I closed my picture framing business at the end of June, after a five-year run. It wasn’t a sudden thing, so I had plenty of time to prepare. Three years into the worst economy of my lifetime, it was just impossible to get a solid footing. This was especially the case for a business like custom picture framing. To begin with, it’s a luxury business. People don’t really need it; they are perfectly happy to sit in a home with blank walls, or to tack their art to the wall like they are still back in their college dorm, even though they now have kids and a home and are pulling down a 6-figure salary. It’s also something that only a small percentage of the population -- maybe 6% -- has purchased.
It didn’t help that the government has no understanding of how small businesses operate, or what their needs are. As the economy melted down, the government gave most its attention and aid to Big Business. These were the big donors to politicians in both parties, and they had instant access to the highest echelons of government. I actually tested this during the first round of government bailouts. I placed a series of four calls to the Treasury Department, each time asking for the Secretary of the Treasury, Henry Paulsen, and each time identifying myself as the owner of a small business. Each time, the receptionist immediately put me through to a general voicemail box set aside for cranks, hoi polloi, and people who simply weren’t important. Then I called back a fifth time, and when the receptionist asked who I was, I told her I was the owner of a $5 billion multi-national, and wanted to speak with the Secretary about government assistance. She immediately put me through to a person, a guy with a name, and I left a message with him. He even called back within about 3 hours, and we had a nice but fruitless chat.
The government’s sole remedy for the plight of small business has been to increase the availability of credit. But I already had a loan I was struggling to pay, and I didn’t need or want another loan. The government seemed to be under the impression that small businesses pay our rent, suppliers, and employees with loans. That’s a shell game, however. If I owe my landlord and suppliers $50,000, and I borrow $50,000 from the bank to pay them, I still owe $50,000. I just owe it to the bank now. With the vig. What the government didn’t understand, what they still don’t understand, is that we don’t pay our bills with loans, we pay our bills with money that our customers pay to us. And if customers aren’t coming in the door and buying what we are selling, we can’t pay our bills. Borrowing $50,000 from the bank won’t help, because without customers, I can’t pay back the bank either.
In all the rush to make sure banks were happy and that greentech research got whatever resources it needed, the government lost sight of the fact that consumer spending is what drives our economy. When consumers disappear, economic vitality isn’t far behind. I must admit, I made fun of President Bush’s $300 stimulus checks, but in retrospect it wasn’t such a bad idea. Put money in consumers’ pockets, and they will spend it on things. It just wasn’t enough, but at least it was on the right track. If customers don’t have money, they won’t spend it and small businesses are going to feel the pain first. If more of the stimulus money had been put directly into customers’ pockets, maybe I’d still have my business.
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