07/31/2009 05:12 am ET Updated May 25, 2011

The Government Hates Small Business

Some days I think that governments of all levels pay only lip service to the dynamic and vital small business communities of America. Despite the nice words and flowery press releases extolling the virtues and value of small business owners, I don't see the true love and understanding that the small business community deserves.

Why does government dismiss the small business community? They do it simply because these businesses are small and usually possess only modest financial muscle. Governments from municipal to Federal admire and seek out that which is large. Large businesses are easier to keep track of, brag about, measure, and tap for funds. With a single jab on the enter key of a computer in Redmond Washington, the mountain of money that represents withholding taxes for Microsoft employees is instantly transported to the federal coffers in Washington DC. That number is probably many millions of dollars each month, and it obviously garners a degree of love and respect among those who receive it. For governments, corporations of that size represent very large, juicy and ripe low hanging fruit.

For politicians, the world of small business entrepreneurs and independent contractors is hard to get their arms around. For them it's like trying to create a seafood banquet from a net full of sardines or making wallpaper from postage stamps! Of all US businesses, 99% have 10 or fewer employees, and they probably can't be viewed as major donors to anyone's campaign coffers. Despite that one criterion, our federal government still defines small business as an enterprise with less than 500 employees. Using the government's standard, small business accounts for 99.9% of all businesses in the US, all of the job growth over the past decade, roughly half of all employment, and just over 50% of the gross domestic product.

High level political operatives can smell money as surely as a shark always turns it teeth toward the faintest scent of blood. I just breezed through the June-09 edition of Inc Magazine, one of the leading monthly publications for the country's small business community. There weren't any pictures of politicians showing their love with "atta-boy" or "atta-girl" handshakes and back slaps to the owners of small businesses. However, leafing through Fortune Magazine you can often find officials, dignitaries, and others on the public payroll "gripping and grinning" with a corporate titan as though they've just uncovered the cure for some awful disease. Money does indeed make for interesting couplings.

At a certain level, I do understand the real life aspect of small versus large business. If I create 10 jobs, only those employees and their families care. But if my company can say we hired 800 people, it hits the radar for the public sector. They start to count the tax dollars that spurt from a single source. There was a time when Bill Gates and Walt Disney were small business owners seeking opportunities and customers just like the rest of us. Their fame grew a bit faster than their bank accounts, but it was eventually the companies' large storehouses of dollars that caught the attention of politicians. Yes, election campaign donations sometimes determine the level of vision that we get from those seeking public office and guiding our government institutions.

I must say that in my opinion, the federal Small Business Administration does a fine job despite having 50 pound slabs of bureaucracy tied to their hands. There are some enlightened officials in all parts of the country who recognize that rules of nature also have parallels in business. There must be fertile patches of ground, seeds, and nourishing care for new business growth. Choking the seedlings with too many regulations, prickly taxes, and uncaring treatment will surely lead to bare patches in the business garden.

Here in California right now, Governor Schwarzenegger and the legislature are locked in a furious budget battle over how to plug a $24 billion deficit. Spending in our state has been on a runaway train for years and lawmakers have refused to pass budgets that bring spending and income into alignment. Sharply increased taxes and fees are driving midsized and larger businesses out of the state to more business friendly environments, their owners tired of being treated like milk cows.

Perhaps our present major economic downdraft will help business owners and government gurus develop some new alliances. Some of the country's giant legacy enterprises are being refocused so sharply that we may not recognize them after the major forced makeovers that are in progress. At the same time, I suspect that a few years from now we'll be hearing and reading about some presently unheralded entrepreneurs who've made that Star Wars-like hyperspace jump from having less than 500 hundred employees to larger enterprises harvesting billions in revenue. Then the politicians and government functionaries will suddenly have a new group of best friends, and they won't be small businesses.

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