Small Business Economics: The 3 Pillars That Help Businesses Grow

Small businesses thrive in free-market systems. The free-er the markets, the more businesses can grow. It’s very important for a nation to protect and nurture their free-market culture. It can easily be eroded over time by over-zealous politicians and special interest groups. There are 3 pillars that undergird an economic system that will allow small businesses to thrive. Here they are:
  1. Minimal regulation.  Federal, state, and even local governments can mean well in creating laws and regulations. But often they do so at the expense of the small business. A case in point is the Patient Protection and Affordable Care Act. This legislation is loaded with burdensome regulations that impact small businesses in negative ways; regulations that have nothing to do with health care!For a free-market system to thrive there must be a basic rule of law. This is to insure that unscrupulous people do not take unfair advantage of others. It levels the playing field so that everyone has the same opportunity. However, fairness should never be defined as equal outcomes. The system must foster fair and healthy competition, and it should reward talent and hard work. This is what controls prices and quality of products and services. It is also the key to creating wealth and growing an economy. Excessive regulation puts a burden on small businesses. We’ve all seen unnecessary, onerous regulation literally drive people out of business. But this is what can happen in any free-market system unless government power and reach is restrained. Small government is good for small business. Big government in not! It literally undermines a free-market economy.
  2. Minimal taxation.  Prior to 1913 there was no permanent income tax. Taxes are necessary only when a nation allows its politicians to grow the government (typically through war, entitlements, and bureaucracy.) Bigger government means more taxes. It’s that simple.Over the past 50+ years our government has aggressively used entitlements as a strategy to grow government. The truth is, government cannot provide any social services as effectively or efficiently as the private sector. The statistics bear this out without exception. Government is the worst mechanism in the world to meet the social needs of a society. As government grows, efficiency diminishes and costs go up! That requires more tax revenue. As taxes increase the system pulls money away from the private sector which is where businesses grow. Business growth is what creates more jobs and more income for more people. That means more opportunity for benevolence, community service, and philanthropy. Government produces no income because it offers nothing to “sell.” It has no way to really create value and wealth. Thus it is also the worst mechanism in the world to create jobs. Bottom line, it is not sustainable. Margaret Thatcher said it well when she said, "The only problem with socialism is that you eventually run out of other people's money." The best solution to poverty, social needs, and job creation is small business growth. That’s why we must create the most conducive conditions for small businesses to grow! Increasing taxes always undermines small business growth.
  3. Minimal debt.  It is possible to control debt. You and I do it in our personal lives and in our businesses. Why can’t our politicians do it in Washington? It’s not rocket science – we MUST stop deficit spending.Every year our politicians spend almost twice what they receive in revenue. Because they lack wisdom and a commitment to the people, they continue to spend beyond our means. The deficit then becomes the mechanism for increasing taxes. Not only do increased taxes hamper small businesses but the spiraling national debt creates unfavorable conditions for small business growth. It dramatically weakens our economy.There’s an old saying that goes like this, “What can’t last forever, won’t!” Deficit spending and expanding debt will eventually leave us with a house of cards that will collapse on small businesses.
If you let yourself think about it you will discover that all of this is actually intuitive. It’s common sense! We fail to see it because we have been educated to not see it through schools, media, and other cultural influences. I am a passionate advocate for small business! That’s why I’m a proponent of these 3 simple truths. If you are a small business owner and you want a coach, mentor, adviser, or encourager, please contact us. We help small businesses grow and accomplish extraordinary things!


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