The Slow (and Painful) Death of Mom and Pop Businesses in America

I just love election time—all those politicians promising all sorts of things, including aid and the importance of survival for mom and pop businesses. Don’t believe them folks because the campaign money isn’t coming from the small entrepreneur. In fact, mom and pop businesses may be dead already.

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Too Small for Help

I realize our great country offers up the Small Business Administration and many cities and towns have economic development centers to aid the small business owner in business planning and startup guidance. However, most small businesses won’t get the help they need because they don’t qualify for loans, grants or fall under the new SelectUSA program signed into law by President Obama, which claims if you build a business in America—we’ll help!

Let’s face it, if you have a small business and you’re wondering for the umpteenth time how you are going to make payroll or pay taxes, you’re already on your way out—and soon—and that my friends is very sad because the small entrepreneur is what built America.

As a small business owner for many years (and I qualify a small business owner as one having less than 50 employees), the recession has hit us hard and made us face the reality of the American Dream—it doesn’t exist anymore.

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The Hopeful

I found the ABC News article, Made in America: From Candy to Candles: Companies Bring Jobs Home by reporters Jim Sciutto and Sarah Amos (June 2011) full of false hope and promise. If you read the post and are indeed a mom and pop business, it may give you hope your idea and your business can survive in today’s recession, but you need to read between the lines.

What the story is really about is how a candy, candle and beauty company were able to start manufacturing in the U.S.A. by shutting down factories in foreign countries and yes—this is progress that America can be a contender in the global market. Unfortunately, this isn’t true. You can bet the farm (or your next IRS tax debt for free) that every one of these businesses received incentives and tax breaks from the U.S. Government, including employee training assistance by opening factories in America.

Nope, it wasn’t because they were the next hot ticket like Facebook or Groupon, they are making it because the government wants them to. Or, if you look at it another way, they may likely fail if they don’t make the switch to American soil.

So skip the false hope here for the already established U.S. small businesses, there is no government help for you and if you find some—consider it a gift.

What's the Truth?

There are, in my opinion, a few reasons why the mom and pops are dead or near death—and it’s not their fault.

Sales Down, Expenses the Same – A small gift shop, tourist shop or even an independent car repair center just can’t reel in the customers these days. Consumers are choosy about what to spend money on (because they have less) and while sales are down, the expenses don’t go away. A business owner must still meet rent or mortgage payments, payroll, and overhead expenses to keep the doors open and how is one expected to do this with absolutely no sales? There is no money to advertise and to many it does appear hopeless as more and more of these businesses close their doors.

One Hand Helps Another - In state and local political races, representatives, congress and even town mayors offer up campaign slogans supporting the small business owner—praising them for all they’ve done. In the long run, however, if you don’t buy that $2,000 table at their benefits and donate some cash, they really don’t care about you and won’t go to bat for you when you are at the lowest of lows.

My Business Is Here! -Those of us who start up smaller venues don’t start them overseas so we don’t qualify for government incentives and taxes if we promise to move or use vendors only in the U.S.A. and hire more American employees and create new jobs—even if we can’t afford to pay for those new positions (including employment taxes). Our businesses are already on American soil. Maybe if we could get an incentive or advice on how to move them off of American soil and jump on the global economy bandwagon we’d get some help—seem more realistic to this small business owner. Any foreign companies interested in offering financial aid to all the mom and pop businesses in America, please apply!

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Other Factors

In the ABC News story, let’s take the example of the Chesapeake Bay Candle Company started in a basement by owner David Wang. David was really successful by selling to big box stores like Target and Kohl’s but unfortunately, he manufactured his candles in China. Now that he’s agreed to manufacture the candles in Glen Burnie Maryland, he’s got it made in the U.S.A.—all via government funds, tax breaks and incentives. For sure he’ll be taking that family vacation this year.

Another part of this story that intrigued me is how many small business owners are building new factories. Where is the money coming from? Well folks, if you decide to build a green (LEED) building, yep, you guessed it, government aid steps in again.

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Mom and Pop Cemeteries

In the past three years, I’ve had to shut down three, yes three, small businesses that employed around 100 people total, but I don’t just count the employees. My business also supported families and kids, offered healthcare and retirement benefits—even stock options for employees. You’d think the government would praise me on my commitment to provide quality jobs with competitive pay.

I, as many, were not so lucky, however. When those capital loan lenders, the Internal Revenue Service or vendors come knocking on your door and you find yourself picking and choosing who to pay and very often not paying yourself, you’re headed for the cemetery where most mom and pops end up these days.

What your business will become is a landmark used by the locals when offering directions, “Do you remember where Tom’s Lumberyard used to be? Well, the new candle company is there now.” You end up in the “where they used to be” category.

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Government Interference

Every once in a while, us mom and pops do get some hope. A President will say, we must keep these businesses alive and help them create jobs! This is only done during election time and with that nearing every day, you’ll hear these promises, but take them with a grain of salt folks. It’s just a campaign promise, not an actuality or a reality for that matter.

No aid will come for you, just a roadmap to the cemetery for mom and pop businesses.

I never studied economics in college, nor am I an expert in the political arena, but what I do know is how small businesses are run and work—something most politicians have no experience in.

Politicians like to interfere as well. They feel by making things better, everyone will have a job and the small entrepreneur will succeed. Another untruth.

Let’s take the bail-out of General Motors and Chrysler and all the government aid they received. Sure the government wanted to help these large corporations because they are important to America. However, economic experts allowed them to get rid of unwanted assets—meaning all the small dealerships who employ less than 50 people became unwanted assets when in fact, these assets were people!

These dealers had no way to fight. Well, they could pay a retainer to a law firm I won’t mention in the amount of $10,000 (who has that kind of money in the recession?) and hopefully win a reprieve, but most couldn’t afford it and didn’t jump on the class action suit.

Before I end my grumping and yes, I’m really mad here, if you own any type of small business, don’t expect aid—you won’t find it unless you fall under the strict rules of SBA loan requirements.

You can find much advice on the Internet on how to keep your business alive and avoid business suicide, but the horror of all of this is when small owners are forced to shut their doors, the guilt, embarrassment and all those personal guarantees they signed for loans overcomes them and many seek out very high bridges hoping they’ve had their life insurance policies long enough so the suicide exemption no longer applies and their families will be protected.

Truth be told, don’t start a small business until after the elections in 2012 and skip the SelectUSA program because you won’t qualify. I’ll wager the same promises will be made only to be a “backdoor issue” once officials are elected. Even then, don’t hope for much, American politicians don’t care about how you own a sewing machine shop and people commend you for how you can fix any type of sewing machine—you are a small dot and for sure, that dot will fade as the world changes.

Farewell and adieu. I’d like to know what you think. I know I’d really feel better if more reporters told the truth instead of offering false hope.