Nothing's Small About Small Businesses

The most recent Memphis Business Journal online survey asked readers how they felt Herenton's fifth term would affect Memphis business. A total of 422 responses were recorded.

Of those, 210 readers, or about 50 percent, checked "business as usual," while 190 votes, or 45 percent, felt the next four years would be "gloom and doom."

Only 22 votes, or 5 percent, felt the next four years would bring "progress and prosperity."

Even though this is not a scientific survey it gives a hint to how Mayor Herenton should focus his next four years in office. Herenton spoke of his legacy and the importance of Small Businesses at a Memphis Regional Chamber breakfast not long ago.

The U.S. Small Business Administration (SBA) has released their updated small business statistics. Here are a few of the highlights. Small Businesses...

- represent 99.7 percent of all employer firms.

- employ about half of all private sector employees.

- pay more than 45 percent of total U.S. private payroll.

- have generated 60 to 80 percent of net new jobs annually over the last decade.

- create more than half of nonfarm private gross domestic product (GDP).

- hire 40 percent of high tech workers (such as scientists, engineers, and computer workers).

- are 52 percent home-based and 2 percent franchises.

The number of new small businesses has grown steadily over the past few years. In 2002 there were about 570,000 new small firms. That number grew to almost 650,000 new businesses in 2006.

Even with our growing dependence on small business in the US economy, the regulatory costs for small businesses continues to grow. The average employer with 20 employees pays about $7, 647 per employee in regulatory costs ($1,304 of this is tax compliance). The average cost per employee for large firms is about $5,282.

Out of that impressive list let’s focus on the 52 percent home-based businesses. Here in my view is the answer to poverty. It is important to understand that the poor do not create poverty; it is created by the choices taken by government and the private sector. As I have said many times, “Poor is a state of mind, but poverty is the inability to state your mind.” If we are to defeat poverty we must work to raise the voices of those who have been marginalized in our society.

If you were to live for a short time in the inner-city you would quickly realize that there are a lot of home-based entrepreneurs. People run various businesses out of their homes: upholstery, hair salons, baby sitting, catering, carpentry, tax returns, and so much more. Most will never expand beyond their homes and always be a one person operation. Imagine the impact it would have on our City’s economy if each of these businesses were able to hire just three people. With 70 percent of all new jobs come from small businesses this is the pond we need to be fishing in.

During my campaign I was asked what could be done to turn our economy around. This is what I said.

If I had a magic wand and could change only one thing in Memphis it would not be crime, or better schools, or even better race relations. I would not focus on any of those issues because they are symptoms of a much bigger problem and that is economics. When the economy is doing better people can find good jobs. Good jobs lead to more stable families. More stable families lead to students doing better in school. Better students lead to less truancy. Less truancy leads to less antisocial behavior. Less antisocial behavior leads to less youth committing crimes. Less crime committed by youth leads to more skilled young adults seeking careers. More skilled job seekers lead to better performing businesses. Better performing businesses improves the economy and the circle starts again. Simplistic maybe, but I’ve yet to be proven wrong.

There are three phases necessary for helping to grow small businesses:

Phase 1 – Focus on improving the skills of entrepreneurs. Here I wish to commend the administration for creating the Renaissance Business Center which is located at 555 Beale. This Center offers training and financial support for those wishing to venture into or have already ventured into the business world. In fact, the Center will host all my nonprofit’s 12-week sessions on “Successful Small Business Training.”

Phase II – Provide financial support for small businesses. The lack of capital sinks many great ideas. That is why we established the SMA Opportunity Bank. This partnership with SMA, Inc., the Women’s Foundation, and First Tennessee Bank provides loans up to $5,000 at a 5% interest rate. The funding focuses on home-base businesses.

Phase III – This is the most challenging. It is my recommendation that the City provides PILOTS (payments in lieu of taxes) support to help small businesses already here by reducing their tax burden, a burden which has been shown to be higher than larger businesses. I would also like to see more Capital Improvement Project (CIP) dollars go to enhancing the safety and aesthetics in the area where these businesses operate. Finally, we need to create what I call “Distressed Area Incentives” for those business owners who operate in inner-city areas. These owners spend a great deal of their limited dollars on security and insurance. They face higher incidences of crime. We could create a package of benefits to offset these extra expenses.

If you are a small business owner or are looking at starting a small business, what do you think?


Anonymous said...

Last year my business was broken into nine times and the Mayor said there is nothing he can do about crime. If we really wanted to improve the economy of this city we would have voted this guy out of office. That's my view!

Anonymous said...

The truth is this is a poor city. We have a large amount of people who are under educated. We can't get the major businesses to move here to Memphis because of that and small businesses usually benefit from bigger businesses. You can't blame Dr. Herenton for that.

Reginald Milton said...

There are a few spaces left for the first Small Business Training which will start January 15th.

Meals and snacks will be provided.

Topics that will be covered:
How to develop a business plan
Limited Liability
Business Strategies
Market Analysis
Cash Flow Management
Risk Management
Financing Options
and much more!

Call Christine Telford at 774-9582 to reserve your seat.

Anonymous said...

First the people leave then the businesses follows. This Mayor has been so devisive that we can't keep people here. "If you don't lke Memphis you can leave." That's what he said and guess what they are leaving. When more than half the people in a city vote against you what power do you have. Small business, big business it don't matter there is no business here in Memphis.

Anonymous said...


We have a lot of small businesses with jobs openings but a lot of these people don't want a job. Go to any handout line and ask the people there do you want a job? All of them will tell you no.
There are to many goof offs in Memphis who want to sit around and do nothing. They want to start off making $20/hr, but don't know nothing. People need to know that you got to get training and work your way up.

Anonymous said...

I work for a Walgreens in North Memphis and we had our inventory report. Our manager said that this one store lost $145,000 in missing merchandise. People come in and shoplift all the time and I know employees steal as well. That a lot of money to loose. How these mom and pop stores stay open is hard to understand. There is one store down the street. They have been robbed so many times you can't count. The owner come in early in the morning and leave late at night. He and his wife run the store. They can't make much money. Now the City government should help small business like that.

Reginald Milton said...

I've had to delete several very derogatory statements made about the Mayor. Folks this is a waste of time. Through a democratic and fair process Mayor Herenton has been reelected to office. I think it is more important that we concentrate on how to go forward.

After I lost my bid for City Council I downed several gallons of ice cream and moved on. So should you. By the way Haagen-Dazs rules!

What improvements would you like to see the Mayor focus on? What are the challenges you see this City facing? How do you see yourself playing a role in this improvement?

Anonymous said...


Get our state legislators to allow Memphis to have casinos.

Look at Mississippi.

Anonymous said...

Creating a “Distressed Area Incentives” is a good idea. It is something like the Enterprise Program, but hopefully it will work better.

We operated a car repair shop back in the 90's. The way things are now it would be tough. The politicians talk a good game but have little follow through.

Anonymous said...

The City needs to continue looking at better ways to partner with small businesses. Even spoon feeding some up and coming businesses by giving them a contract to meet a small need and each year as the business grows increase the request in the contract. The key word is PARTNER.

Anonymous said...

Do we not live in a capitalist country? Survival of the fittest. Taking tax payers money to help someone run a business so they can turn around and raise the cost of what they are selling. This is not right. If your business can't make it then you need to close your doors. Weed out the weak. Gover't takes enough of my money as it is. Pay for police, pay for firemen, pay to have them pick up my trash, but don't pay someone to run a business.