Everyone knows that you have to make a profit to stay in business. Sometimes critics of businesses forget that, but you can’t stay in business if you lose money.
A lot of businesses do lose money. Out of all the new businesses that people start, it is estimated that only about 20 percent of them last longer than five years, and many do not even survive past their first year. Those that do make it often do so because their owners work long hours, even without income, until their business is solid enough to do well.
In Maine, the majority of our businesses are small businesses. According to the U.S. Small Business Administration, 97 percent of all employers in our state are small businesses, and nearly 60 percent of the private-sector labor force works for these small businesses.
It is a struggle for many small businesses to survive. Still, a lot of politicians around the country argue that businesses make excessive profits. That’s not true, of course. Otherwise, so many owners would not have to close their restaurants or shoe stores or other small businesses, all the time. But when there are economically tough times, the first thing some people want to do is to clamp down on and squeeze businesses.
First, business owners have to face the fact that they are a minority in this country. They can be out-voted anywhere. When they get favorable legislation or when they prevent unfavorable laws, it is because business people have gotten very active, worked hard and convinced the rest of the voting public that anti-business legislation hurts everyone. If businesses cannot make a profit, they close, and their workers lose their jobs.
Let’s think about it. When government needs more money, it is easiest to tax businesses. They are usually the smallest and safest group of voters to burden. It seems most people want more government services, as long as someone else pays for these benefits.
Anytime there are strikes, owners of businesses are the real minority. The system is slanted toward labor, not because labor is inherently more worthy, but because there are so many more workers than owners.
When city workers go on strike, politicians almost always capitulate, because they need the support of these employees to get re-elected. So they give government workers pay increases that are often way out of line with what private industries can pay their employees.
Second, some political activists have expressed the concept of healthy profits as almost immoral. In the past, price controls and government regulations have been directed at controlling costs, which results in lower profits. Businesses seem unable to control the cost of labor and material, especially when the costs of some items ”“ like energy supply and wages ”“ are thought to be subject to some immutable law that says they must always go up.
No one should assess fair profits for a business except its owners and investors. If their costs or prices increase too much, they can’t sell their products or services. Without profit, no one would invest money or time. The incentive to invest, to innovate and to make that profit is diminished if someone can take your profit because they think it isn’t fair for them to have less than you have. Those thoughts are sneaking into the political arena today.
Rewards for talent, for ideas and for risk-taking have led talented people to come here from all over the world. Scientists, engineers and entrepreneurial go-getters have left other countries to come to the United States, where there are still rewards for hard work, ideas and innovative actions. If we want to keep our own best and brightest from leaving, we need to make sure that we do not take away their incentives.
The intent of much anti-business legislation being talked about today is in a direction of controlling not only prices, but profits as well. If businesses feel that long run controls on the amount of profit will stifle innovations, capital investments and economic freedom, businesses will either leave, close or work harder to protect our free market system. Those who believe in it must get out and do something about it, with a strong commitment, support and action to fight for their well-being.
We don’t want to see a future freeze on profits. Businesses have to be able to look forward to the good times so they can get through the bad times.
Businesses and their supporters must take positive actions now to make those good times continue to happen.
— Bernard Featherman is a business columnist for the Journal Tribune and former president of the Biddeford-Saco Chamber of Commerce.
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