When You Find Yourself in a Hole—Stop Digging

Over this past weekend, the Obama administration rolled out their small business stimulus plan, or whatever they are calling it. All it looks like is a reduction in costs to borrow. Bad idea. Has anyone in the White House ever had to make a payroll? I doubt it.

There are two major problems with this plan. Access to money is not a problem for many small businesses. Community banks and credit unions are willing partners. Citibank and Bank of America are not lending money, but they won’t deal with small business during good times—forget it now. The problem is sales and profits. Our sales are way down and therefore our profits are too.

The other problem with this plan is debt itself. Our country got into this mess because of too much debt. So, now the suggestion is more debt? Really. Mr. Geithner, when you find yourself in a hole, the first thing to do is stop digging. Don’t make things worse than they are.

How about my plan? Cut government spending, cut personal AND business tax rates, and cut regulation. Make it easier to a little guy to make a buck. This social engineering program makes us nervous. Raise tax rates on one hand and make it easier to get deeper in debt with the other. Small business is not buying. The financial big shots got us into this mess, Now Washington, get out of the way of the little guys to clean it up.

Layoffs Stink

There are a few situations in business that really stink for a small business owner. Being defrauded or swindled by an employee or partner is really bad. Being a victim of someone else's crime is way up there. Violence brought to the job by an employee is unconscionable. But what these have in common is they are rare and have to do with crime in one form or another.

But in the regular ups and downs of business, nothing is worse than letting go of an employee. Sometimes you have to sack an employee because they did not work up to expectation. That’s hard. One reason it is hard is because the owner was probably the one who made the decision to hire that person. Now the boss has to admit he or she made a mistake. So the decision to fire an under-performing worker is delayed in the hope that they will get with the program and turn around. That rarely happens.

While there is justification to let go of a bad worker, laying off an employee is much harder. Now you have to sack someone who was doing a good job. It is not for cause. It is for economic conditions that are usually not in the bosses control. The overall economy is in the dumper, sales are down, clients are slowing down payments, we are in a pinch. I have to let you go.

In a small business employees can become like family. Of friends. That makes it worse. Some bosses will delay laying off excess staff in down times because it hurts and is uncomfortable. This delay could kill the business. It can put everyone out of work. And it can bankrupt the business owner personally. Sadly, the burden to make the hard decisions falls on the owners shoulders. It stinks, but that’s the reality.

My Plan to Restore the Economy

President Obama’s plan to restore the economy seems to be really complicated and risky. A guy named Joe even said it has a 30% chance of failing.

Here’s my plan:
Cut income taxes across the board including corporate income taxes which are the highest in the world;
Cut government spending across the board except for defense to keep more money in hands of the folks;
Cut government regulation to make it easier to start and grow a business.

This plan worked for President Reagan. It is tried, tested, and it works.

—Michael Tarpinian