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Steve Lunetta: A bailout for small businesses

Posted: February 9, 2009 12:23 a.m.
Updated: February 9, 2009 4:55 a.m.
When the federal government hands out billions of dollars to large corporations that have severely mismanaged their businesses, one begins to question the process by which these bailouts are administered.

Who decides which business gets a bailout? You? Me? Nope. Its the senators and congressmen who passed the bailout legislation in the first place that decide which business live or die. Sort of like Caesar in the Coliseum declaring, "he pleases me, he shall live."

But what of smaller businesses that need a helping hand?

A friend of mine, Mike Anderson, owns Play It Again Sports - a local establishment that sells new and used sports and fitness equipment. Mike recently sent a letter to Congressman Buck McKeon, Senator Dianne Feinstein, and Senator Barbara Boxer asking for a portion of the bailout money.

Mike starts his letter by explaining what his business does and the intention of his letter. He then writes: "unlike the companies that have received bailout money, I have always operated my company ethically and responsibly."

Interesting point. Guys who lie, cheat, and steal in the mortgage business, give themselves massive bonuses, order luxury aircraft, and take cool corporate junkets get huge sums of public assistance.

What about giving a piece to a businessman who is moral and honest?

He goes on: "When sales began faltering, I looked to cut expenses. I had to layoff two employees and cut the hours of the remaining two. I now work seven days a week, most weeks, and do not take a wage, salary, dividend, or bonus." Now there are two people out of work and on the street. Also, his remaining staff is struggling to make ends meet. On top of that, Mike must work insane hours to keep the doors open and survive the current crisis.

All the people at Play It Again Sports have been hurt in some manner or other.

"I negotiated a $1,200 per month decrease from my landlord, but still owe $9,800 each and every month."

Mike showed business savvy and acumen by working to lower his cost structure through negotiation. Maybe the State could take a hint from Mike's example? If Sacramento had gone back to the teacher and prison guard's unions and renegotiated their insane compensation and retirement packages, the State may have averted the current budget disaster.

In fact, I'd like to see Mike go help The Governator with the budget crisis.

"Despite my cost-cutting measures, my business still lost $45,000 last year." Forty-five grand is lunch money for a GM or Wall Street executive. Its a mere pittance. That is 0.000005 percent of the current $900 billion bailout plan. It wouldn't even be missed!

Mike goes on to explain how he would spend the money: "I will use this money to buy advertisements in our local publications, such as The Signal and The Magazine of Santa Clarita. I will use it to hire one or two additional employees so that I can be freed up to go out and promote my business."

Mike did more in two sentences than the executives of the largest auto companies did in their repeated trips to Congress. He laid out a simple plan that would reduce unemployment, increase prosperity to local businesses, and make a small dent in the looming Recession. Not to mention helping our beloved Mighty Signal.

He makes one final point by declaring: "All these things will inject money into our local economy, both now and in the future (when my sales rebound), in the form of payroll tax revenue, sales tax revenue, and advertising revenue." Is anyone in Sacramento listening? Mike has hit the nail directly on the head - prosperous commerce benefits state government through increased tax revenues! When California business is healthy (and spending is under control), there are no budget problems.

Aren't small businesses the backbone of our economy? The concept is simple. Instead of giving a billion dollars to one business, why not give $100,000 to 10,000 small businesses? Think of the massive benefit that this infusion of capital would do to our economy. In Mike's case, this would represent about 2 years of continued operation. For 10,000 businesses, this could be just what they need to turn the corner.

So, what do you say Buck, Dianne, and Babs? Don't you think a good and honest small businessman like Mike deserves a chunk of the bailout? I do. It just makes good business sense.

Steve Lunetta is a Santa Clarita resident. His column reflects his own views and not necessarily those of The Signal. "Right About Now" runs Mondays in The Signal.


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