Blog for Rural America

The Center for Rural Affairs, a private, non-profit organization, is working to strengthen small businesses, family farms and ranches, and rural communities. Permission to reprint items from this web log is hereby granted, on the condition that clear credit is given to the original source of the material. If the blog provides information for a story, please let us know by sending an email to johnc@cfra.org.

Tuesday, September 20, 2005

There's Nothing Small about Small Business

- from the desk of Phil Menke, pmenke@cozadtel.net, Center for Rural Affairs Central - Southwest REAP Business Specialist.

There's Nothing Small about Small Business

A giant new industry is being hotly pursued in Nebraska. Statistically, its size is greater than 85 percent of firms in the state. It will also employ thousands, increase household income by an average of $8400 in five years, and will supply the majority of new jobs in the state. If it chooses to locate here, projections show it will supply 15 to 20 percent of all payrolls.

The state legislature is being called into special session to ensure that the new firm is supplied with a plethora of special tax incentives, deferments, and adjustments. Many other states are hot in competition for the firm, and it’s demanding tremendous concessions from municipalities and the state.

Private banks and other commercial lending institutions are lining up with very competitive financing packages for the firm. The Governor and leaders from major business interest groups of other larger municipalities are lobbying for and competing with a host of smaller rural area communities for the location of the headquarters.

What is this organization?

Surprise, it’s called Nebraska Microenterprise. Yep, this little spoof is a cynical, sarcastic, and hopefully humorous way of touting the importance of the collective production, job creation, and economic returns to the state from current Nebraska microenterprise firms (fewer than 5 employees).

Collectively micro businesses supply literally thousands of jobs in the state and 18 percent of the state’s payroll. According to a recent five-year study by the Aspen Institute, nationally these types of microenterprises have increased household income an average of $8400.

What is still missing?

A more organized, coordinated, disciplined, bold, and sensible approach to rural economic development. Give the Nebraska legislature and the Governor credit for drafting and passing more favorable treatment of small business legislation this last session. Give them credit for becoming more aware of the critical need for more rural economic development involving small micro business stimulation.

Also give them credit for some minor reforms on LB 775. Philosophically one could argue all day the merits and demerits of special tax incentive programs to induce new economic growth. The most practical solution politically is for this collective “Nebraska Microenterprise firm” to make sure that any public policy move to subsidize rural and metro economic development doesn’t give a marked unearned comparative advantage to either sector.

What’s an unearned comparative advantage? Think of it as running a 100 meter race with an Olympic-class sprinter and giving them a 10 yard head start. They don’t need it and probably didn’t earn it for any logical reason.

Why it’s your business.

Without a disciplined and logical marketing and promotion plan in your business, you can have the best product or service in the world and nobody will recognize it or buy it. The saying “the wheel that squeaks gets greased” is true.

For a moment, let your imagination run wild. Suppose that at the same time a major firm was lobbying the legislature for tax concessions to locate or expand, every microenterprise in the state (both rural and urban) phoned, e-mailed, or visited their state legislative representative and requested the same special treatment to keep the playing field level. Do you think the legislature wouldn’t sit up and take notice?

Identify what could truly stimulate practical and logical growth of your microenterprise. If, for the good of your community and your business, a change in public policy regulation or economic development strategy would assist you in reaching your dreams and goals, wouldn’t it be worth it to add that piece to your marketing and promotion efforts?

What rural Nebraska needs is a different mindset – one that recognizes our collective importance and what our collective power can achieve. An emphasis on quality economic development – the kind of development that would serve the current generation and attract our youth – would be the kind of economic development we could be proud for our own sons or daughters to come back to, if they chose.

for more information post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

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