Small Business & Why Government Should Butt Out

In 2012 one of my favorite staffers quit my D.C. office. He moved back home to Pennsylvania and opened a small business. His name is Ben Stoltzfoos, and you might have eaten at his place before — he is the proud owner of a Jimmy John’s franchise in Manheim Township.

“I have one [sub shop] in Manheim Township and I’m opening another in Lancaster in two weeks,” Ben explained. “I love it because because I get to employ people, feed people, run a mini-organization, and feel the results of our performance in [my] paycheck.”

May 1–7 is small business week, and small businesses like Ben’s provide more than nearly two-thirds of the job growth in our great country. However, some aspects of running a small business can be pretty tiresome — like when the government interferes.

“The thing that I worry about hindering or slowing down my business is the tax code… I have to pay an accountant a lot of money to do the taxes, and now they have to deal with tying in layers of Obama regulations,” Ben reported. “Another big worry is healthcare. I’m opening three stores, so I don’t know if we’ll hit the 50 employee threshold with the opening of that third store.”

If we truly want to bounce back from the recession, the government must make sure it’s not standing in the way of small business owners and entrepreneurs like Ben. If we want innovation to truly thrive, we must shape an environment that’s conducive to the prospering of small businesses.

Pixar Films cofounder Ed Catmull wrote in his book “Creativity, Inc.” about the way Pixar chose to shape the environment of its employees. On the Pixar Studios campus, they created passageways that allow employees to linger in conversation and a business headquarters that functions more as a college campus, where employees play ping pong with each other and where they’re funneled every morning through a single entrance (to encourage maximum interaction). The idea was to remove any barriers or obstacles that might prevent Pixar employees’ maximum creativity and communication.

In much the same way, the federal government must ensure that it does not create unseen barriers for entrepreneurs.

We want our country to be the most receptive country on the planet to entrepreneurs with good ideas. We want America to be a place where entrepreneurs have an idea, and they can maneuver their idea easily from conception to execution. The government must lower the barrier of entry into the marketplace for this to occur. If the Federal government mandates a bunch of one-size-fits-all regulations for everyone, from the Walmart supermarket to the shoofly pie saleswoman at the Lancaster Market, it dampens blooming entrepreneurs like the shoofly saleswoman from expanding her business or starting one at all. Even the current price-tag of spending enough time to understand all the government’s regulations is quite high.

When it comes to taking enough time to learn about all the regulations that apply to his shop, Ben adds, “Labor laws are very complicated. If one of my delivery drivers does something I don’t know about or if one of my employees decides that I’m discriminating against him or her, and I’m hit with a lawsuit and the government decides to scrutinize me really closely and finds one little bit of paperwork out of order… I could lose my entire business. And I can’t afford to keep an accountant on staff or a lawyer on staff to protect me against those things. The stakes are really high when you’re a small business.”

Taxes are also intimidating small businesses. It’s not just that they’re high — they’re complicated! Like Ben pointed out, the burden of filing taxes is heavy enough that he has chosen to pay someone to do his business’s taxes.

We must have a tax code that is simple, that people can understand. That’s why I cosponsored H.R. 27, the Tax Code Termination Act. The bill sets a date to sunset the current tax code, forcing Congress to work under deadline to formulate a new system.

Another issue for businesses can be finding the capital they need to open shop or even make basic improvements. Stated Dave Burkholder, president of Achenbach’s Pastries in Leola, “We had to get certain mixers that hadn’t been made in a few years and we were struggling really hard to fix things…we didn’t have resources to get a loan or any kind of credit to get a loan. That was difficult, but we plugged at it, survived, and slowly turned it around until we got to that point.”

These days, banks are willing to make fewer and fewer loans because of the restrictions the government has leveled against them. Community banks often can’t compete with larger banks because of federal capital requirements. While I am certainly not advocating for no regulation at all for banks, the government needs to make sure it’s not prescribing a one-size-fits-all approach that disadvantages fledgling entrepreneurs.

Our country needs more small businesses owners who will create good jobs, like Ben and Dave. But first, the government must get out of the way.