George Rebane: Entrepreneurship 2011
June 10, 2011
This administration has taken a bad economy and, by any measure, made it unimaginably worse. We all know the litany of government stimulus packages, corporate bailouts and takeovers, new reams of regulations designed to drive business and finance off-shore and, of course, Obamacare.
That nationalized healthcare monstrosity is proving to do exactly the opposite of every one of its touted benefits. And parodying Nancy Pelosi, the more we find out about the Patient Protection and Affordable Care Act, the worse it gets.
Polls now show President Obama’s disapproval ratings well above 60 percent for his handling of the economy, yet enough people are being paid sufficiently that 44-percent of voters would still re-elect him. With so many people ignorant about or out of today’s economy, it will take a miracle to replace him.
Meanwhile both Democrats and Republicans agree that small businesses are the nation’s job creators, and success there paves the road to recovery. Yet the social engineers and vote buyers in Washington continue hindering the very economic activities they tout from the other side of their mouths.
Few people know what it takes to be an entrepreneur and start a job-creating business. A successful entrepreneur comes with an overarching dream, a practical approach, tolerance for considerable risk and enough funds to last through the “cash minimum point” when revenues start exceeding costs – whenever that may be.
Entrepreneurial risk is a many-headed monster, both vicious and sneaky, waiting to torpedo the fruits of your planning, investment, months of sweat and maybe much more. Most entrepreneurial efforts require that you quit your day job, run a gauntlet of regulations, filings and fees and work 80-hour weeks while holding your breath. That also means taking a hit in the progress of whatever career you had going with that regular job.
And your family, it is going to go through a time of belt-tightening and stress. Not regular stress, but the kind that can put your marriage and relationships with your children, friends and relatives on the rocks.
To fund your dream venture, that final big push to put you and yours on the beach, you need money. And unless you belong to a government-approved class, you get this money by draining your own resources, which may involve refinancing your home and putting your kids’ college educations on the line (remember stress?) and also tapping into friends and relatives who believe in your dream.
If professional vulture capitalists get involved, then you must be doubly careful that you don’t wind up losing your business through some small print that you overlooked.
But let’s say that you did everything right, and the long hours and late nights and missed weekends with the kids, etc., have started. You hire staff and proudly create a few jobs with more to come. You’re working your proverbial south end off as you try to make your business financials head north. And then, you finally start seeing light at the end of the tunnel.
To keep things as simple as possible while building the business, you formed the corporation under the Sub-S law, which allows you to take revenues and manage business costs as part of your personal tax filings. The profits accrue to you as income, and your plan calls for reinvesting a hefty chunk to really start growing the business. But not so fast.
Finally your income is well beyond $250,000, and the state now calls you “rich.” Being “rich,” you are the next enemy of the people whose income should be docked and put to much better uses than expanding your business. The tax money that you pay will decrease your reserves for the inevitable bumps ahead and push off into the future that new position you planned to fill.
“I’ll tell Sally that I have to reschedule her start date to next spring, and hope that she’s still available.”
And this is how it goes in today’s America, where the creation of wealth through individual dreams and perseverance is a suspicious enterprise. Taught in schools is the myth that government creates wealth, along with more approved methods that involve private industries working closely with government in favored channels of commerce.
From such relationships with business and labor, politicians can count on enormous amounts of cash to finance re-election campaigns. And these relationships are so easy to set up – all you have to do is talk privately with a few people, instead of all those thousands of independent small entrepreneurs who are hard to contact and then convince. They are so yesterday.
George Rebane is an entrepreneur and a retired systems scientist in Nevada County who regularly expands these and other themes on KVMR, NCTV and Rebane’s Ruminations (www.george