Taking a portrait of the little guy

Editor’s note: Michelle Stockman is an independent consultant with her company, Fort Smith-based Msaada Group. Stockman earned a bachelor’s degree from Loyola University-Chicago in communications and fine arts, and earned a master’s in entrepreneurship from Western Carolina University. Her thoughts on business success appear each week on The City Wire.

A strange thing has happened in the last several years with the Inc. 500 annual ranking of the world’s top entrepreneurial companies. When I began my path into entrepreneurship development more than 10 years ago, traditional economic developers had many reasons to believe entrepreneurship was a fluke (even a reason to blame during the 2001 recession).

However, this year’s Inc. 500 has much to say to traditionalists. This year Inc. confirmed once again, that it is our entrepreneurs who are the job creators and economic engines that many of our communities have needed far longer than they realized. Some of the stats shared in this year’s Inc. 500 edition include the popular jobs created comparison: 821,000 jobs were lost between all the Fortune 500 companies while Inc 500 companies added a combined 35,823 jobs. Imagine how many more jobs have been created if we added all the jobs created by entrepreneurs?

Inc. says the aggregate 2010 revenue among the companies is $10.5 billion.

Meanwhile, Robert Litan, vice president of research and policy at the Kauffman Foundation, a nonprofit that studies and promotes entrepreneurship, proposed in a paper that the United States could grow its GDP by 1% annually if it produced 30 to 60 new companies that eventually reached $1 billion in annual revenue each year.

However, we continue to burden entrepreneurs. Our political leaders on the federal, state and even city level continue to add regulations and tax burdens on small businesses that continue to scare and discourage the very sole of entrepreneurship. The country as a whole is losing its entrepreneurial edge as other countries are getting closer each day by being more welcoming to entrepreneurs. Even China has begun a culture change where working for yourself is growing in prestige compared to landing the big corporate job.

Small businesses pay the lion’s share of taxes at all levels, yet they are the last to have a voice when it comes to policies that affect their businesses. They are also the first to receive horrible threats from the government when taxes are off or late. Small businesses are liable for all the regulations and restrictions that their businesses are subject to and they are carrying the burden of an overwhelmed unemployment system.

For example, Dan walks into his business that is doing alright. Dan, by no means, is getting rich quick, but his business pays its bills and offers Dan enough money at the end of the day to pay for food and shelter. Dan has planned to work on his month’s financial close. Today, Dan pays his rent, gas, electric and water bills. He also gets his sanitation bill, vendor invoices and invoices for maintenance for a few repairs needed in the business. Afterward, Dan moves on to go through payroll before moving onto taxes.

Taxes alone are worth the cost of an accountant. Dan reviews his payroll taxes and makes the necessary adjustments toward the state mandated increase in percentage to pay. Next, Dan reviews additional Federal tax requirements before moving on to state sales tax. Once the big tax collectors have checks ready to mail, Dan then has to figure out what is due to the local town’s special tax. A dollar off to any of the tax collectors, and he knows he’ll get a lashing.

The very entities that need Dan to succeed and grow the number of jobs he creates are also the first in line to threaten to shut Dan down if an error is made or a payment is late.

Adding more regulations or taxes is not what small businesses need. Rather, a voice where the bureaucrats listen long enough to understand the other side of the fence is sorely needed as the country has seen a dramatic decline in the number of businesses starting during the past two years. This is a stat that should be very concerning to the country.

No entrepreneurs = no job creation.

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Stockman can be reached at [email protected]