Have Some Empathy for the Entrepreneur
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Walk in Their Shoes: It?s not easy being a small business. Put yourselves in an entrepreneur?s place, even for a short time. Image by istock
Jewish professionals, including rabbis, are increasingly taking the food stamp challenge. For a week or even a month, these individuals spend no more than what the federal government gives the needy in food stamps — $5 a day — for all their nutritional needs.
As exercises in empathy go, it’s impressive. I have known several individuals who have done it, and they are powerfully changed by the experience. Unless you live on $5 a day, you can’t know what it means to always be hungry, always think about the next meal and always live in fear that the money will run out before the next welfare check arrives.
It’s such a good experiment that I think we should apply it to other areas of life that have to be experienced personally in order to be understood completely.
For example, starting a business. Starting a business does seem, at first, to be a relatively simple thing. You are good at producing something or performing a task, and you figure that by directly selling to customers, you can make a good living doing what you like.
And at first, that’s really all it takes. But it does get more complicated than that. For example, you might need a license to do what you want to do. The license application will take time to fill out, and you may need to pass certain tests and inspections. The license procedure may have nothing to do with what is demanded by the actual marketplace, but your goal is just to get it over with.
Then you have to register with local and state authorities. Why? Because someone thought businesses should be registered, and that’s it. Each registration costs a certain amount of money — not much, but still, you have to pay it, and you have to be sure to pay it on time.
Then, you will have to hire a registered agent in the state where you are incorporated. The registered agent doesn’t actually do anything other than take any official mail you receive — tax and legal notices — and forward it to you. Why can’t you receive those things directly? Well, good question. But ours is not to wonder why. It just is the way it is. Don’t bother fighting it.
Let’s say you’re good at what you do and you have lots of customers. Well, you will need to hire employees. Now things will get very interesting. You will need to pay them, of course. But you will also need to get them health insurance. Good luck with that. Insurance for small businesses is not only expensive, but also so complex that you may just pay for an insurance broker to help you fight through all the paperwork.
Then there is the matter of payroll. If you want to figure out how much in taxes to withhold from your employee’s pay, be my guest. But if you make a mistake, or screw up the payments in any way, you could be in line for major penalties from the Internal Revenue Service. So you have to hire a payroll service — even for one employee. You will also need a workers’ compensation insurance policy, because the law requires that, too.
What if you find that one of your employees isn’t doing his or her job as well as you had hoped, and you need to fire that person? If the employee is part of a protected minority or demographic, you will need to be able to demonstrate that the firing is completely performance-related, or else you may get sued. Even then, you will probably have to offer a large settlement to avoid a lawsuit.
Speaking of getting sued, you can expect some of that, too. If you make anything that people use, you can expect lawsuits if they get injured using the thing you make. So you will need an umbrella liability insurance policy of some kind. If you have a business that involves any risks or dangers that you can foresee — and frankly, what businesses don’t these days? — you had better get a lot of insurance.
But let’s say you are able to handle all those annoyances, and you succeed nonetheless. Congratulations, but don’t consider yourself out of the woods. Your competitors may decide to hassle you with any number of challenges. They may convince a government agency to declare your product or service unsafe or unfit. They may collude among themselves to set prices artificially low to force you out of business. They may simply lie about you to the media or to your clients. It happens every day.
The government may decide on its own to turn its regulatory focus on you. If your products or services are really successful, you may be accused of using monopoly powers to destroy the competition. The rules by which you have long played will be rewritten, and those doing the writing may be lobbyists for your competitors.
Of course, you may succeed all the same, against all these challenges. In which case, get ready for your reward: roughly a 50% tax rate on your profits, and accusations that you don’t pay your “fair share.”
After all that, you may finally begin to learn, just like those on the food stamp challenge, that there is no substitute for actually walking in someone else’s shoes, whether they are struggling or self-made. You will understand why entrepreneurs have a natural dislike of lawyers, government bureaucrats and April 15. And you will know why those who made it on their own don’t suffer lectures from people who never built a thing in their lives.
Noam Neusner is a principal with the communications firm 30 Point Strategies. He was a speechwriter for President George W. Bush.
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