In This economy, The Government Should Be Helping Small Businesses, Not Doing This Crap

When you can’t even open a small bagel shop, it’s screwed up.

I signed a lease with the property owner for his 1000 square foot space. I contracted with a general contractor and designed the restaurant floor space on a CAD program I have on my office machine.

Having boot-strapped two seven figure companies from the ground up over the past 25 years, I knew all of the permits needed in order to open a regular business. First, I had to have my attorney file for incorporation in my state. Then, I secured my FEIN (Federal Employer Identification Number) from the IRS, opened a bank account, got my sales and use tax permit (to collect sales taxes) from the State and contacted the person at the state level who is responsible for food establishments at the state level. The department that handles such things is the Nevada Health Department.
The inspector who is responsible for my geographic area (since I live in a sparsely populated county, we don’t have a county health department) at the state level told me that since the space had not been a restaurant for a few years, I would need to pay additional fees the first year and my endeavor would be treated as a “new” retail food establishment. The cost was an additional $500, but that’s just the way it is. The property already had a grease interceptor (1500 gallons), floor drains, a mop sink, air exchanger on the roof and was mostly plumbed. I’ll get back to this later.
I submitted plans to the state contact person and was told that my symbology was not standard for the plumbing and electrical. The suggestion was made that I seek the services of an architect. Very well. I did. I found an architect who has done some restaurants in the area and we got to work. I submitted my floor plan to him, which he said was very detailed and seemed to use the space to its maximum potential. However, he did mention that if I were going to serve one single person as a dine-in customer, I would have to have at least one ADA compliant bathroom. The space had two existing bathrooms that were ADA, but not the latest version. So, those would have to be upgraded. Next, he told me that if I served, in-house, I would need to provide two ADA compliant bathrooms. I was going to remove one of the ADA bathrooms, so I could have more seating, but if I had more seating, I would need two bathrooms. Catch-22.
My architect submitted to the state for review and was told that I would need to expand the hallway. That means that the current hallway walls would need to be completely gutted, with plumbing removed and drains moved.
I guess it really did not matter though, since according to the State of Nevada, I was required to have EIGHT (8) sinks in my 1,000 square foot space. I needed two bathroom sinks (which I had), one dirty sink with three wells, clearly labeled “wash, rinse, sanitize”; this sink needed to have two side-boards of not less than 18 inches etc. I also had to have one prep sink, with a wand facet, one dedicated mop sink, two hand wash stations (that could not be near any other sinks) and a bar sink for smoothies. This meant I had to have an extra floor drain put in, while the others needed to be moved. Great. 8 sinks. Cost to bring the plumbing to code and provide engineered drawings and system? $20-25 thousand.
After six revisions to the plans (to make the state happy), I finally gave the plans to a general contractor. He sent it to his electrical and plumbing sub-contractors. They informed the general that due to code issues, they would have to quote an engineered HVAC system that provided balanced air for the replacement needed by the hood exhaust. The hood exhaust would need to be tied into the HVAC, so that my customers would be in an environment that met the state standards for air quality. OK. The plumber also said that I needed a brand new, engineered waste pipe system, one that could only be installed by jack hammering the entire plumbing system, since the state was requiring a detailed drawing of the pipes in the floor, and since it was put in before they had these requirements, they would want it all dug up and put into a plan. Great. Engineered HVAC cost? $40,000 (even though the place seemed to work fine for 25 years with an evaporative cooler and a gas heater).
Next, I was told that since I would need a 200 amp electrical service panel (which I knew), the power company would have to replace the transformer on the pole outside, since new construction (the buildings are 30 years old, but hey, it’s a restaurant) requires new EPA compliant transformers. The power company fee alone would be 12-15 thousand dollars. Cost to upgrade electrical to code? $20,000, including power company costs to install EPA approved transformer.
Next, I was told that I would have to have the gas pipe dug up, jack hammered and replaced with a larger diameter gas line. This would be $20,000 or so dollars. The reason is, of course, that the new code requires a minimum pipe diameter for gas; even though I was only going to have one appliance on gas; the range. Everything else is electric.
Keep in mind that all of this was taking time. In point of fact, from the time I signed the lease in late December, until just this past week, I was doing nothing but getting my paperwork ready and trying to comply with government mandates. Essentially, I spent 7 months trying to not only figure out what I needed to do, while I was paying rent and utilities, but I also spent many hours trying to figure out the complexities of what the state required.
For instance: Each food establishment is required to have at least one Food Service Handling Manager. Each person who serves or prepares food has to take a Food Handler Course. The manager course is about 500 dollars, when all is said and done. The food handler course is about half of that. This is an annual fee.
Aside from what I was being required to do for the construction, the state also required the following:
— A complete list of vendors. Said vendors must be USDA certified wholesale food suppliers. No farmer’s markets, supermarket or home grown.
— A complete menu, listing calories of each ready-made product.
— A sample of my labels for prepackaged product showing nutritional data, ingredients, warnings about any allergens (peanut etc).
— My estimate of how many employees I thought I would need (so they can tax me on each employee, annually, something the county does too)
— Certificates for any employees who would be handling food, including any managers. My Federal EIN and my State tax ID.
— Complete plans, contractors, amount of estimated business (so they can PRE TAX me on estimated sales taxes)
It just goes on and one.
The law in Nevada is called the Nevada Revised Statutes, or NRS. The statutes for retail food are about 500 pages thick. That’s just the codes that cover food. This does not cover the building, electrical, plumbing and service codes (such as ADA compliance, handicap parking, etc.)
So, I quit. They beat me.
It always amazes me when politicians use the sound bite of how they will “create jobs”. Well, I am an entrepreneur and have created thousands of jobs over the past 25 years. I have also be responsible for over 500 million in savings to my customers over that time period. This means that 500 million dollars of wealth that was saved, could be put into new technologies, new business ventures for into savings.
I am a job creator. But here are at least six jobs that I won’t be creating.

http://charleshughsmith.blogspot.com/2015/08/our-government-destroyer-of-jobs.html

I think that the real problem is that he didn’t have the “right” connections.  When it’s impossible to get things done there’s usually a hand out somewhere in the process. I can believe that say, a small donation to the local county election fund or such and somehow all those petty little details would just disappear.

I see this as instructive.

The system has made opening a business almost impossible.  Not only are there thousands of rules, but they are not consistent.  As the man above found out, what were the rules even a short time ago have all been changed seemingly by the mandate of uncaring bureaucrats. Without some understanding what the rules are going to be, it’s impossible to estimate what your costs are going to be. This is crucial, because without know in what your costs are going to be, you can’t asses your risk.

In age where just where just about everybody is a victims class that cannot be discriminated against, it seems like the only targets for grievances is the businessman, especially the small businessman.  I know that contempt for the bourgeois goes back to Rousseau and is healthy in the Ivy Covered Snob Factories that produce the administrators that run the administrative state. The people that write the regulations and rules that make small businesses owners’ lives miserable have never been in a position where their livelihoods are affected by the rules of the kind that they inflict on small businessmen.

You here these people talk and over and over they will tell you how they want to support the small business, small farmer, small factory, yet they promulgate rule after rule and tax after tax, all to help one chosen “victim: class or another, at the expense of the small businessman they really despise.  I suppose it’s easy to abuse those you despise and the elites have despised the business man since the end of the middle ages.

It’s easy to blame Wal Mart, or Home Depot for the loss of the small businesses.  That means you don’t have to think about the impact of your abuse on the people you are abusing.  Guess what, it’s not Wal Mart, it’s the Ivy Leaguers’ prejudices that are the problem.  It’s all too easy to hit somebody who can’t hit back.

And that’s what’s happening.  If isn’t some petty ADA rule, it’s being sued for discrimination by SJWs who set up the situation, or safety regulations that are contradictory.  Or just going in and freezing their bank accounts because they don’t deposit the money the right way. It’s all fair game as far as the elites are concerned. It’s seem like theirs a new story of some sort of abuse of small business men every day.  The only business that seems to please the elites is drug dealing.

It’s awfully easy to make decisions where they don’t impact you directly.  It’s easy, for instance to mandate a raise in the minimum wage when your aren’t making the payroll, the rent and maintaining inventory that you need to stay in business.  It’s easy say “build a ramp” when you aren’t paying for it or having the rent increased.  It’s incredibly easy to say “raise your prices,” when you aren’t the one seeing people put stuff back because they can’t afford it.

Well, for those of you concerned about living down a similar life of privilege, I have a solution for you: start a business.  Doing so instantly converted me into a hated abused underclass.  Every government agency I work with treats me with a presumption of guilt — when I get called by the California Department of Labor, I am suddenly the young black man in St. Louis called out on the street by an angry and unaccountable cop**.  Every movie and TV show and media outlet portrays me as a villain.  Every failing in the economy is somehow my fault.   When politicians make a proposal, it almost always depends on extracting something by force from me — more wages for certain employees, more health care premiums, more hours of paperwork to comply with arcane laws, and always more taxes.

http://www.coyoteblog.com/coyote_blog/2015/08/worried-about-your-privilege-want-to-be-treated-like-an-abused-underclass-start-a-business.html

The interesting thing isn’t that people aren’t starting businesses, it’s regardless of how many times they are abused they keep trying. How much nickel and diming can they take?  Yet there they are, right back at it, with the next idea after the last one failed. People like this are truly inspirational. I don’t know how they do it.  I see these people all over, yet somehow the powers that be can’t even acknowledge their existence other than as an abstraction. You can just see the arrogance here.

Now did the Ivy Leaguers supported not understood what they are saying to the average Joe just trying to make a living.  It’s pretty clear that they have no clue the HURT that they are inflicting.  That is when they aren’t hurting people deliberately for not being with the program like they did with poor Joe The Plumber.

The thing is that the only thing the administrative state and it’s regulated economy have to offer is yet another program.  That’s after they have already created a ton of programs and  taxes to pay for them whose  collective effect is like taking a punt gun to the economy. The economy was crashing and all the administrative state’s chief representative could offer was higher taxes and more programs.

Consider what it takes to just rent out your condo.

http://www.slate.com/articles/business/small_business/2013/02/starting_my_small_business_cities_make_it_incredibly_hard_to_get_a_business.single.html

That’s just requirements for a rental.  the guy was lucky it wasn’t worse.  Suppose he HAD  been with rent control requirements. he also hasn’t rented out the place yet, so we don’t know if he could be hit with a discrimination suit.  And I hope he has his ADA all set.  This is how the regulated state works, or doesn’t.

Just look at this little list of things that you might have to deal with.

I want to start out by saying that i am a 27 year old male with a small business in Sacramento CA. I started this business a few years ago with savings of 15k. With a lot of hard work and determination i have succeeded, but it sure as hell was not easy. I am a long time lurker and have never seen anyone go in depth about what its like to own a small business and the reason why they are disappearing. Without going into to much detail, i own a furniture store so obviously things are different then other businesses but a lot of the things are the same. I wanted to begin with the things that are killing small businesses. Also only my opinion.

  1. Small Business Loans – Although they are not killing small business they sure as hell don’t help anyone. Unless you are opening a unique small business you are not going to get any funding. By unique i mean something along the lines of creating solar panels. According to a recent investigation by the SBA Inspector General (ill post the article if you would like), over 75% of SBA loans went to large businesses. So basically if you want to open a normal business you need a ton of collateral and a miracle to get a loan.
  2. Permits and Licensing – In opening my specific business the first year totaled about $2000.00.
  3. Advertising – Many small business’s cant afford to take out pages or flyers in the news paper or TV ads so they only have a few choices such as Yelp or the Penny-saver. (Don’t get me started in Yelp).
  4. Street Advertising – While this used to be a good portion of how you get business it is now off limits. Code enforcement will not allow you to put anything outside. No balloons, signs, anything with your store name, window paint more than 50%, or any mattresses. Also delivery vehicles can not be closer than 50 feet from the curb. In my case that means behind the building.
  5. Board of Equalization – Cant go into to much detail here but they sure as hell aren’t here to help.
  6. Health Insurance – Now obviously with the people that have a large work force working full time they will be hit hard by obamacare, but i wanted to give you a perspective on a single person. The cheapest rate for myself and me only, and believe me i have looked around, is $250.00/month. Some might say oh that’s not bad, but let me explain what that covers, NOTHING lol. Basically if something happens to me i have to shell out 6K before insurance gets involved. Also 100 dollar co pay every time i go.
  7. The economy – While many know that when the President comes on TV and says the economy is doing great, we all know it is not, some people don’t. Every month more people drop out of the Labor Force and the number of families on food stamps is sky rocketing. So for those of you who don’t know the economy is terrible because of all the top stories of Kim Kardashian and whoever else, lots of people in america are struggling.
  8. Merchant Fees – This is for credit card processing machines. The machine itself costs 600.00 plus the percentages on sales and cards. Companies such as BofA charge once a year on top of the regular fees $150.00 to protect you from fraud (which they can’t even stop) and yes its mandatory. Paypal or Square seem to be the best options these days.
  9. Fire Department – Yes even the Fire Department wants a piece. Starting last year you must do your own visual inspection and send them a check for 150! Basically if you don’t they will come to your store and give you a million violations for wasting there time.

Something to watch out for is people who check fire extinguishers in business’s. This is a huge scam where they come in without permission to inspect your extinguisher, get you a new one and bill you like 200 the following month. They have no right or permission to enter your business and jump all over you. You can simply tell them politely to get out. They dress like they are fire fighters but they are not.

http://www.zerohedge.com/news/2014-11-14/reason-small-businesses-are-disappearing-explained-small-business-owner

And after that, well the business owner has been denied the right to run the business as he see’s fit. At where doing business with a protected “victim” group is concerned.

The Colorado Appeals Court ruled that the owners of a bakery do not have any right to control their property, and that they shall be forced to provide bakery services to a couple that the owner would rather not do business with. In other words, they have no property rights. The court writes:

Masterpiece remains free to continue espousing its religious beliefs, including its opposition to same-sex marriage. However, if it wishes to operate as a public accommodation and conduct business within the State of Colorado, CADA prohibits it from picking and choosing customers based on their sexual orientation.

These sorts of rulings essentially rewrite the very nature of commerce and our whole concept of contracts. A business agreement (i.e., a contract) is based on two parties agreeing to a voluntary relationship. This is the foundation not only of business relationships, but of the relationship between citizens and states themselves. This is why “social contract” theory is so popular among theorists. Everyone recognizes that coerced relationships are inherently unjust, which is why defenders of the modern state system claim that states derive their legitimacy from a “social contract” in which both parties agree to the relationship.

Without this contract into which both parties have presumably entered voluntarily, the relationship is unjust and a violation of basic human rights. But that all just goes out the window, apparently, when we’re talking about discrimination. With court decisions like these, the court is saying that we can have contracts in which one only side agrees to it. But let’s just call this what it is: seizure of one of the party’s private property.

Moreover, in an attempt to muddy the waters further, we’re being told that this case is about religion. Ultimately, though, cases like these are really about nothing more than the simple right to control one’s private property:

In practice, the decision to exclude is always based on some type of discrimination. The type of discrimination can run the gamut from “you’re banned from my store because you groped customers” to “I don’t serve your (racial) kind.” In everyday life, the merchant, salesman, clerk, or owner of any kind must — because time is scarce — make constant discriminatory decisions as to whether or not he will do business with client A or client B. Indeed, every single economic act requires this sort of discrimination. A person may prefer to do business with more attractive people, or people who are friendlier. Or he may wish to work only with his co-religionists or citizens of his own nation-state. On a fundamental level, everyone knows this is the case, but many accept that it is the legitimate role of the state to decide which types of discrimination are acceptable and which are not. Hence, discrimination against unattractive people remains acceptable. Discrimination against certain racial groups is not.

Regardless of what groups end up being favored, the effect of any anti-discrimination law is to curtail the freedom of the owner and to increase the size and scope of government’s coercive power over the lives and livelihoods of property owners. Moreover, since anti-discrimination law is heavily dependent on proving intent and motivation, such regulation also puts the government in the position of investigating the thoughts and opinions of owners. Sometimes, owners make this easy for regulators by stating their motivations outright, but in other cases, private owners are investigated and inferences are made as to the feelings and views of owners. This is necessary because, since every business transaction requires some sort of discrimination, the mere act of not entering into a business transaction is not sufficient to prove not-government-approved discrimination.

And even from a consequentialist angle, there is no real “cost” on the party being refused service. In this case, the refused party merely needs to drive down the road to one of dozens of similar bakeries in the Denver metropolitan area. But even if there were no other bakery in town (which is untrue of any community but the tiniest) the answer to this is to encourage more commercial freedom. Restricting commercial freedom merely produced the opposite effect of producing fewer bakeries:

Thus, those who wish to lessen the negative effects of discrimination on consumers ought to concentrate on expanding the economic options for those who face discrimination. This is done through deregulation of industry and the elimination of corporate welfare and other anti-market programs and regulations that favor incumbent and semi-monopolist firms. Unfortunately, however, those who favor regulation of discrimination also tend to favor government regulation in general, including wage rates, employment practices, lending practices, food “purity,” and nearly everything else, in spite of the fact that the sum effect of such regulations is to prevent the entry of new firms into the market place while protecting the standing of large politically-powerful firms. The result is fewer merchants, fewer firms, fewer jobs, and more monopoly power which leads precisely to the negative discrimination-imposed burdens that the pro-regulation lobby claims to be fighting against.

http://www.zerohedge.com/news/2015-08-18/court-bakery-owners-you-have-no-property-rights

It’s said that you can’t understand somebody until you’ve walked in their shoes.  I’ve worked in small retail stores, restaurants and manufacturers.  If you work in places like that the problems aren’t in some  office far away, they are right next  to you working away.    When you work at a small business you see this stuff first hand, over and over.  What nobody seems to understand is that all this stuff not costs the business owner money, it costs him time.  Time he isn’t helping customers, stocking shelves or keeping things running.

Running a business is a big commitment in time and money.  You have to give a lot of yourself to do it.  You also have to know that even if you are putting your heart and soul into the business it may fail for circumstances far beyond you control. Even if you succeed the rewards  probably won’t be that great.  Yet people do it, over and over.

Small businesses are where growth comes from.  They are the laboratories that create the creative energy of an economy. Consider this store.  This is Sassafras in South Norwalk CT at least until a couple of years ago. The place sold all sorts of imaginative and crazy stuff along with some dried flowers and yes, crazy clothes.  This is sort of business that could never come  from the big chain stores, though perhaps it could have become a chain in different times. Now it’s just gone. Along with some other longstanding small stores that enriched and diversified Washington St., South Norwalk and Connecticut.  And life is just a little smaller.

DSC_1966

The likes of Bernie Sanders and the rest of the Progressives will say endlessly how small businesses enrich us and that we need more of them. They will complain endlessly about sprawl and how plastic things have gotten.  It is though, the very policies that they have promulgated which have created that empty environment. When the conditions are such that only the well connected, the illegal and the large can start and stay in business, well that’s what you are going to end up with. Along with a bunch of suckers who are just trying to create something without being sucked dry.

the problem with that environment is that we lose the business that doesn’t happen.  It might be just a bagel shop, or it might be a new way of manufacturing stuff, a new product that everybody just has to have or a new retail environment that fills a need that nobody knew existed.  That’s the invisible in the current mess and it’s not a small thing.  Which is why we need to rethink how government deals with business. The true wealth of a country is the ability of the people to pursue prosperous lives and what the government is doing is making us all poorer.

For more on the dysfunctional economy click Here or on the tag below.

 

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7 comments

  1. John Van Stry · August 19, 2015

    The government, at least the liberals in government, HATE small businesses, and will do everything they can to stop them.

    Like

  2. bojojoti · August 19, 2015

    With increasing regulations, licenses, fees, paperwork, and legal entanglements, I don’t see much of a future for the small business person. A person doesn’t mind sacrificing for a business if he/she sees that all the hard work will eventually result in a profit; we’re reaching a point where starting a business isn’t worth the risk.

    Like

  3. Dan Lane · August 19, 2015

    Tacitus’ dire words are as true today as they were in the first century. Corruptisima republica plurimae leges. *sigh*

    I see more and more folks edging into the gray economy, and some outright black. There are “businesses” out there with no billing address, that pay no taxes, employ no people, sell no products and give no services… officially. Un-offically, they paint fences, fix cars, trade produce and meat, and so on. It’s a weekend “job.” Or afternoon work. Something on the side, under the table, paid for in kind, sometimes in innocence, others with intent. When the taxes and regulatory structure become so onerous it sends otherwise law-abiding folk down this path a step is being taken, and I don’t think most people realize what it portends.

    We are a nation of laws, not men. Or, we damn well *should* be. Without that framework of laws and honorable men and women to see them enforced justly, freedom evaporates like fog on a hot summer day. It won’t come back without cool heads of reason reining in the wild enthusiasms of statist bureaucrats like as got us the ACA, state mandated sinks and bathrooms, and the terrifying revocation of a business’ right to refuse service to anyone, for any reason. The Gods of the Copybook Headings aren’t far off at this rate.

    The thing is, there is not shortage of *work,* and never has been. Removing legalistic barriers to people getting on with said work is the best long term solution, period. State controlled economies have failed again, and again, and still yet *again.* Capitalism works. Socialsitic policies, be they anything from minimum wages to price ceilings, to the restriction of interest rates, to outright Marxian abolition of the wage rates (all of which we’ve either done or have heard put forth as the solution to the social/economic illness of the day) strangle innovation and growth.

    People say there will be an outcry, riots, massive unrest if the handouts ever stop. And they’re right. We will always have rabble rousers and folk who won’t lift a finger to earn a wage, but will smash windows and steal booze if the opportunity presents itself. But I believe there are a great many out there that *would* work if given the chance to keep more of what they earn… And once they get a taste, and realize that the only things holding them back are their own lack of ambition and an established, entrenched class of people that have lied to them all their lives, saying that they are not good enough or smart enough, they need a helping hand from Daddy Government- hopefully, by then we’ll be back on our feet again as a country.

    The culture is sick. But it’s not beyond hope yet. If we give folks a chance to get ahead *legally,* they’ll still take it. How to get there? That, beyond pestering candidates and congresscritters (state and local both), I dunno.

    Of course the game is rigged. That’s no reason to stop trying, though.

    Like

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