Why are American businesses failing?

[MikeBjerum]

There are literally a thousand issues a day that business and its owner face and must deal with.  And living in a mostly blue state we are not exempt.  Minnesota is a diverse a state as you will find with the seven county metro area that holds far too much control, Rochester and its medical base, the band of agriculture that covers a large portion of the south and west central, the lakes or recreation areas, and the Iron Range in the northeast.

For as blue as the Iron Range, Metro area and Rochester are we do have moments of sanity.  However, those moments are always under the control of liberals that can make their lives miserable.

All of that said, for the last year and a half I have worked for a 71 year old Minnesota firm that was started as a second business by a successful business man, went through some years of multi-national ownership, was sold to its long time controller, and is now owned by the daughter of the former owner.  A public project (parking lot for a city convention center) forced the company to move from its long time location.  They chose to lease until they knew exactly what to build since the economy was such there was nothing suitable available.  About five years ago they purchased/built a new facility that matched square footage to current needs, but the building had vertical space to allow for racking that could double capacity as the company continued to grow.

Today the building is for sale.  The stock was originally cut back, and drop ship was utilized to fund the building purchase in the short term.  This has worked well, but customer service is a struggle without stock on hand.  After five years sales are holding strong - maintaining rather than growing, but that is due to limited stock for immediate shipment.  What is holding us back and forcing the change? TAXATION!!!

I saw the numbers on Tuesday.  Our property tax bill for a building that is correctly sized for the operation and with margins and pre-tax margins on par with similar businesses, is equal to 35 days of gross margin (gross sales minus cost of goods).  Seven weeks, provided we don't have a holiday, of devoting everything to property taxes!  No payroll, no insurance, no utilities, no mortgage, no maintenance - nothing but property tax!

Hopes are to move a short distance into a county with better tax rates.  However, moving is expensive, multi-million dollar buildings are empty all over the metro area, and the in-house staff with decades of service (nearly half with over 20 years, and the main shipping guy who is 64 (no plans to retire) went to Vietnam, and came here right after his discharge for a temporary job - he never left) all live closer to the original location with each move giving them a longer commute.

What can we do to convince the liberal tax hike crowd that we can not afford their tax plans? If we close down, the other major suppliers (there are five others in our field) will pick up our slack.  However, they will do it with no noticeable increase in wages, no extra hiring, and no facility expansion or addition.  We are the only one of these suppliers located in our state and region, so these are all revenues that will be lost completely here, and the 800 lb gorilla of the industry is multi-national, so when they pick up the bulk of the business the feds will lose revenue as well.

I will also guarantee that the local charities, except the churches, will not suffer.  Our owner, management and staff are very generous, and they give to excess to social needs.  When these pet social groups lose out on donations our liberal reps up here will send more of our tax dollars to select groups.

I'm ranting, I know, I don't care, I'm pissed ...

 

 

[tombogan03884]

It's really pretty simple.
Excessive regulation.
Excessive taxation on those who would otherwise provide new jobs.
The threat of having your secured investment seized by the Govt and redistributed to Union cronies as happened with GM and Chrysler.
Free trade agreements that allow foreign imports to under cut US product prices.

In other words, The Democrats.

[r_w]

It's really pretty simple.
Excessive regulation.
Excessive taxation on those who would otherwise provide new jobs.
The threat of having your secured investment seized by the Govt and redistributed to Union cronies as happened with GM and Chrysler.
Free trade agreements that allow foreign imports to under cut US product prices.

In other words, The Democrats.

You forgot the uncertainty--all of the above keep changing randomly so a business can't plan on how to deal with it. 

[tombogan03884]

My thinking was that those things create the uncertainty.
Or more precisely the certainty that this is a good time to be sitting on your cash, like Apple and their $73 Billion.

[TAB]

Its not just taxation. 

Even if you cut out all of the taxs, you still can't be competative with some one that pays people  a day what you pay your workers a hour.

[Sponsor]

[JdePietro]

You think thats bad? Try working in industry. Taxes are not even a noticable problem anymore. The Municipality has refused to allow my place of employment to expand, they out right refuse to let us buy property around out current location. Refused to issue permits to build in the limited room we have left. This is all on account of air quality issues that don't exist but may if we expand. To top it all off the new DEP regs require exhaust technology that doesn't even exist yet, to be put in place by 2018.

I want to take this moment just to say you cannot get any cleaner than what we are. We do not buy a single polution credit, and all of our exhaust is bag house and scrubber filtered to the point steam is all that we put out.
 

If this country is making anything by 2020 I will stand in total amazement.

[tombogan03884]

Its not just taxation. 

Even if you cut out all of the taxs, you still can't be competative with some one that pays people  a day what you pay your workers a hour.

You can if you replace payroll taxes with tariffs and import duties.
That is where the free trade BS screws us.

[Ichiban]

Free Trade is supposed to increase the standard of living for our trading partners.  All it really does is reduce ours.  And theirs still sucks.

[MikeBjerum]

Its not just taxation. 

Even if you cut out all of the taxs, you still can't be competative with some one that pays people  a day what you pay your workers a hour.

That is true.  However, are their workers legal?  If so, you need to decide how you can better market yourself and show the value of your services.  If not, you need to be reporting the issues to the authorities.

We have people in the industry I serve that all complain about competitors that are using unlicensed workers to do licensed work, because they can pay them 1/3 to 1/2.  The local inspectors know this is going on, but they can't do anything without the reports.  However, nobody will actually give the details so they can bust the criminals.

When I was on the front lines of our industry I was one of the highest charging firms.  However, our clients knew what they wanted, they knew I would provide it plus more, and as they paid the high bill, even complaining, they would recommend us to everyone they met.

For us, we would love to use more business.  We would love to be able to expand the stock.  We would love to not only fill the floor space as was intended, and build the racks to the ceiling.  However, you can not support that level of taxation and survive, much less expand.  2.5% of our gross sales is going direct to property tax, and at this time 40% of that merchandise never touches the property - it is drop shipped from a manufacturer or other vendor direct to the customer.  Keep in mind this is only property tax, does not include any other assessments, local, state or federal taxation, and the 2.5% is bases on gross sales (if our sales increase the numbers will look better, but if sales drop that number gets even scarier!).