Killing Small Business

I love to support small businesses. I do it whenever I can. When shopping online I always look for specialty shops, check ebay, or Amazon looking for merchandise being sold by small internet retailers. I tend to go to my local card shop for Magic: The Gathering cards instead of buying from one of the giant department stores.

In fact, I hear the same all the time, from just about everyone. I have a hard time remembering any time anyone has ever told me that they do not like to support small businesses, or at least, believe that small businesses should be given a fair chance in the market.

What boggles me is that so many people want small business to have a fair chance and/or want big business to fail, yet these same people support government intervention in the market that hurts small business and, by extension, helps big business.

Well, not all of us...
Most might support a minimum wage, or even raising the one we have in place now, because it makes the super rich pay higher wages to the super poor. People need to be able to live off of what they earn. That must be a good thing, right?

You see, a retail giant like Walmart, can handle a jump in government mandated minimum wage. Cut some hours here or there, raise a few prices by a few pennies, even terminating a high paid employee or five does the trick.

But, a small business owner cannot handle forced changes to their payroll. Generally speaking, a "mom & pop shop" is that family's only source of income. A small business with only a few employees makes just enough for the owners to live comfortably, if they're lucky. A locally owned retail store with twenty employees is in the same boat, though the owner may be a little better off financially, they're still not easily able to handle a change like that being forced on them. For these stores, any price changes that they make are significant, because they have to be. Instead of raising a few items in their store by a few mostly unnoticeable pennies, they need to raise all of their items, much more noticeably. Losing one employee hurts a business like this significantly.

Minimum wage is actually really bad for the economy, especially for the middle and lower classes. Check out this post for more on that.

What about the other types of regulations put on businesses?
Licensing is required
Permits must be obtained
Codes must be followed
Taxes must be paid

Government is a red tape factory. You pay them to wrap red tape around everything.
Walmart has a building full of people whose only job is cutting red tape,
but they get just as much tape as your local business owner.
Who is responsible for these regulations? The city, the county, the state, the feds. Sometimes you, as a business owner, are required to pay all 4 of them for the same thing. But you are always responsible for knowing which regulations to follow and who to pay for something that your business could run just fine without. This all adds up to massive overhead, cuts in expected profit, and a serious headache. For a guy who works hard at keeping his small business afloat, finding out that he is being fined $10,000 when he only brings home $65,000 is a life changing event. For a big business, finding out that you were fined $10,000 when your personal income is in the millions, not that big of a deal.
It's not about choosing the right order to "regulate" things.
It's about realizing that government is the fence.
If we want a booming economy, where everyone gains wealth, we need a market that is fair for everyone. The only way to have a fair market, is to remove government "regulation" completely. No minimum wage, no codes, permits, or licensing. Get rid of it all. Then, and only then, will we live in a place full of opportunity for all.

That's the way I see it.