The Reason Small Businesses Are Disappearing, As Explained By A Small Business Owner

OK Folks, So you were wondering what is happening to The Small Businesses in your Neck of The Woods. It seems everything nowadays is part of Some Franchise or Mega Corp, even the one's that look Mom and Pop are often disguised offshoots of MEGA RETAILERS OF SOME KIND. This article has some insights into just what's going on (Not even close to all).

So, is this particular business owner somewhere near the truth, or is he just whining about his own poor judgement in starting a New Buisnees in The Throes of A Deep Recession?

Any Replies, Comments, Rant, Raves etc. re most appreciated.

Mods, Please feel free to move this if you find this to be in The Wrong Place here.

Thanks everyone for taking a look and Peace Arjunanda.

Confused why despite endless daily propaganda that the US economy is getting better - after all "just look at the record high S&P 500" - fewer and fewer Americans believe the narrative, as the Democrats and Obama found out the very hard way in last week's midterm elections? Then the following explanation written by the owner of a small business - the segment of the US economy that has historically led every single recovery but this time was left behind - should help answer some questions.

The reason small businesses are disappearing written by a small business owner.

I want to start out by saying that i am a 27 year old male with a small business in Sacramento CA. I started this business a few years ago with savings of 15k. With a lot of hard work and determination i have succeeded, but it sure as hell was not easy. I am a long time lurker and have never seen anyone go in depth about what its like to own a small business and the reason why they are disappearing. Without going into to much detail, i own a furniture store so obviously things are different then other businesses but a lot of the things are the same. I wanted to begin with the things that are killing small businesses. Also only my opinion.

Small Business Loans - Although they are not killing small business they sure as hell don't help anyone. Unless you are opening a unique small business you are not going to get any funding. By unique i mean something along the lines of creating solar panels. According to a recent investigation by the SBA Inspector General (ill post the article if you would like), over 75% of SBA loans went to large businesses. So basically if you want to open a normal business you need a ton of collateral and a miracle to get a loan.
Permits and Licensing - In opening my specific business the first year totaled about $2000.00.
Advertising - Many small business's cant afford to take out pages or flyers in the news paper or TV ads so they only have a few choices such as Yelp or the Penny-saver. (Don't get me started in Yelp).

Source

a reply to: arjunanda

or is he just whining about his own poor judgement in starting a New Buisnees in The Throes of A Deep Recession?

Why some people believe we are still in an era of free enterprise astounds me. At least this fellow spreads the blame for his hardships between both private and public expenses.

As a small business owner (3 & 1/2 employees) I can tell you that he didn't even scratch the surface of all the obstacles that you encounter.

a reply to: arjunanda

Friend of mine tried selling me his coffee shop really really cheap. I was getting so excited about it...me running a coffee shop...he told me though that before I bought it wed have to sit down and talk about everything....so we did...and then I didn't buy it and realized ill never open a business unless I do it illegally ....like run some hot dog stand somewhere without getting a permit lol...

Yep Hoosierdaddy, That's what I was thinking as well, Me and My Dad, Ran A Small Business back in The 80's and it was really tough then. I can not even imagine the obstacles that have been deliberately put in place nowadays. Good Reply and a Star for you Arjunanda. a reply to: Hoosierdaddy71

This was an integral part of the American dream that's been co-opted for the benefit of large corporations. I do my best to avoid patronizing any of the big stores even if I have to pay more. At least I know some of my money will remain locally instead of lining some investor's portfolio.
The other leg of the American dream was to find a blue collar job and stay until retirement. Industry has been demolished and any remaining has shafted their employees' benefits and retirement.
What we lost with small businesses is diversity and choice. All the big stores carry the same crap made overseas by someone working in slave conditions.
I don't blame capitalism for our current condition, it's been the unethical and greedy among us that rigged the game in their favor.
God bless anyone starting their own business these days, it's a hard road and fraught with danger and they have my utmost respect.

a reply to: arjunanda

I think your problem is that you have a small business in Sacramento, CA, the state of over-regulation.

Big corporations catch a lot of grief and sometimes for good reason but they are the least of my problems. Taxes are a killer. Insurance is brutal and I don't mean healthcare, it's workman's comp and liability insurance. You think heating your house is pricey but try heating while paying the business rate. Yes it's higher than residential. Telephone rates are higher for businesses to.
I'm giving myself a headache.

Small businesses are dying because big corporate businesses are eating them up. They can sell cheaper because of volume. It's big corporate that is the enemy and their supporters.

a reply to: arjunanda

I want to start out by saying that i am a 27 year old male with a small business in Sacramento CA

That is the first problem. Why would anyone want to operate a small business in the most business-unfriendly state west of the Appalachians? A state that is in lockstep with the current administrations socialist aspirations?

I had a retail business for 7 years in a state that was booming and it was difficult. Even successful ones are a LOT of work.

That's why my next one is a manufacturing startup (launching soon). If I am going to put in the effort, I want the reward to be proportionate.

originally posted by: damwel
Small businesses are dying because big corporate businesses are eating them up. They can sell cheaper because of volume. It's big corporate that is the enemy and their supporters.

That's a very simplistic viewpoint. Why are sears and pennies struggling and walmart thriving? Those are huge companies. Volume purchases should not be a problem for them.
What small business is being driven out by ford and chevy?
What little guy is boeing driving under? Mom and pop air liner makers?
Many small manufacturers are building parts for those big corps and that is where many place their survival.

a reply to: Hoosierdaddy71

What small business is being driven out by ford and chevy?
What little guy is boeing driving under? Mom and pop air liner makers?
Many small manufacturers are building parts for those big corps and that is where many place their survival.

Until they move overseas, maybe. Parts and labor are cheaper there.


In Silicon Valley a company called Applied Materials sold out the rights to make chip making systems overseas. When they did that a plethora of small "supporting" machine shops went under straight away. I knew a lot of them and was pissed to see it happen. We called that era the scrapping of Silicon Valley.

Golden parachutes, tax loopholes overseas and cheap labor all contribute to the little guy floundering.

I have been a small business owner for 7 years now. (I am only 30) And boy did I think I had it all figured out when I was 27 myself.
His article, while put together well, and somewhat enlightening, didn't even put a dent into what it is like to be a business owner day in and day out. I feel like a lot of factors play into why small businesses are disappearing. Though I live in a state where small business is booming thankfully. But the main thing for people my generation is instant gratification. It is difficult for the younger generations to see things long-term. You might be completely broke for your first year, or two, or even ten!
The company Otterbox started in the building next to me in Fort Collins, CO. (I wasn't there when they started, but later on) And they struggled. They were in massive amounts of debt. Everyone told them to give up. FOR TEN YEARS. And now look at them. Their story, along with many other's I've been lucky enough to hear, has really inspired me to keep pushing, stay focused, and work hard. It is difficult to fail when those things are in order.

I feel like as a business owner, you are constantly under a magnifying glass. Having integrity is important too. Something which younger generations lack as well.

I guess what I'm trying to say, without writing a huge, biased novel here, is that it is way more than the government, or mega corps, outrageous taxes, licensing, etc... those things have always been around. Instead of pointing the finger, we need to look at ourselves.

OK Intrptr, I can see this as a very possible chain of events that you witnessed. It's not just The Big Corp offshoring manufacturing, but all The Small Peripheral Businesses that supply said company. Good Reply and A Star for you Arjunanda. a reply to: intrptr

a reply to: intrptr


yup
And that's because of all the regulations and taxes that businesses must deal with. The only way to survive is cut costs. They are only playing the cards that were given to them from the governments deck.

I ran a small business for a while. I love in a high density, high wealth area. The rent alone cost as much as our revenue at half capacity. It might be different in rural or poor areas but property owners have an insane amount of power. Demand is so high and supply so low that they can charge whatever they want, demand whatever they want, and offer as little in services as they want.

a reply to: Hoosierdaddy71

Yah, way over regulated. Just opening one is a miasma of regulations, licensing, permits, leasing, insurance withholding, loans, etc. The only way to make money with a small business these days is to have a lot of money to begin with. The days of Colonel Sanders back yard BBQs growing into a mega chain are over. Be cause all the mega corporations pay the mega government to enact legislation to prevent us from starting a business from the ground up (like Colonel Sanders).

originally posted by: ScientiaFortisDefendit
a reply to: arjunanda

I want to start out by saying that i am a 27 year old male with a small business in Sacramento CA

That is the first problem. Why would anyone want to operate a small business in the most business-unfriendly state west of the Appalachians? A state that is in lockstep with the current administrations socialist aspirations?

I had a retail business for 7 years in a state that was booming and it was difficult. Even successful ones are a LOT of work.

That's why my next one is a manufacturing startup (launching soon). If I am going to put in the effort, I want the reward to be proportionate.

If california is so terrible why is it the 8th largest economy in the world?

I do and have worked for many small businesses in the Golden state for many years. The licensing, tax, worker's comp and other insurance requirements are quite substantial but also provide excellent value to the business owner over the long term.

Worker's Compensation - the biggest factor in rates is the wage paid to the employee. The higher paid worker (any mostly I'm talking about the trades here) have a much lower WC rate as it's assumed they are more experienced. It's often much better for the small tradesman to pay his workers more and pay a lessor WC rate. Now, consider this, if you are not paying worker's comp and a worker is injured on the job - how much is that going to cost you - it can cost you your business. Worker's comp is the biggest complaint I hear.

I find the businesses that run completely above board, follow the regulations of their particular field, pay their business and payroll taxes in a timely manner can do quite well in California. I also have found over the years that those business owners that spend time on "gaming the system" and not on customer satisfaction can have a very hard time.

Most small businesses fail, this has been true regardless if the state of the economy.

Sure the current business environment is particularly skewed towards Big Business in retail but the trades will always have to be local. Big business has many advantages in terms of buying in volumne and buying regulatory 'favors'.

But California is not business hell as you imply. In fact you can actually find good employees here because of our raggedy social net. Taxes and regulation improve the stability of any state and business planning requires a stable environment to work in.

If california is so terrible why is it the 8th largest economy in the world?Text

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I would encourage cash transactions whenever possible. I am one of the most moral people you can imagine, but when it comes to the IRS, if you can screw them any way you can and get away with it - more power to you. The IRS doesn't need to know what there is no record of.

originally posted by: ScientiaFortisDefendit

If california is so terrible why is it the 8th largest economy in the world?Text

Sheer size.


I would encourage cash transactions whenever possible. I am one of the most moral people you can imagine, but when it comes to the IRS, if you can screw them any way you can and get away with it - more power to you. The IRS doesn't need to know what there is no record of.

Unless your are useing tor to right that then thats a bad idea,

Never under estimate the lenghts the goverment will go to get its taxes from the peasents and that includes watching what you say online.

As far as goverments crime goes in this order:
1) terrorism
2) tax evasion
3) pedophiles