No Jive Diatribe-Small Business Survival Index
'Golden State' or 'Bad Lands'?
The Washington D.C. based Small Business and Entrepreneurship Council
released their annual 'Small Business Survival Index'. The Index ranks
states according to its public policy climates for and about small business
and entrepreneurship.
South Dakota was ranked number one followed by such other major economic
'power houses' like Wyoming, Mississippi and Alabama. California was ranked
49th. The Index examines 31 major government imposed or governmental related
costs that affect small business. The 31 factors make up the rankings that identify
the short comings of doing and growing a small business.
According to the Index, entrepreneurs in California face the highest personal
income and capital gains tax rates, high corporate tax and the imposition of both
individual and corporate alternative minimum tax rates, an added S-Corp tax, a
large number of health care mandates, high electricity and worker's compensation
costs and the highest gas tax in the nation along with a poor ranking on highway
cost effectiveness, a poor ranking on eminent domain legislation and very poor
ranking on government spending.
The question must be asked, do low taxes and limited regulations make for a
better climate for small business?
The Index does not rank the states based upon other factors such as access
to capital, access to a pool of educated and skilled workers, maturity of existing
business infrastructure or average growth of small business by state.
Many of the factors associated with the Index such as estate taxes have little
if no impact on small business owners because they only affect wealthy taxpayers
and most small business owners according to the US Census make an average
of $77,000 a year.
The validation of the Index and its ranking of California however illustrate the
realities of doing business in California. Certainly it requires fortitude and
perseverance to do business in the 'Golden State' beyond those carrying out
commerce in other states. And the costs of doing business in California are
well documented, but it is too bad that this organization did not make a
comparison on the returns for small business.
For example, the American Business Journal in its annual ranking of "Hottest
Markets for Small Business' identified a variety of California cities; Oxnard/Thousand
Oaks ranked 9th, San Diego ranked 12th, Sacramento 23rd and Los Angeles 25th.
No mention of cities in South
Dakota or Wyoming
In addition, San Francisco-Oakland has one of the top ten highest ratios of
small business per 100,000 population residents in the nation and highest in the
state at 2809. Riverside and San Bernardino has one of the top ten highest
percentage of business growth in the nation and state at 19.4 percent. Again,
no mention of cities from South Dakota or Wyoming.
Also California has the highest percentage of Asian-Pacific, Black and Hispanic
owned small business in the nation. And from a marketplace perspective, California
adds a population the size of South Dakota every two years. Need more customers-
looks like California is the answer.
No where in any growth oriented business rankings is South Dakota mentioned.
It is found in reports such as this one and the Milken Study on the least taxed
states. South Dakota, smaller population, fewer customers, lower aggregate
growth and less return. Retorically, do you want to be in the world's eighth
largest economy and one that offers more business growth opportunity
or one that is in search of a small business climate let alone located in an
area called the 'Bad Lands'?
Tim Johnson
www.CaliforniaBusinessMinute.com
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