARP and the auto bailout and the rest argue, because those big businesses are so crucial to the economy. There is a modicum of truth to that. Small-business advocates will howl that they provide the bulk of jobs, which is also true. But I’ve covered enough business history to see what happens to those small businesses and their jobs when the big business in town closes or leaves town.
With that record of big-business largesse, some small businesses figure the answer is for similar assistance. Others would prefer that no one gets anything.
And there are those who believe small business should be grateful for any attention at all, whatever the motivation, however sporadic or belated, however out of balance to what’s lavished on larger companies, on the chance that it might result in one less form to fill out, a few fewer regulatory subparagraphs to decipher, a slightly smaller fee to pay.
Those can mean a few more minutes or dollars to devote to business. The amounts don’t even add up to spillage for big companies, but they’re hugely significant to those who are not only owners and chief executives of their businesses but serve as heads of sales, accounting, operations and governmental and regulatory affairs – as well as the entire staff of those departments.
Bill Virgin’s column on business and economics appears Sunday in The News Tribune. He is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at email@example.com.