5 ms·

I'm in the process of shutting down my business, so anecdotally: 1) Globalization has made it almost completely impossible to make things in the US unless they

I'm in the process of shutting down my business, so anecdotally: 1) Globalization has made it almost completely impossible to make things in the US unless they are massively overpriced goods (ex. luxury items or niche specialty goods). Customers simply won't pay enough to cover your costs. And there's a good chance that if you are successful, someone will copy your stuff, make it in China, and sell it for half your price within 12 months. 2) In California at least, costs are pretty ridiculous for small businesses. Between state, county, and city taxes, high labor costs, ridiculous healthcare costs, rent, insurance costs, etc. etc. It is far more expensive to start a business today as a percentage of expected revenue than it was a few decades ago. 3) The US IP protection and regulatory systems are out of control. Fending off patent trolls, tiptoeing around trademarks, dealing with licensing systems specifically designed to be too burdensome for small companies to bear, spending time and money to deal with regulatory compliance, etc. puts small businesses at a massive disadvantage. 4) Unpopular opinion, but I think today's workers are less suited to small businesses than they used to be. Many younger workers say they want to work for startups, but what they really want is a venture-backed cushy office with catering and perks completely untied to actual business revenue. These types of businesses account for a tiny percentage of actual small business starts in the US, which are often not places today's workers want to work at, let alone stay loyal to.

cylinder 8y ago
Deleted
- dragonwriter 8y ago
  > It's sad that you were able to make all of these very valid points without even needing to mention the "health insurance costs for self employed people and their employees" That was mentioned along with a litany of other things in point 2.
pm90 8y ago
Since you didn't refrain from airing an unpopular opinion, I will counter with another one: you failed in your business likely because you didn't adapt quickly enough to changing market situation (locally and globally) and were unable to recruit and motivate today's workers in the industry in which you operated in. Generalizations offer very little insight though older folks seem to love to complain that the youth/next generation are just not suited/hardworking enough.
- snarf21 8y ago
  Let's say you are right. How would you do better? What actual practical advice do you have to offer this person who at least tried? I agree on the point that you can't just say "kids these days..." as every generation blames the one before and kids are always "lazy".
- jondubois 8y ago
  I think that we're at a point economically that it doesn't even make sense to point out mistakes that entrepreneurs may or may not have made... Even without any mistakes, the odds of failure for a small business are still ridiculously high. As a rule of thumb, all the capital goes straight to corporations. You can't build a business out of the current environment. You can hack, lie or cheat your way but you can't do it fair and square anymore.
  - pm90 8y ago
    Agree completely. Which is why... blaming the current generation of workers seems unhelpful. I hope the OP will realize that.
    - jondubois 8y ago
      True. There's definitely a vicious cycle. These days you have to work like a maniac to get a 10% chance of success. It's not very motivating. It's better to save yourself the mental trauma, take a cushy job and get a 90% chance of being able to retire.
- rubicon33 8y ago
  I think his first 3 points are valid, but the 4th should have been left out. All generations, young and old, have their fair share of entitled + lazy people. It's never been easy to find hard working, loyal people. Never. Blaming it on the current culture, or the "youth" is understandable, but ultimately misguided. One of the undervalued skills in entrepreneurship is the ability to not only find, but successfully hire and retain, excellent employees. It's never been easy.
jorblumesea 8y ago
#1 and #3 seem to be in direct competition. You're worried about others copying your IP, but then also cite overbearing IP issues as a problem. If IP laws were weakened, would that not make the theft of ideas even worse? #4 somewhat relates to #2, where costs as often put on the employees to keep small businesses afloat. Large companies have the sizes to keep costs down. I would love to work for a small business, but it would mean x5 increase in healthcare and insurance costs.
- dkjshfajskdfa 8y ago
  I don't think 1 and 3 are contradictory. Chines companies routinely scoff at US IP protections.
- leetcrew 8y ago
  #1 and #3 are not contradictory. #1 is about being undercut by firms overseas that don't respect US IP law. #3 is about US IP law being overbearing where enforced. they're basically orthogonal points.
Aloha 8y ago
I'll disagree with you on point one. I can buy all sorts of US made shit, that is profitably sold, at reasonable prices, overalls, jeans, mattresses, washing machines, boots, cars - its that the margin is lower in the states as it costs 2-5% more to make something here. The issue is, many things here cannot be made here with any ease, because the ecosystem for them no longer exists. I'm willing to pay 10% more for american made things - I suspect most americans would be too, given the option.
- Domenic_S 8y ago
  > many things here cannot be made here with any ease Like what?
  - Aloha 8y ago
    Electronics for one - there is no longer a domestic industry for jellybean components
- zjaffee 8y ago
  Exactly this, for most generic goods, automation has reached the point where the cost of producing goods somewhere not too far from a major American rail route is only marginally more expensive to deliver to the end consumer than had you produced it in China or elsewhere. The problem is that the Chinese manufacturing environment has a much tighter supply chain, where all the precursor products needed are also manufactured nearby with heavily optimized supply chains for getting raw goods where they need to be. This is especially true with high weight added products such as appliances. The real problem is that we absolutely suck at manufacturing anything other than items that only really make sense to manufacture locally (certain food items, detergents), where in terms of exports we only exceed at certain types of heavy machinery along with certain chemical and polymer products.
  - Aloha 8y ago
    I think its possible to bring the ecosystems back - but you have to start at the top of the chain, and work backwards. Not at the bottom up - make a price competitive business with foreign made bits, and eventually thru protectionist trade policy, bring back lower and lower parts of the supply chain - we may find it makes sense to stop half way down, and not try to bring it all back - we may not.
nikanj 8y ago
5) The housing crisis affects the business finances too: You need to pay your workers enough to live in the area of your business. In California, this is a major burden.
gamblor956 8y ago
Going to disagree with you on point 2. Taxes for businesses are taxes on profit not income. If you're not making a profit, like most startups, you don't pay taxes. It's a very simple concept that most people simply don't understand, presumably because taxation of individuals is based on (gross) income. California is expensive--but factoring in the size of the available market, labor pool, logistics, and other resources, it's a far better choice than the Midwest or the South.
- mdorazio 8y ago
  Sorry, but no. I thought the same thing until I actually started a business. Look up how taxes work in California and then look at how they work with respect to S Corps. Then look at how large companies hide their profits via schemes like the double Irish, which small businesses have no chance to do. Just to give you an example - in Los Angeles, the county assess a tax on unsecured property that has absolutely no bearing on your revenue. That's a tax on your office equipment, furniture, machines, etc. The city also assess a tax on revenue, not profit, in excess of $100,000. And even if you don't make a dime in profit, Corps and LLCs still pay a minimum state tax. If you own a building for your business you're also going to pay property tax, and if you don't you're going to pay it in the form of higher rent as well. To your last point, you need to add an "if" to make it accurate. California is a far better choice than the Midwest or South if you can start a small business with high enough margins to cover the much higher costs of basically everything.
  - gamblor956 8y ago
    Sorry, but no. I do this for a living, and you're deliberating misrepresenting how taxes work, including how business property taxes work. To note: a company with millions of dollars of business property might have a $10,000 business property tax bill. If you can't afford that, you have no right to call yourself a functional business. The minimum LLC franchise fee is $800. A real business can afford that, a pretend business cannot. Double-Irish structures don't work to shield US income. They never have, so US companies can't use them to reduce their US taxation either, regardless of size. And finally, you chose a pass-through form of taxation, meaning you chose to be taxed as an individual instead of as a separate entity. That's on you--not on California. That same choice would screw you over pretty much everywhere there's a state income tax--meaning all the states where people actually want to live.

cylinder 8y ago

Deleted

dragonwriter 8y ago
> It's sad that you were able to make all of these very valid points without even needing to mention the "health insurance costs for self employed people and their employees" That was mentioned along with a litany of other things in point 2.

pm90 8y ago

Since you didn't refrain from airing an unpopular opinion, I will counter with another one: you failed in your business likely because you didn't adapt quickly enough to changing market situation (locally and globally) and were unable to recruit and motivate today's workers in the industry in which you operated in. Generalizations offer very little insight though older folks seem to love to complain that the youth/next generation are just not suited/hardworking enough.

snarf21 8y ago
Let's say you are right. How would you do better? What actual practical advice do you have to offer this person who at least tried? I agree on the point that you can't just say "kids these days..." as every generation blames the one before and kids are always "lazy".
jondubois 8y ago
I think that we're at a point economically that it doesn't even make sense to point out mistakes that entrepreneurs may or may not have made... Even without any mistakes, the odds of failure for a small business are still ridiculously high. As a rule of thumb, all the capital goes straight to corporations. You can't build a business out of the current environment. You can hack, lie or cheat your way but you can't do it fair and square anymore.
- pm90 8y ago
  Agree completely. Which is why... blaming the current generation of workers seems unhelpful. I hope the OP will realize that.
  - jondubois 8y ago
    True. There's definitely a vicious cycle. These days you have to work like a maniac to get a 10% chance of success. It's not very motivating. It's better to save yourself the mental trauma, take a cushy job and get a 90% chance of being able to retire.
rubicon33 8y ago
I think his first 3 points are valid, but the 4th should have been left out. All generations, young and old, have their fair share of entitled + lazy people. It's never been easy to find hard working, loyal people. Never. Blaming it on the current culture, or the "youth" is understandable, but ultimately misguided. One of the undervalued skills in entrepreneurship is the ability to not only find, but successfully hire and retain, excellent employees. It's never been easy.

jorblumesea 8y ago

#1 and #3 seem to be in direct competition. You're worried about others copying your IP, but then also cite overbearing IP issues as a problem. If IP laws were weakened, would that not make the theft of ideas even worse? #4 somewhat relates to #2, where costs as often put on the employees to keep small businesses afloat. Large companies have the sizes to keep costs down. I would love to work for a small business, but it would mean x5 increase in healthcare and insurance costs.

dkjshfajskdfa 8y ago
I don't think 1 and 3 are contradictory. Chines companies routinely scoff at US IP protections.
leetcrew 8y ago
#1 and #3 are not contradictory. #1 is about being undercut by firms overseas that don't respect US IP law. #3 is about US IP law being overbearing where enforced. they're basically orthogonal points.

Aloha 8y ago

I'll disagree with you on point one. I can buy all sorts of US made shit, that is profitably sold, at reasonable prices, overalls, jeans, mattresses, washing machines, boots, cars - its that the margin is lower in the states as it costs 2-5% more to make something here. The issue is, many things here cannot be made here with any ease, because the ecosystem for them no longer exists. I'm willing to pay 10% more for american made things - I suspect most americans would be too, given the option.

Domenic_S 8y ago
> many things here cannot be made here with any ease Like what?
- Aloha 8y ago
  Electronics for one - there is no longer a domestic industry for jellybean components
zjaffee 8y ago
Exactly this, for most generic goods, automation has reached the point where the cost of producing goods somewhere not too far from a major American rail route is only marginally more expensive to deliver to the end consumer than had you produced it in China or elsewhere. The problem is that the Chinese manufacturing environment has a much tighter supply chain, where all the precursor products needed are also manufactured nearby with heavily optimized supply chains for getting raw goods where they need to be. This is especially true with high weight added products such as appliances. The real problem is that we absolutely suck at manufacturing anything other than items that only really make sense to manufacture locally (certain food items, detergents), where in terms of exports we only exceed at certain types of heavy machinery along with certain chemical and polymer products.
- Aloha 8y ago
  I think its possible to bring the ecosystems back - but you have to start at the top of the chain, and work backwards. Not at the bottom up - make a price competitive business with foreign made bits, and eventually thru protectionist trade policy, bring back lower and lower parts of the supply chain - we may find it makes sense to stop half way down, and not try to bring it all back - we may not.

nikanj 8y ago

5) The housing crisis affects the business finances too: You need to pay your workers enough to live in the area of your business. In California, this is a major burden.

gamblor956 8y ago

Going to disagree with you on point 2. Taxes for businesses are taxes on profit not income. If you're not making a profit, like most startups, you don't pay taxes. It's a very simple concept that most people simply don't understand, presumably because taxation of individuals is based on (gross) income. California is expensive--but factoring in the size of the available market, labor pool, logistics, and other resources, it's a far better choice than the Midwest or the South.

mdorazio 8y ago
Sorry, but no. I thought the same thing until I actually started a business. Look up how taxes work in California and then look at how they work with respect to S Corps. Then look at how large companies hide their profits via schemes like the double Irish, which small businesses have no chance to do. Just to give you an example - in Los Angeles, the county assess a tax on unsecured property that has absolutely no bearing on your revenue. That's a tax on your office equipment, furniture, machines, etc. The city also assess a tax on revenue, not profit, in excess of $100,000. And even if you don't make a dime in profit, Corps and LLCs still pay a minimum state tax. If you own a building for your business you're also going to pay property tax, and if you don't you're going to pay it in the form of higher rent as well. To your last point, you need to add an "if" to make it accurate. California is a far better choice than the Midwest or South if you can start a small business with high enough margins to cover the much higher costs of basically everything.
- gamblor956 8y ago
  Sorry, but no. I do this for a living, and you're deliberating misrepresenting how taxes work, including how business property taxes work. To note: a company with millions of dollars of business property might have a $10,000 business property tax bill. If you can't afford that, you have no right to call yourself a functional business. The minimum LLC franchise fee is $800. A real business can afford that, a pretend business cannot. Double-Irish structures don't work to shield US income. They never have, so US companies can't use them to reduce their US taxation either, regardless of size. And finally, you chose a pass-through form of taxation, meaning you chose to be taxed as an individual instead of as a separate entity. That's on you--not on California. That same choice would screw you over pretty much everywhere there's a state income tax--meaning all the states where people actually want to live.