Comment: It's not a matter of dumbing it down

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It's not a matter of dumbing it down

It's more a matter of a shift in thinking to open your eyes.

There are two ways to start a small business but people today only see one. That one is to go get a loan, go into debt of some kind and allow that debt to control prices and wages forever. If that upset you, you're already starting to see the answer.

The other way is to rally real people behind helping a business get going. I don't care if that's by 10,000 people donating $10 each or if they each purchase a blade of grass (self picked) for $1 each. They can do any combination of crowdfunding or just have a good old fashion barn raising. The point is that by cutting the beginning debt of the company, many community benefits become automatically available.

With little or no debt, a startup business has less people wielding power over it. Traditionally, this has resulted in the investor placing 4-6 of his people on the company's board of directors. Then they mandate that the business comply with their HR, PR, sales, OSHA, ISO9000, accounting, stock, retirement, insurance and other 'guidelines'. In practice, this takes a typical $200k startup cost up to $3M. It's no wonder they feel they have to go public and cash out of self ownership every time.

With less overhead and less debt, now the fun stuff can happen. The owner can avoid most marketing and sales costs by shifting even half that budget to wages. Couple that with a good speech and some profit sharing and he's got a stronger word-of-mouth market than he could have bought. ...and the employees wages went up.

With higher paid workers and lots less overhead, they can now offer many creative job swapping programs. This keeps people happy because swapping shifts or taking your turn at in-house daycare or cooking becomes a near zero cost benefit. Even distributor and customer direct pickup can be better coordinated to eliminate most shipping costs. Productivity soars.

For the community, the product price can be reduced even while maintaining these higher wages. To illustrate this, consider that a typical business has 11% manufacturing costs which actually covers all materials (6%) and labor. Give 10% to the owner and you're left with 79% to split between higher wages and lower prices.

And lastly, don't forget that of that 79% that was spent, likely more than 50% went to Wall St., got stripped down to minimum and then out to 'regular investors'. Without this money leaving the community and without this cost being forced to grow each year (earnings return), the company can stay in business, paying both owner and employees the highest wages and not rely on growing their sales into the global market. That's a lot more money left in the community than if half of it left.

By the way, this is why the corner dive restaurant has remained in business for 60 years but the new one across the street can't survive more than 5.