Small business and big institutions: oil and water?

It’s easier for politicians who are more concerned with being re-elected, and who possess insufficient knowledge of how business and economies work, to give tax breaks to the Fortune 500


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Despite being the backbone of America, small businesses get very little respect from big institutions. People in Washington proudly proclaim their love for the small business owner, but when it comes to enacting supportive policies -- not so much.

The Federal Reserve sure has the back of Wall Street, and it is keeping interest rates low, but it is powerless in determining whether the positive effects trickle down. That decision is left to the banking community, and even the community banks have tightened their credit reins.

The reasons for this lack of love are not mysterious. Creating a climate that actually fosters growth in small businesses is a complicated task. For politicians who are more concerned with being re-elected, and who possess insufficient knowledge of how business and economies work, it's just easier to give tax breaks to the Fortune 500.

Did I mention that the average politician also knows where his or her bread is buttered?

As for the banking industry, big businesses are more lucrative and in ways easier to do business with than small businesses. I don't necessarily blame the banks for seeking the most profitable markets. And increased regulations haven't exactly helped facilitate lending to anyone.

But the government and banks may not be the only big institutions who have little respect for small business. The Wall Street Journal has earned a spot on that list -- at least the staffers who write the headlines.

Specifically I speak of this curious headline: "Small Business Causing Spring Swoon?”

The article cites statistics that indicate hiring in the small business sector has slowed. According to ADP, since 2010 when the economy starting adding jobs again, large firms have increased payrolls by almost 8 percent while businesses with fewer than 50 employees have increased employment by 4.7 percent. Compared to the period before the financial crisis, that has contributed to 999,840 fewer jobs being created by businesses less than 12 months old.

Who’s at fault?

The article also cites seasonal differences in hiring. According to the Journal, big companies do most of their hiring in the fourth quarter, while the second quarter is peak hiring season for small and medium-sized firms. The inference is that small businesses are to blame for the recurring spring swoon that the economy has suffered in recent years.

The nerve of small business not hiring and causing investors to take a hit. Clearly we need to pull our weight and hire people, even though demand doesn't warrant it because -- bottom line -- we are costing the true "job creators" valuable capital.

In fairness to the Journal, the article portrayed a reasonably accurate picture, but the headline sure didn't do the same. (As an aside, note that headlines are most often not determined by the author of an article. Others within print media determine the headline and often the goal is not accuracy but sensationalism.)

So forget that the big Wall Street firms greatly facilitated this mess in the first place. And forget that tightened credit standards have made it difficult for the little guy to access capital. The small business community needs to get off its collective butt and start pitching in, even if it means eating into our profits. I'm sure that the big business community would do the same for us.

Tony Paradiso of Wilton is an author, professor, entrepreneur, radio and TV commentator. His website is tonyparadiso.com.


 

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