One local man, Israel Smith, has a job that he likes with Acme Machine Shop, making $50,000 each year. Israel watches how his boss manages the business and thinks of strategies that would help his boss make more money and may get Israel a raise. When he suggests some changes, though, Israel gets rebuffed by his boss. Over time, Israel is able to save some money and he eventually has $25,000 in the bank.
After researching the costs of running a small machine shop, Israel thinks that he may make $75,000 per year with his own company. After paying expenses, advertising, etc., he estimates that he will have $45,000 income. So, Israel decides to take a huge risk and his family promises to support him as he tries to make it work. If the business fails, they will lose their home and the family may be forced to make more sacrifices for a long time. Mariah, Israel’s wife agrees to help reduce expenses by doing the office paperwork and cleaning up the shop weekly. Israel quits his job at Acme to go into business for himself, putting his family’s financial security at risk. They are hopeful and supportive of Israel’s dream.
Risk Versus Reward
After 3 years, Israel’s business is finally growing. His customer base grows because of a reputation for quality and timeliness. Again, Israel does some research and determines that he can hire one more person. With an apprentice, Israel can make a little more money. He thinks he can support an apprentice at $30,000 per year, and will make a little more income himself. That year, he personally makes $55,000.
After 10 years, Israel’s business continues to grow, although there have been years of struggle. Many, many nights, Israel laid awake making plans and worrying about the family’s financials. He created jobs for 7 people, in addition to himself. And, his personal income is now $100,000. Eventually, Israel employs 20 people and his personal income grows to $250,000.
The United States is going through a difficult period with 2 wars, as well as a transition of labor requiring more technology and less industrial labor. International competition is increasing, but small businesses continue to be the #1 force in the economy. Most Americans work for companies with less than 500 employees. Ironically, the federal and state governments grow rapidly, funded by taxes upon taxes on business and individuals. In a struggle to find the ultimate solution to economic challenges, and someone to blame for growing unemployment, the President decides to blame small business owners and raise their taxes. Anyone who earns $200,000 is considered wealthy and their income tax rate goes way up.
The demographics of the United States and every other first world country is transitioning to a large older population. Many governments, with decades old entitlement programs and social security programs, have populations where 2 workers will soon be supporting each retiree’s benefits. In this untenable position, America faces devastating financial challenges while also spending billions of dollars to protect the world from fanatical tribes that use terrorism to devastate entire communities, women and children included. Where will the money come from? How can we grow the economy to make it strong enough to survive coming challenges? Every modern country watches the United States, the UK, Germany, and other world leaders to find glimmers of hope that there is a solution.
The looming threats of growing federal control over businesses and a demand that the unemployed be financially supported at the same level as the employed, present a shaky future and quickly rising taxes, threatening the Smith family’s security. Should they wait, and keep operating the business until they know what will happen?
What solution does Israel have to stave off financial ruin? As his employees leave the company for whatever reason, he does not replace them with new people. As federal healthcare laws are enacted, he stops offering the broad spectrum of benefits that has helped him attract highly qualified people. The quality of Israel’s products decline and he loses customers. As the threats grow, Israel decides to sell his building and lease it back. This will allow him to close the business, when necessary, with a higher likelihood for a positive financial outcome for his family. Unfortunately, he is forced to sell his $500,000 building for $150,000.
More and more businesses in the United States have reduced, and some have stopped, their employee benefit offerings. More businesses reduce their workforce either through attrition or by permanent lay-offs. The federal government continues to try to take control of the economy through increases in taxes, restrictions on businesses, and strategies that encourage imports.
What do we do now?