A number of business owners have let me know of their new annoyance. They’re taking umbrage. The Great and Powerful Ozbama has chosen a new demon: the small business community. Not long ago, the rhetoric was about the need to assist small business. Now it is about hanging his unemployment crisis around small business’ necks.
The problem, Obama suggested in a speech this past week, is that small business is not hiring enough, and squeezing its too-few workers to do more. How dare they? Small business owners should hire even if not making profits. And, he apparently reasons, greedy owners must be taking excess profits instead of hiring. Otherwise, gee, there’d be more jobs.
Since neither Oz nor many of the socialists around him has business experience, I offer this week’s column as an educational gift to them. It’s just two lessons called Business 101, based on one of my 13 books, “No B.S. Guide to Ruthless Management of People and Profits.”
Lesson #1: The purpose of business ownership is not to be a provider of jobs. The purpose is maximum profit. Anything or anyone interfering with achieving that mandate must be ruthlessly dealt with. Or economic reality will ruthlessly deal with you.
This piece of information might come in handy, now that – with zero relevant experience – Obama is managing quite a few businesses we all own: Government Motors, a welfare program for 35,000 UAW members masquerading as a car company; AIG; and assorted zombie banks too big to be buried.
Dear President Oz, your no. 1 task is to make these entities make profits. And if they can’t, hand them over to bankruptcy court. With ruthless decisiveness. Take out the garbage before it infects the entire place with toxic mold and fumes.
No business or business owner has any obligation to create jobs or to provide jobs, unless doing so produces more profit than could be made otherwise. Each person employed must be worth a multiple of their cost, or they must go. And the fact that productivity and unemployment are both up tells you that there have been plenty of businesses tolerating unnecessary, unprofitable employees, and companies are discovering far and wide that supervision has gotten sloppy.
Lesson #2: Debt is evil. Sure, business start-ups and expansion require private capital from investors (not taxed into paralysis) as well as financing from lenders. But the idea that tight credit is causing small business not to hire more people and create more jobs is fanciful. If you are running a business and need to go deeper and deeper into debt in order to meet payroll, hiring more people is like adding passengers and cargo to a small, leaky boat. (Sort of like creating a giant new federal health care program when the smaller one you already have is, by your own admission, drowning in waste and fraud, and functionally bankrupt.)
Almost 30 years back, I made that very mistake, and it didn’t turn out well. To quote Maggie Thatcher, sooner or later you run out of other peoples’ money. If you’re running a credit dependent business, it’s sooner. A lot sooner than if you’re running, say, a government. But at your pace of drunken-sailor spending and debt accumulation, President Oz, you will get there. I have every confidence.
Mr. President, the bulk of the job losses at the small business level aren’t tied to tight credit at all. They are the result of your policies and threats of policies that target business owners. I have lost count of the different ways you and your Democratic Congress and your czars have threatened to take money away from business owners. I was up to 30, and just gave up.
The job losses are the result of a climate of uncertainty and fear you have created. They are anticipatory; a shedding of employees before unknown burdens tied to Obamacare occur. And you are about to see another tidal wave of such job losses, right after the new year, as countless small businesses that hung on through the holidays received no Christmas miracles, and eliminate another job or two each, or, in many cases, shutter their doors permanently.
I know these things and, perhaps, you don’t, because I am a small business owner, and I’m in constant communication with about 25,000 others who are too. You, on the other hand, are busy calling a lunch and a photo op with CEO’s of big business a Jobs Summit. Or squeezing in a campaign stop in Allentown between the climate change (ie. economic destruction) conference in Copenhagen and taping your part in Oprah’s Christmas special.
<?xml:namespace prefix = o />Dan Kennedy is a serial entrepreneur, adviser to business owners, sought-after speaker and author of 13 books. More information about Dan can be found at www.NoBSBooks.com , and a free collection of his business resources including newsletters and webinars at www.DanKennedy.com .