By Jim Hall
I am responding to Mr. Denman”s letter of May 12. His comments on opening a new business and whether “(a) multi-level fee base for county permits” would level the playing field for the small business entrepreneur against the company owned chain or franchised businesses would be fair or not. I would like to add to my first thoughts on the issue. They were published on Jan. 28.
I am a retired certified business broker and draw from my experience as such with this reality in starting a new business. First, some simple truths as ground work. Having a great idea for a new business, being an intelligent, hard worker, drawing up a business plan, or having years of experience in the field you want to run a business in, gets you zero chance of opening a business. Go to any lender with the above and he will listen to you politely, accept your business plan and when you leave, file it in the round filing cabinet on the floor of his office. The one and only thing he will respond too is how you plan on financing your dream, meaning, family or friends loaning you the money, cash in the bank, or enough collateral assets to cover a loan from the lender. This said, a person who purchases a franchise does so with a substantial amount of capital, a half million and up for the most successful ones. A corporately owned franchise unit has the funds or gains funds from investors. The larger franchise owners are more like investors, who hire staff to be trained to run these businesses.
So, to say the playing field is level, is not at all accurate. Those souls who, without a great deal of personal funds or assets, but with skills, talents, elbow grease and desire, working within their means, by using used equipment, their own labor, friends and family help, can bring a dream to reality, when start-up costs are lessened as much as possible. The permit costs are high and over-the-top regulations jack the start-up costs to a far greater level then necessary. This keeps many new small businesses from every getting off the ground. In the past, most small businesses grew and, with their profits, would expand and upgrade equipment, etc. Now, a new business is regulated at its start to open at a level that only well-financed franchises can afford. So, is this a level playing field ? I think not.
To compare a mom and pop business with a franchise business is like comparing apples to oranges.
Lastly, food businesses are historically the highest percentage of new small businesses opened each year. They offer the greatest degree of diversity, through cultural and regional fare, that allow many different ones to survive in the same area, offering jobs and economic wealth to the smallest of communities. Local governments and agencies would do well to extend any and all help to all the true small business entrepreneurs who live in their communities.
Jim Hall
Clearlake Oaks
