Adjusting to a Hostile Business Environment | Ep 14

Speaker A

00:00:00.560 - 00:22:18.640

This is episode 14 and I dig into the government's complete disrespect of small businesses and how to work around it. This is the Bottleneck Breakthrough podcast.

I'm Josh Long, and this is all about helping you find and fix the biggest challenges in your business to unlock growth and profits that. Hey. Hey. Glad to have you here today. It's an interesting time. It's June 13, 2020.

As I record this, a lot of states are opening up, but there's a lot of craziness going on. We're just on the heels of the Black Lives Matter riots and protests.

And I've got an interesting perspective that has kind of solidified over the last two weeks. And it's one that some people might not agree with.

But since I deal with small business owners all day long and I'm committed to helping small business owners win, it just stands out as really obvious to me.

And that obvious position is that politicians and government policymakers and employees and those that are in charge of our country disrespect small business owners. They don't care about them. They, for the most part, view them way down the totem pole.

And that was proven not just by the coronavirus shutdown and the fact that big businesses were allowed to stay open like Walmart and Target and Home Depot and Lowe's and Costco, because those guys, it doesn't make any sense why those guys could stay open and others couldn't because small business owners can comply with social distancing and masks and wipe downs and all that stuff.

But then the Black Lives Matter protests and subsequent riots that were allowed to happen when just a week before, small business owners were being arrested for opening because the threat of spreading the coronavirus was too great.

And so the hypocrisy of politicians right now and the inconsistent behavior of politicians giving a free pass to protesters and rioters when they've been shutting down business owners for three months, just finalized, was the nail in the coffin for me that government employees and policymakers don't give a shit about small business owners. And here's some data, some really interesting data to tell you, to show you.

I know you listening to this, understand this, and I know I'm preaching to the choir. But having data and facts are way more important than feelings at this point in time.

And I think that having some of these facts in your back pocket and being armed with them to defend your position is really powerful.

So, first off, small businesses employ 48% of the working population in the U.S. they account for 45% of the gross dometic domestic product currently, which is down from 50% in 2000. So there's definitely a trend where small businesses are being squeezed and pressured over the last 20 years. And I think there's.

These are all hypotheses at this point, but I think government likes big businesses because they're easier to regulate and they comply with regulations. Also, those big businesses lobby a lot.

The gig economy in California had a ruling last year to go against the gig employment economy so that Uber and Lyft had to move their drivers to be employees and get minimum wage and benefits and all this crap.

Well, that had huge ramifications harming the flexible employment models that have been growing and that small businesses were utilizing to grow their businesses. So I think when we look at the trends of small business ownership, the trends of employment, the trends of production, there's definitely.

I don't think there's a overt conspiracy against them.

I just think they fall down the totem pole and are being completely disrespected and that there's no reason to have to play nice or bow to the authorities or bow to those policymakers that don't have a clue what it takes to drive an economy or be in business or to innovate.

The interesting thing that I keep coming back to when I in all of my conversations is it's like these government lifetime bureaucrats have never realized that everything we live with and have was innovated and created by an entrepreneur that most likely started as a small business.

I can only think of one modern technology that didn't come out of small business, and that's gps, which was created by the US Military and has been spread around and shared so that all sorts of companies can piggyback on that back of that technology.

But outside of gps, there's not a whole lot of modern amenities that we have that weren't created by a small business owner, innovator or entrepreneur.

I mean, looking at my workspace, the desk lamp I've got created by an entrepreneur, the manufacturing facility, all the manufacturing equipment, the ships that were that ship it over, the trucks that drive it, the tires that the trucks drive on, the lug nuts, the clothes I'm wearing that the cotton farmers and the gins and the manufacturers and the dye makers and all of it, every last step in that supply chain. Those supply chains I just referenced are run by entrepreneurs, everyone. They're run by small business owners.

Some of them are big business owners, some of them are publicly traded companies. But those are the vast minutes minority. 18,000 companies supposedly that employ more than, I think it was 500 people.

Not very many of them compared to the 29 million small businesses out there in the U.S. so all innovation comes out of small businesses. But yet these policymakers and bureaucrats act as though it just comes out of thin air, as though some.

I'm not going to get political, but it's almost like Obama's statement that you didn't create this is believed somehow that we need some kind of government infrastructure to be able to make this stuff happen. It's the exact opposite.

The government infrastructure exists because we've created this and we've created prosperity and economic models work and create abundance for everybody out of thin air. None of it is a zero sum. We're not hunting buffalo in the wild trying to feed our families. We're manufacturing all of this out of thin air.

Now, granted, we have resources that most of the earth has to be mined for.

Some of this stuff, like the metal in the lamp that I'm looking at or the MIC stand that I'm speaking into right now, but those aren't finite resources that are in an amount that are going to run out anytime soon. So there's everything we have is created out of thin air, manufactured by an entrepreneur, and we're disrespected. So some more stats. Unemployment.

Get this. In February of 2020, 19 of our 50 states had the lowest unemployment rate in their history in February.

You go back a couple years, 28 have had their lowest unemployment in their history since 2017 during Trump's presidency.

Now, I didn't vote for Trump, I voted for Gary Johnson because my vote in California didn't matter and I wanted to vote for somebody that I. Johnson was a knucklehead, but he represented Ron Paul, in my opinion. And I think Ron Paul was a great opportunity for America to get some sound leadership.

So I didn't vote for Trump, but man, am I becoming an apologist for him. He's rough, he's gruff, he says a lot of stupid stuff, but man, does he have small businesses at heart.

And he's created or built the momentum or created the greatest economy in American history from the likes of it. And it came to a screeching halt in March. Get this.

So from February, 19 states having the lowest unemployment in their history to April, 43 of the 50 states had their highest unemployment in their history in April.

Now, looking at the historical highs, other years that jump out in those historical highs, West Virginia, February 1983, Connecticut, March 1976, Wyoming December 1986. So these are tied to bubbles that burst. Washington, D.C. september 1983.

Other than that, all the highest unemployment in the history of the, of the nation is in April of this year.

Now, not to get into whether coronavirus is a scam or not, or whether there's some political maneuvering going on to try to kill this economy and get Trump out of office in November, regardless of that, the policy that these bureaucrats have gone through killed the best, strongest economy we've ever had, killed jobs for everybody, and revealed their hand that they disrespect small business owners, don't care about us at all, and somehow think that the economic engine is just going to keep going while they print money. Doesn't make any sense.

But what matters is what do you do as a small business owner with this realization that you've got the most regulation, you've got the most taxes, you've got every angle coming at you, from the EDD to the Franchise Tax Board to the license organizations, regulators that you are fighting off a battle that so few people understand. And I think there's some really clear things you can do to reposition yourself to be as strong as possible.

And I think that's, that's the lesson out of this is how do we navigate dealing with hostile political opposers, I guess, or hostile regulators. So a couple interesting little tidbits.

Not only is the unemployment highest in history for 43 of our 50 states, but there are companies, I'm here on the big island of Hawaii. There are companies that have survived 9, 11 and the recession, but they can't survive this pandemic.

The Kona Candy Company just announced today that they're closing after 43 years in business. I mean, they made it through the savings and loan Crisis in the 80s, they made it through the Carter administration financial headaches.

They started during that and they are now having to shut down because they can't afford their rent and utilities because our governor is keeping our state on lockdown and tourists can't come. So there's a 33 year tourist, 33 year old tourist company based in downtown Kona. They're closing as well.

And so it'll be interesting to see what the backside of this looks like and how much PTSD there is or won't be in the small business world because now that the government's been able to completely lock down the country, that tool and technique is now available to do whenever they find find it suitable for their needs. So what do you do going forward?

Well, here's A bullet point list of things that I'm doing that I'm recommending all of my clients do and I recommend you do. So the first is be more aggressive with your hiring and firing. Now, I know most of us are very loyal. There's people that have worked with us forever.

We care about their families, we care about their provision, we care about helping them get ahead, we care about rewarding them for helping us get ahead. That's fantastic. We're all, every, every client I've ever worked with is wired that way.

But you can't feel bad for becoming more aggressive with your hiring and firing because the government created this situation of instability.

I said in the last episode that it feels like living in a third world country right now because there's so much instability, there's so much uncertainty going on day to day and the policies are changing, the rules are changing, the goalposts are being moved. And so the government's created this instability.

And so you have to protect yourself first, you have to protect your business first and yourself first. And it sounds like a cold hearted, extreme libertarian perspective that the corporation is highest and most valuable, but it's so true.

And if you need to reframe it to look at it as the provision for your family and then the families of the other employees that you will keep, that's why I think being more aggressive with hiring firing is totally moral and totally fine.

But like I said, most of us are very caring in being able to change that perspective so that we can be more nimble and be more responsive to the marketplace and not carry dead weight. And again, that makes may sound like, oh, but they're a person, they're not deadweight.

Well, the reality is if they're not adding value, they're a dead weight. And it doesn't mean that they're a bad person, it just doesn't. It means that they're not meeting an economic outcome.

And so that's the next point is focus more on trackable ROI for every expense. So there's in 2000, after 2008, there was a lot of fat cut out of organizations. And after the recession, a lot of jobs weren't rehired.

Companies figured out how to make do. They got more productivity out of less employees.

They found other technologies, they found other systems, they reduced their scope of what they offered, all sorts of things to improve efficiency. And I think we're going to experience that in a more extreme case here again.

And so focusing more on trackable ROI for each expense again says, how do we make this business as sustainable and profitable as possible. Because if it's not sustainable, it doesn't matter how many people we want to hire, we can't hire. Keep any of them because we're going to go under.

So make everything as trackable as possible that you spend. Which leads next into negotiate harder. I think everyone needs you more than you need them at this point.

The banker, the landlord, insurance company, your vendors, even some of your clients, they all need you because you're essential. Without you as the business delivering the goods and services, the economic flywheel around you doesn't exist. So negotiate harder. I'm bad at this.

I come from an abundant mindset that there's enough for everybody and there's enough to go around and we'll just make up for it and profit and whatever. But I think now again, the government's created this environment where you now have an excuse to say, no, I can't do that term of that lease.

No, I'm not signing a five year lease. No, I'm only signing a one year lease and a renewal every year thereafter.

And we'll renegotiate the fee at that point too, because this economy may not sustain staying in this office for more than a year and your building may not be ideal for us in a year.

So it's being more and more flexible and demanding that that flexibility be extended from all places, all partners, all vendors, all constituents that you deal with.

And then finally, I think I mentioned it earlier, but being nimble and flexible, it means following, paying attention to the cash flow, paying attention to your key performance indicators. This is what actual big businesses do.

And a friend of mine, his company got acquired by a private equity firm and they were doing a big initiative right before Coronavirus, and they've still grown through Coronavirus, but their software company, but this initiative still wasn't hitting their goals and they were like 15% off of their growth rate towards this one goal. And he's like, yeah, that's totally normal, reasonable. Well, that private equity firm said, no, it's not. We think it can be achieved.

Fire the three people that have been running it and replace them. That's super cutthroat. Now, I don't necessarily agree with that approach, but that's how big business runs.

They focus on the numbers, they focus on traction, they focus on how are they achieving it, what do they need to adjust. And they make quick decisions when they're focused on an outcome. So be nimble and flexible.

One rule of thumb, do not come out of pocket for three months in a row to keep things afloat.

There's nothing worse than watching somebody build a business then go bankrupt trying to keep that business afloat and lose all of their net worth in the process. The whole goal of a business for business ownership is to give you the lifestyle you want.

So that lifestyle, a big piece of it, is financial security or financial stability. And if you've built up financial reserves, do not go pouring those financial reserves back into the business to keep it afloat. Cut.

And I know there's some businesses where you have huge deep experience in your staff and losing them would make it really, really hard. But the reality is it's not your job to keep them employed.

And if you keep them employed while there's no revenue and you go under and you just shorten your Runway by keeping them on board because, oh, it's hard to replace them, then everybody's out of a job a lot sooner.

So I think a good rule of thumb is don't come out of pocket once you're that second month that you're coming out of pocket to keep things afloat is a big, big red flag. I just always live by the rule. He who has the cash is in control.

So by getting behind on payments or letting people go or renegotiating things and holding onto your cash gives you more control. So that's just my quick and dirty on dealing with a hostile business environment from the US Government and how they view small business owners.

Now, I know there's some municipalities and some states that are very pro business and have done their best to help small business owners.

But by and large, as a whole, from the top down, government bureaucrats and policymakers have shown their cards that they disrespect small business owners. There's no logic or rhyme or reason in any of their policies or behaviors around preventing the coronavirus.

And the fact that they've allowed the rioters to loot and destroy businesses with little to no recourse is just the straw for me. Just, just broke my back.

And so I'm fully committed to doing everything I can to reduce the amount of taxes legally that I pay, that my clients pay, reduce the amount of regulation that they fall under, reduce the amount of government control or oversight that they may have, and do everything I can. Because it's all made up. It's all make believe anyway. It's all bureaucrats making things up as they go.

And I think they've proven that if we give them all this control, all they do is make bad decisions after bad decisions. Because they don't know what's best.

And central planning at its worst is being proven right now with the crazed unemployment, crazy market and insanity that is going on in the streets. Just like up in Seattle with the protesters there that so many people claim aren't antifa. I don't really give a shit what you call them.

They're the lost boys, behaving badly, holding people hostage or holding the city hostage. And it doesn't make any sense why that's allowed. But a hairstylist in Dallas can't open her salon makes no sense. So I hope this is useful.

Feel free to message me podcastottleneckbreakthrough.com if you want other topics talked about, shoot me a message. Join the Facebook group Bottleneck Breakthrough Method. We're having lots of conversations there and I hope this is helpful for you.

I really want you to win. I want you to be stronger. I want you to get ahead.

I want you to not be jerked around by the government and and taking the short end of the stick when you're the one that creates the economy. Without you, none of this exists. I don't care what any politician says. Nothing exists without small business owners. So best of luck to you.

Have a great day. This podcast theme music is an excerpt from triptych of snippets by Septah Helix. It's used under Creative Commons.