Today, as you probably know, Gov. Pawlenty is going to reveal his budget plan for Minnesota. On MPR's Midday yesterday, the governor talked about cutting corporate taxes and making Minnesota a more business-friendly state. I asked on yesterday's post why a corporation would move here to do business and fell into an old trap -- thinking of the 3Ms and the Cargills rather than the small business. If I had, I'd already have my answer: Minnesota is where they already live.
An article in today's Wall St. Journal about an Ohio tile company reaffirmed the notion.
Big corporations aren't the source of new jobs. In fact, 60-80% of new jobs are created by small firms, the newspaper indicated. Half of the jobs in the country are at companies of fewer than 500 people.
Small business is also the place where the boss also has a better -- if not entirely complete -- clue about the lives of the employees.
Let's hear from those of you who either own a small business in the state or work for a small firm. Check in and describe your biggest challenges.
I used to work for a small business until the owner retired and sold to a national company. Yes, the personal relationship piece was apparent when owned by this one man, now we have management in place from the larger company who implemented an "account for everything" approach to office spending. Granted, shoring up expenses helps in the long run, but its hard to see where saving a few pennies here and there offsets the corporate offices' decisions to purchase it's execs luxury cars for the new year. I'm sure the same goes on elsewhere. The little guys take the layoffs and cuts, while the upper management feels little to no pain.
My experience is that in a small business owners take the first cuts when cash flow is a problem. Management is the first to feel the pain in a small business. We cut our (owners only) salaries 10% last fall at the first signs of things going from bad to worse. We are watching cash flow like a hawk. We still had a holiday party, but cut out a few flourishes. Owners only get paid from what is left over...sometimes that's nothing. And no, we aren't going to relocate, this is where we live. Corporate taxes don't impact us much; we typically pay out all but a relatively small reserve each year. Payroll tax relief, property tax relief, those would have immediate impacts. But taxes had nothing to do with the decision to start a business here. It is where we live. We provide good jobs, good benefits.
I'm not asking for a tax cut, but I don want to point out that almost every tax cut for business is a "corporate" tax cut. Small business people like myself, who are not incorporated but rather sole proprietors, usually don't get anything. And Pawlenty's idea of letting people write off depreciation of vehicles, Bush did that a few years ago... here's a hint, if your going to do it, don't limit the tax credit to people with giant gas guzzling vehicles. Why not allow it for any business vehicle? I have a 2003 Honda Odyssey van, big damn thing, it didn't weigh enough to qualify for depreciation credit, it was 500 lbs short. Go figure. Besides why not encourage energy efficiency instead of guzzling?