From lack of capital to taxes to increased healthcare costs, a host of heavy issues are weighing on small business owners in 2013.
And though talk of supporting small businesses was as ubiquitous as the American flag on the campaign trail last year, entrepreneurs nationwide say they’re hoping for less talk and more action from this administration and Congress.
So in the wake of fiscal-cliff haggling and President Obama’s recent inauguration, ShopTalk chatted with local business owners about their biggest concerns and greatest needs, and how – if at all – they think the government could lend a hand.
Though it’s been nearly four decades since Ernest Aschermann, 67, started the company that’s now EmGovPower LLC, he says access to capital has always been a struggle, especially in recent years.
To secure loans to build the company, which provides software to local governments, Aschermann has had to put personal assets on the line.
“Access to capital is clear at this point: For a small business, there is none,” says Aschermann. “We have to put up every bit of equity we have of our own to help with loans. ...I got through the last three years because I wrote my own checks back to the company.”
EmGovPower provides local governments (including those in Vail, Colo.; Williamsburg, Va.; and Boiling Springs, N.C.) with software for accounting, billing and e-commerce.
But when property values tanked, so did property taxes, leaving less money for services like EmGovPower’s.
The company’s staff is down by one-third and revenue is down by 16 percent, compared to pre-recession levels. Aschermann now has a staff of seven.
“Hiring” and “creating jobs” are buzz words among politicians these days, but Aschermann says he’ll need help from the government, if he’s to invest in more jobs.
EmGovPower relies heavily on programmers, whose starting salaries range from $50,000 to $60,000. And because his company’s technology is so complex, it can take six months for an employee to be fully trained. That means he’s paying nearly $30,000 before a new programmer generates revenue.
If the government were to subsidize that training period, Aschermann says he’d be able to hire more: “They certainly want us to...hire people, but there’s no incentive to.”
Re-work worker’s comp
Don Reid, 52, founded his Pineville moving company, Easy Movers, in 1987. Since then, he says he’s seen workers’ compensation fraud increase exponentially.
“The administration went after banking with a vengeance...but there’s a sleeping giant with small businesses and worker’s comp,” says Reid. “It’s a silent poison that’s killing businesses on a regular basis.”
Reid has 43 employees. Easy Movers has an A+ rating with the Better Business Bureau and gets top marks on Angie’s List, which aggregates consumer reviews of service companies.
But Reid says insured movers like himself pay a high premium for coverage because they’re accustomed to mismanaged claims.
If an insurance company sets aside more money than necessary to handle a minor claim (say $100,000 for a $10,000 problem) then small businesses’ premiums skyrocket. After a couple of times, a small business owner could have his or her coverage cancelled, which could shut a business down.
Reid would like to see new legislation to change the way workers’ compensation claims are filed and monitored.
“Nobody wants a worker’s comp claim,” says Reid. “But when it does happen, it shouldn’t wipe your business out.”
Cut the red tape
Vic Gondha, 67, founded American Circuits in 1990, and the company now builds circuit boards for various industries, from healthcare to the U.S. Military, textiles to consumer items.
The company employs 25 people and is regularly one of Mecklenburg County’s “Gold Award” recipients for environmental stewardship with waste water.
But working with the government needs simplifying, he says. It’s a convoluted process rife with hurdles, and unlike large businesses and corporations, small businesses can’t afford for a staffer to handle government paperwork full-time, Gondha says.
“To work with the government...you have to fill out one form on one website, and they refer you to another website and there’s another form,” says Vic Gondha’s son, Ket, 33. “Then you’re trying to get paid and there’s a third system, and then they send you to the fourth system. It’s quite time consuming, learning the whole process, and it’s so confusing that you end up calling for help (with) filling out a basic form.”
In 2006, Robyn Pellei a former nurse and Charlotte mother of nine, founded ViveVita, a company that manufactures a line of children’s products she designed.
Pellei’s products include: decorative bands that identify children’s cups and toothbrushes, washable and waterproof chair covers, and a plastic toy ring that hooks onto a stroller for young children to hold on to.
She says heavy government regulations – that cover everything from product safety to tracking capabilities to consumer notification guidelines – force her to pay warehouse premiums and contract people just to handle the paperwork saying she complies. They keep her margins so tight she can’t afford to hire anyone.
For a $10 product, Pellei says she can count on at least $0.40 in regulations, and that doesn’t include the cost of manufacturing, shipping or doing business with Amazon, which buys her products to sell them.
“It’s the little costs...five cents here, a little bit there, but it adds up,” says Pellei. “It’s almost not worth doing (business).”
Pellei’s other request of Washington: communicate. Help small business owners like herself better fit in the nation’s economy by telling them how they feasibly can.
For example, Pellei – like many small businesses – is forced to manufacture her products overseas in China because of already-tight margins.
“But if they (the government) want me to manufacture in the U.S., show me, ‘Here’s how we can make it easy for you to do what you need to do,’ ” says Pellei, 49. “I would like advice...I would like them to show me their primary goal and how (I can) fall into that plan.”