How Large Corporations Hurt Small Business

Large corporations employ millions in the US, with their assets and earnings representing a large portion of the nation’s economy. Some say that it has lead to American prosperity; however, if you look around in a room full of your peers, you may find it hard to find someone that it has led to theirs.

Cash Flow

Big business takes money out of circulation and is inefficient at distributing wealth throughout the economy. You can see this through centralized pay roll in large, multi-state corporations with employee tax withholdings, paid quarterly to the IRS, topping out at 39.6 percent in 2013. That’s not including the Medicare and Social Security withholdings, in addition to state income tax withholding where applicable.

Then there are waves of monetary resources funneled into the stock market each pay period; artificially induced by pre-tax incentives through 401k, pension plans and such. These “investments” come directly out of millions of Americans paychecks before they are deposited into their bank accounts.

All this equals cash flow in the large corporation’s coffers. The government doesn’t care, as they get a nice monthly and bi-weekly kick of payment for tax. Small business never sees any of this cash flow.

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Jobs

It seems like politics are abuzz with talk of “Jobs”. “We have to create more jobs, it will save us all” is how we could all agree to summarize what we’ve heard. Why are we always talking about job creation and growth rates?

It is simply nothing more than the sources we hear about jobs from  and their interests in creating jobs in which lies the reason for all the noise. Large corporations, the government, and the media they sponsor get their power (cash flow) and profits from employing people.  Employing people for the lowest price and pushing liabilities away from revenue equals high profits.

Regulation of employment and general citizens is the government’s job, and oh do they do it well. The Affordable Care Act taking affect now forces every citizen to get insurance or pay fines. In essence, it is a fee for life. This money is mandated to go into the insurance companies (large corporations and banks) ledger each month first, without providing any service; without providing money to local healthcare providers.  Sure, the local sales agent gets a rip, but even they too are more frequently becoming corporate employees.

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Centralization of Capital

Of all the horrors mentioned prior pale in comparison to that of centralized capital. When large corporations and governments are allowed to operate, they tend to act in their own best interests. Nothing is more convenient to a large organization then to consolidate and centralize it’s capital.

These days, it seems like every good startup or small company is being bought out. A few months ago, my business insurance went from an independent agent to Liberty Mutual. Last week, my friend’s startup that he has been building for years just got acquired by LinkedIn. Whatever happened to Blockbuster Video, or Twinkies damn it?

Gone, that’s what happened to those brands. All the small businesses across America, now nice little pieces of IP and patents scooped up like an amoeba of capital. No more diversity, sacrificed for only one thing - growth. Unfortunately, we live on a finite planet and I don’t think there are enough tickets to the moon, and unless you buy “Piece of Ship”, you can’t ride with me.

Large corporations are inefficient at delivering resources to far flung bits of corporate empire. When too large, they will not perform, and as all extremities removed from nutrients do, they too will dissolve. This is what gives me the strength to keep working on my businesses.  I see the holes and inefficiencies, and just like the Eskimos, have carved out a niche for my small business.

I can help you do the same for your business, or help you start your first one. America was founded by entrepreneurs. It is why we have enjoyed so much success in the past. Why are we straying from that?

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