Why in the World Would You Build a Small Business!?

Small business owners

Small business owners

The ideacapitalist interviews… the ideacapitalist, family guy, entrepreneur and small business owner.

How did you become a small business owner, and why?

The simplest answer would be, no one would hire me.  My first job out of school was working for my dad.  Nine months later, my dad fired me.  I knew it was coming.  My dad ran the business out of the house.  That morning my mom had made me my favorite breakfast, blueberry pancakes. 

Thereafter, I have had successful stints with large and mid-size companies, but there’s only so much a person will do for money.  I had reached my limit.

What do you love the most about running a small business?

Gainfully employing good people.  Growing the business.  Being more innovative and responsive than our larger competitors and winning.

What does owning a business allow you to do that most folks do not get to enjoy?

This question has the potential to be long on clichés, but the right answer is that I never have to think twice about getting out of bed in the morning.

What is your biggest challenge right now and how are you dealing with it?

Ok, now it’s time for a clichés.  My favorite expression is from Alan Kay, “The best way to predict the future is to invent it.” In the software development (technology) business we are reminded of this expression daily.  We have to constantly reinvent ourselves.

What has been your proudest moment as a small business owner?

I’m going to equate pride with reward and say my most rewarding moment was when an employee, I held in high regard, walked into my office, and stuck out his hand.  We shook hands and I asked him, “What is this all about?”  He said, “You promised me within five years, I would be making “x-amount” of dollars per year and I am.  Thanks.” 

My proudest moment was March 7, 2013 when we celebrated 25 years in business.

What have you not yet achieved that you would like to?

I’m not a “bucket list” kind of guy.  Certainly I have revenue goals and long-term objectives for the business.  Call it 20/20, annual twenty (20) percent growth in both revenue and profit.  The real challenge is balancing the physical challenges with the mental challenges.  Next year, I’m looking forward to both cross-country skiing and cycling around Crater Lake.

What is the best part of your day?

Getting out on my bike for an hour or two in the middle of a work day, and not getting run over.

What do you read?

I’m reading an amazing, gut-wrenching, inspirational story of personal struggle and entrepreneurship titled Born to Rise: A Story of Children and Teachers Reaching Their Highest Potential by Deborah Kenney

What has been your biggest mistake and how did you learn from it?

I’ve made many. I’m going to make many more.  My biggest mistake would be not to learn from them. 

Small Businesses – Over Regulated? Thousands of Community Banks a.k.a Small Businesses May Disappear!

In 2012, 6,037 new regulations posted in the last 90 days

Our small business, with under 50 employees, does business with community financial institutions (FIs).  We are subjected to many of the regulations FIs are subjected to including:

Sarbanes–Oxley Act

Gramm–Leach–Bliley Act

Dodd–Frank Wall Street Reform and Consumer Protection Act

Credit CARD Act of 2009

…to name a few.  This equates to many thousands of dollars in added security measures and personnel costs.

We now face another huge challenge, none more onerous than the PPACA (a.k.a. Obamacare) as it ramps up.

Many community banks and credit unions are small businesses too and are subject to the same laws and regulations facing big banks.  The Feds have closed down 10 of our FI customers, costing them their jobs and costing us hundreds of thousands of dollars in lost revenues.  Speaking to many of our contacts at these FIs, most closing could have been avoided.

According to several of these sources, the Feds come in at the end of business day, Friday and take over the bank.  One source, described it similar to be treated as a criminal as she was forced to stand outside her cubicle while they accessed her PC.  She was kept there until after midnight.

Recently, an expert on financial services stated “there will be no de novo (startups) financial institutions due to the steep financial requirement and regulations.”

A quote recent article from CNN Money’s Fortune Magazine, Thousands of banks may disappear, “Now that President Obama has been re-elected, analysts, consultants and deal makers have turned from whether Dodd-Frank will be repealed to what it means for banks now that it’s likely here to stay. The overwhelming conclusion: Thousands of small banks will soon disappear.”

As the number of community banks and credit unions shrink we are forced to seek new markets.  An added burden to  already burdensome economic conditions.  While the Obama administration panders  to big business, big union and advocates big government, small businesses continue to bear the brunt of over regulation.

This is the official government “fair warning” website regulations.gov.  Be afraid!  Be very afraid!

The Endangered Species, Entrepreneurs, a.k.a. Small Business Owners

President Obama is disingenuous when he says he is championing small business and the middle class.  Most small business owners are Sole Proprietors, Limited Liability Corps (LLCs) or Sub S Corps.  I own a Sub S Corp.  President Obama knows the challenges I face.  He is counting on you, the voter, to lump small business owners like me into his campaign to denigrate the high income earners in this country.

What he doesn’t want you to know is small business people, like me, often take a lesser salary, but often earn more than his definition of   “rich” because I have to pay taxes on the combined total of my salary and my business earnings.   Both are considered ordinary income.  By ordinary income, I mean income you and I pay taxes on after pre-tax expenses and deductions, like anyone else earning 1099 or W-2 income.

Keep in mind the risk to a small business owner.  If my business loses money, my salary and my business is in jeopardy.  It is a constant challenge to a small business to earn enough money to employ people, to grow and still earn a salary, in that order.  Contrast that with government subsidized businesses like GE and Solyndra.  Imagine if President Obama had the vision to subsidize small businesses to the tune of Solyndra or GE.  Take Solyndra’s $500 million in taxpayer dollars and give it to 500 small businesses, each with 20 employees or the equivalent of 1,000 employees.  Take my company’s track record over the past 2 years and small businesses would have increased employment by 40%.  I have a neighbor down the street who owns a small business, who increased his small business employment by 3-400 percent, without a government subsidy.

I run a small business, going on 25 years.  I pay taxes on my salary as an employee of my business and on the income my small business earns, both as ordinary income.  For many years, my business didn’t earn income.  For many years, my salary was well below the poverty line.  There were many years I was eligible for government assistance and I refused to take it.

How do you put a price on all the sacrifices a small business owner makes?  How do you quantify the years of no or little income you live with while supporting your business and fellow employees.  You pay their salary, you pay suppliers, you continue to pay them while you wait to get paid by your customers.  How do you quantify the debt you assume, including 2nd mortgages, credit cards, personal and bank loans.  How do you quantify the risks you take only to emerge from that debt as a job creator.  Only to be told, “You didn’t build that…,” the government built that.”  You’re branded greedy, uncaring if you are a Christian who believes in the sanctity of life and racist?  Like Mitt Romney I believe a women should have a choice to abort a pregnancy in the case of rape or incest, yet I’m extreme!?

My business is classified as an S Corp.  Today my income tax rate on ordinary income due to the income my small business earns, in an Obama administration, in the next four years, if he is reelected, will be much higher, 35 – 44.5%.   Today it’s 28%.  From that point forward you can make the argument there are tax breaks, subsidies, deductions for both personal and business income.

Argue the advantages and disadvantages until the cows come home.  The bottom line is the effective tax rate.  The effective tax rate for most small businesses will increase from 28% to at least 35% .  That’s huge.  Even more significant, more important and what President Obama doesn’t want you to know is most small businesses reinvest the income they earn from their business back into their business on sales and marketing programs and personnel and consequently accounts receivable to grow.  This practice creates jobs in all segments of the business.  In my case, I reinvested one-half (1/2) my ordinary income in jobs and other current and performing assets, increasing employment (salaries by over 40 percent) in 2012 YTD alone.

If you are the CEO of GE and Obama’s schmoozer-in-chief, your salary, bonuses and investment income is taxed as personal income.  There’s a good bet the CEO of GE paid little or no taxes on millions of dollars in income, certainly not at the same rate myself or other small business people paid.  His company, GE paid no taxes in 2011.  GE’s income was offset by losses, subsidies, tax breaks and expenses, claims I would wager could easily be overturned and taxes, interest and penalties would be significant.  The problem is GE has always had their hand in the government’s pocket.  There’s no secret there’s a love fest going on today between the Obama administration and GE.

What the Obama administration doesn’t want you to know about small business tax rates, is we pay taxes on ordinary income both on our salaries and on the money our business makes.  As a rule of thumb, a small business owner will take one-half (1/2) of their income as salary and they will reinvest the other one-half (½) of their small business income back into their business.  The small business investment I’m talking about isn’t about capital investments in equipment, furniture and other fixed assets.  The investment I’m talking about is in operating income, including people, sales and marketing, accounts receivable which is the fuel the economy needs to grow.  Operating income comes from small business revenues taxed as ordinary income.

In fact, even large corporations in America pay much higher corporate tax rates than most other countries.  Our higher corporate tax rates are supported by the Obama Administration.   A Romney administration would propose to lower corporate tax rates to be more competitive with other countries we compete with for business.  The irony is Obama touts green energy and competing for high tech business but he will do nothing to lower the unfair advantage international competition has because their tax rates are much lower.

Here are the facts…

On taxes, President Barack Obama wants to raise “the top rate to 44.8 percent.”

http://www.politifact.com/truth-o-meter/statements/2011/may/18/paul-ryan/paul-ryan-says-barack-obama-wants-top-tax-rate-448/

Here’s a potential solution – Fairtax

FairTax - FairTax.org

EntrepreNever

If it takes you 27 years of sweat equity running a ‪small business to make it into the 1% don’t you think there should be a waiver from the Obama administration on his tax on everyone who makes $250,000 or more?

There are waivers for Big Union and Big Business for Obamacare.

  small business  owner is a community organizer too, only he’s not spending other people’s money.

After all, a small business reports income taxes on what the business makes and then must determine how much of that income has to go back into the business for the business to survive and grow.

Why should Obama decide how many employees I should hire?  Why should he decide how much we decide to invest in new and existing products and services to survive or grow?

 

 

 

 

 

“If you gaze long enough into an abyss, the abyss will gaze back into you.” Friedrich Nietzsche

I made a point to take my two young daughters to NYC shortly after 9-11 even though they missed the ascent to the top of the Statue of Liberty for security reasons, they were able to ascend to the top of the Empire State Building. 

“Today the World Trade Center is again the tallest building in New York one year after the killing of Osama bin Laden and more than 10 years after the attacks that brought them down.  It is still a work in progress: The hulking steel structure known as the Freedom Tower is still 500 feet shorter than it will be when complete.  But it is already a tribute to American resilience, a reminder that whatever devastation we face, we can still come back bigger and better than before.”  Aaron Vaughan

Tallahassee Fire Dept Extrication Team. Liberty Street across from Ground Zero

I can understand where the Occupy Wall Street (OWS) is coming from.  I was young once upon a time.  I took sociology in college and a course called American Ghetto Environment, if you can imagine how “not PC” that course name would be today.  I wanted to help people who had a hard time helping themselves.  A Nelson DeMille character in the General’s Daughter reflected, while “Life’s Grown Soft, I’ve Grown Hard,” reflecting on growing up in a post WWII era.  Life was hard.  Today life is soft by comparison.  There are plenty of folks out there that deserve help.  I say “help” because I detest the word “entitled.”  To me the word entitlement defines a benefit given someone in need, not in want.  Our so called entitlement programs, Social Security, Medicare and Medicaid, other mandatory spending programs were programs designed for hard working people who need and whenever possible contributed to their own welfare. 

A lifetime of work experience allows me to say there are people who believe everyone regardless of work ethic and moral fiber are entitled to the American Dream and those who believe the American Dream is earned through a good work ethic and morals.  I am from a middle class family.  I was the second child of six.  I was always wanting but never needing.  If I wanted something I would find a way to get it.  Ok, I could pout with the best of ‘em for a nickel package of bubble gum and baseball cards.  Mostly I learned to earn what I wanted.  Since the age of 11-12, I always had an after school job, be it paper route, bagger or stock boy at a local grocer.  In high school I washed pots and pans in the cafeteria on my lunch hour.  Later, I was promoted to making and serving milk shakes and sandwiches to my fellow students.   If you have ever worked in a school cafeteria at age 16, worn a hair net, while serving sandwiches to your fellow students, in particular, the girl you had a huge crush on, you would understand the price you pay to earn a few extra dollars.

During college, I worked for a janitorial service from 4 – 7 AM daily at a local hotel to help supplement my $15 per week expense allowance.  Summers I worked on a crew with 3 occupational day laborers, landscaping and mowing lawns.  My boss was a machine operator and had a landscaping business on the side. 

He made me, the 18 year old college kid the crew chief.   I made less than my crew, but I wanted a job.  My crew was ages 18, 30-something and 40-something.  18 had a wife and a new baby.  He showed up for work every day.  If he didn’t want to work, he’d sit in the shade and smoke.  He outweighed me times-two and that was just his arms.  If I pressed him to pick up his shovel, he wanted to arm wrestle or place a lit cigarette between our forceps to see who would pull away first.

30 and 40-something worked 4 days a week.  My boss paid them on Friday.  They got drunk on weekends, nursed a hangover on Monday’s,  then dragged their sorry asses back to work on Tuesday. 

The summer break next year, I went to work for the local school district doing the same thing.  At the school district, I worked with 3  guys also.  One was a friend and fellow college student.  We worked our butts off.  The other two guys complained and cajoled us to slow down and slack off.  The experience wasn’t much different than the summer before.   To me acting busy was harder than being busy, but in the end there are no great gigs in the lawn care and landscaping business.  Did I mention the mosquitos were nasty?

Life is so much softer now, but we all have a responsibility to pull our own weight.  We have a/c, cell phones, flat screen TVs and cold beer on every street corner.  So what’s the big deal?  Go to work.  Get a job.  If you can’t get the job of your dreams you can still go out and earn a living.  If you want something more, go out and earn it.  I know some retired guys who worked hard all their lives.  Now that they are no longer working, they are willing to live (want) with less.  It’s habit forming, but we can’t all be retired.  So if you need something, go to work.  Work can be habit forming, too.  My experience wearing a hairnet left me wanting more. 

Coming into this election, there’s an underlying current of ill will.  Call it hate, dividing Americans. I have never before experienced such divisiveness before between conservatives and liberals, in my youthful 60 years of age.

Friedrich Nietzsche’s famous quote, “Whoever fights monsters should see to it that in the process he does not become a monster. And if you gaze long enough into an abyss, the abyss will gaze back into you.”  

This quote should serve as a warning to all of us, especially this President, Congress and influential leaders.  We are at risk of a great divorce, with all the ingredients including hate, resentment and financial ruin.  Worst is how it will affect the children, many who call themselves Occupy Wall Street (OWS) the citizens of this great nation.  It’s always the children who get hurt the most.

Note from author on 11-27-2012:  Now that the election is over I feel more strongly than ever this message should resonate with anyone who is concerned about the future of this country.

Have You Hugged Your Building Custodian Today?

You cannot lead from behind!

Leadership begins with mutual respect.  The leaders I respect the most lead by example.  Politicians, pundits and the media can go around trying to divide people into haves and have-nots, but there’s really no divide between most of us. 

Small business owners don’t have a problem hugging their building custodian.  How about the lawn care person, the handy person, the painter, the delivery person; most of all the bug person, who you may feel at risk… to hug?  Hug, hug, hug them, anyway.   Many of the aforementioned live enriched, fulfilling lives with or without millions; and need not be classified otherwise.  Many of these folks are small business owners, too!  Like me.

I’m sure there’s a more PC way to describe some of your favorite “small business owners,” but here’s mine.  They probably fall off ladders.  They are probably mechanically deficient and they’re probably a danger to themselves and others, with a hammer.  OK, that’s just me… but most small business owners have a great deal of respect for those who wield a mop or a nail gun.

You’ll find small business owners in and amongst your family, and amongst your friends.  People you know and respect.  I’ve also come to learn, most small business owners, including me, are generally opposed to big government.  To them, big government prescribes life to be easy, convenient, comfortable and mindless.  To me government is the voice saying, “Eat your vegetables, go to school, do your homework, go to college, get a job, get married, have kids, retire, play golf, get cancer and die.”  I already have parents, thank you.  Small business owners know, even if you were to try to live such a mundane existence, government can’t save you.  They know there’s no such thing as a mundane existence.  There’s always going to be something that requires you to be extraordinary

Government isn’t extraordinary and it doesn’t make money, you do.  Government spends your money.  Frankly government spends money you don’t have and you are personally on the hook to pay back that debt.  You and your family, as citizens of the United States of America, now stand to own a piece of over $5 trillion dollars in debt in just the past 3-4 years alone.  This is the new normal.  Are you willing to double down on that much debt?

News flash!  For many small business owners like me, life isn’t easy.  Like most Americans who are willing, I have to earn every dime.  Still no one can speak for those of you who were dealt from a rigged deck, who live a life of marked cards.  Your life may include poverty, possibly abuse, neglect or worse.  To escape this life you may need or have needed to be extraordinary. To escape you may need or have needed extraordinary luck.  To escape you may need or have needed extraordinary help from other people, places including the institution of government and beyond.  You may need private investment, support from charities and organizations supported by those who have been more fortunate.  In this fashion, there are plenty of small business people, again like me, who support those in need.  What small business owners don’t need is more big government, big union and big business getting in the way.

Without free market capitalism, small businesses can’t thrive or even survive.  Many people disagree.  They think more government is the answer.  Where will the jobs come from?  Government?  Where will the tax revenues come from?  Rich people?  Hardly!   All the institutions that are getting a pass include big government, big union and big business.  So where do you turn?  Most small business people know how hard it is to make money and to pay off debt.  That’s what most small business people do.  That’s leadership.

So why are politicians, pundits and the media so hell-bent on dividing this country into haves and have-nots?  I say, it’s time to go dish out some hugs!  Start with the folks that keep me off ladders and off my roof.  Start with people who take away my hedge trimmer and my chain saw, too.  That’s just a scary movie to me.  You can start with a hug for me.  If I am still in one piece, I’ll hug back.

Recently I ran across this open letter to Romney called The First Four Years Are The Hardest… that echoes much of the sentiment conveyed here… a great read…sorry you had to come this far to get to this

Who isn’t afraid of failing?!

The Wallenda factor is just a normal fear of falling!  Who isn’t afraid of falling?!

“Just in case you haven’t heard, the Wallenda factor refers to the fear of falling or failing. Shortly after Karl Wallenda fell to his death in 1978 (traversing a 75-foot high wire in downtown San Juan, Puerto Rico), his wife, also an aerialist, discussed that fateful San Juan walk, “perhaps his most dangerous.”  She recalled: “All Karl thought about for three straight months prior to it was falling. It was the first time he’d ever thought about that, and it seemed to me that he put all his energies into not falling rather than walking the tightrope.”

Life is like traversing a tight rope.
If you think you need a safety net,
It won’t be long before you fall. 
Live your life without a safety net,
Or be prepared to live your life
Closer to the ground. 
 
Matt Ridley, The Rational Optimist says, “Pessimism is complacency.”   I think generally speaking I would have to say at times I exercised pessimism in certain situations.  I can relate it to looking in the mirror each morning and thinking, “I’m not getting any younger or thinner,  for that matter.”  I’m over that now!

To see the video – just click on the picture

Last year I spoke of challenges.  This year, I believe anything’s possible!  Last year I spoke of good fortunes, we were fortunate enough to have earned another year in business.  I said I was proud of the intellectual property (IP) and talent we had.  This year I am confident our talent pool here is second to none.    Everyone has bought into The Rational Optimist theme, “Everybody is working for everybody else.” Last year I said opportunities present challenges.

We have faced those challenges.  We have conquered many and we are prepared conquer the future.   While politicians in Washington scrum over the economy and jobs,  free market goes out and creates 100 mpg cars, even driverless cars. We need to tell our politicians…anything’s possible.This year we will focus again on making our products easier to use, easier to install and cloud ready.   Inside Integra, we will continue to concentrate on developing and acquiring better tools to do our jobs in a more productive environment.  Last year’s message was, “Attitude is everything.”   

This year we will continue  to encourage a positive attitude in the workplace, with our customers, partners and suppliers.  Everybody is working for everybody else (click on the picture to the left for the video) because again…. anything’s possible.  Finally, last year I predicted growth would be next our greatest challenge and we grew significantly.  We remain well positioned to take advantage of those significant gains in 2012 and beyond.

To see an awesome video – just click on the picture

I’ll leave you with a great video (click on the photo below) and when you feel that wave of pessimism coming on, remember, anything’s possible.

“We are what we repeatedly do.  Excellence, then is not an act but a habit.” — Aristotle

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