The Small Business vs. StartUps

The right environment for starting a new business has been written about before at Dailyfoodtoeat, but today’s post delves even deeper into the topic by evaluating current legislation and other proposals aimed at infusing cash into entrepreneurial sectors. Contributor Juliana Davies, a regular writer for business education website, offers tips and advice for readers with all levels of expertise.

Business Friendly Policies Benefit More Than MBAs and Entrepreneurs

Job creation and stable employment statistics are things most Americans would like to see, particularly in these economically troubled times. Mass layoffs and “job reduction plans” are more commonplace now than ever before, though, leading many to wonder if change is even a possibility. In most cases, it is—though it may not come in a familiar package. Many of today’s leading economists have identified the small business sector as a possible silver lining for the U.S. economy. “Business startups remain robust even in the most severe recession,” a recent report from the Kauffman foundation found; numerous other studies have backed these findings up, suggesting that the biggest growth potential lies in the entrepreneurial and startup sector. These businesses are actually creating jobs, rather than eliminating them—a trend many say must be encouraged if the nation is to rebound financially.

Supporting small businesses through tax incentives and job creation bonuses was one of the main goals of the 2011 American Jobs Act. In particular, that act would significantly reduce the payroll tax for companies that paid $5 million or less in annual payroll expenses; would roll out comprehensive reforms and tax reductions aimed directly at entrepreneurs; and would establish a payroll tax “holiday” for companies that added workers or increased salaries. The act projected that, if followed, its provisions could create as many as 1.9 million new jobs in 2012.

Unfortunately, the nation’s job creation rate as of mid-2012 has fallen far short of that 1.9 million figure. This mostly owes to the congressional tension surrounding the act. The small business provisions have received some heat, but most of the opposition—centered primarily in the Republican side of the House and Senate—has targeted some of the act’s other focal points, primarily veteran’s benefits, educational tax credits, and “Made in America” incentives. As a result, the act has not been implemented coherently enough to make much of a difference for small businesses.

New entrepreneurs and start-up hopefuls do not need to wait for resolution in order to make a difference, though. The economy still needs jobs creation, and small businesses are still in the best place to provide those opportunities. In many cases, the down economy is an ideal climate for starting something new, as finance rates are at an all-time low and there is an increased market interest in supporting local shops and businesses.

Still, getting started too fast or without regard to some basic efficiency tips can be costly. Entrepreneurs do not usually need formal business training to succeed, though some degree of business savvy is usually helpful.

Taxation is one of the most common pitfalls. “If you don’t think about taxes until your company starts earning revenue, you’ve waited too long,” David Ehrenberg, CEO of Early Growth Financial Services, wrote in an article for Forbes. “While the IRS may not be especially interested in your company until you’ve been funded and have some capital, you need to think about taxes from the outset—to avoid tax trouble down the line, and to save money through deductions.”

Young companies are also best served by starting small, focusing on immediate goals, and being conservative with profits and expenditures. Grand visions of future expansion are to be encouraged—but acted upon only after significant thought and financial planning. Start-up businesses are likely going to be one of the saving graces for this country in the next decade. Getting the process right, both when it comes to federal incentives and independent business policies, is going to be increasingly important, for leaders and entrepreneurs alike.

DailyFoodtoEat is the official blog of FoodtoEat, a sustainable online food ordering and concierge catering service featuring your favorite restaurants, food trucks and caterers. Check out the deliciousness here:


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