Small Business Struggles Leave Many Without Work

7 years 5 months 2 weeks ago Thursday, December 02 2010 Dec 2, 2010 Thursday, December 02, 2010 7:57:51 AM CST December 02, 2010 in News
COLUMBIA - Jeremy Elson's former accounting teacher warned him that starting his own business would be the hardest thing he'd ever do. She was right.

Elson, the co-owner of The Defining Print, a downtown Columbia printing shop, started his business a month ago in what many economists consider the worst economy since the Great Depression. Two years after politicians won over voters by promising jobs, 80,000 more Missourians are looking for work and answers.

Missouri's unemployment rate has stalled as construction projects end, small businesses lack the confidence to ask for loans, and banks have been unwilling to lend. Elson didn't take a loan, instead pooling money with his partner and getting help from his partner's family. But the first month has still been tough.

"Everything that can go wrong will go wrong," he said. When you think you've gone over it enough, go over it again."

Elson said it's been a struggle to make money, but many small businesses don't even make it that far. Entrepreneurs are putting off starting a business or expanding operations because they're too afraid of going into debt, said Bob Hull, a small business specialist with Commerce Bank.

"They're just not to the point where they want to maybe take on a lot of debt to expand their business when they're not quite sure what's going to happen down the road," Hull said. "There's uncertainty on the part of small businesses and uncertainty on the part of banks -- it's just a reluctance to jump in with both feet."

Successful businesses have good histories and are in places where an outside investment could be just the thing they need to grow, Hull said. Kansas City, Mo.-based Commerce doesn't do much lending to start-up entrepreneurs, he said.

The lack of confidence is part of the reason 277,000 Missourians are looking for work. Small businesses create half to two-thirds of all U.S. jobs, according to various economists.

Missouri's U.S. Senate candidates both campaigned on their plans to help small businesses.

"Private sector jobs are the key to our economic future," Rep. Roy Blunt, a Republican, said during a debate in Kansas City. "We need a few government jobs, but government jobs don't pay the bill. They are the bill. We've seen a lack of focus on the things that create jobs."

Secretary of State Robin Carnahan, a Democrat, also emphasized the importance of small shops.

"We need to focus on small businesses right here in Missouri," she said in an exclusive interview with KOMU 8 News. We also need to focus on middle class tax cuts. Right now, these tax cuts and tax subsidies continue to go to big oil companies and folks who are shipping jobs overseas and that's all got to stop."

There are 142,000 Missourians getting unemployment benefits from the state or federal government. For them, the money pinch is about to get worse.

People who've collected payments for less than 26 weeks will not be able to move on to extended benefits after Nov. 21. One week later, those who are already on a federal extension won't be able to move to the next level of benefits.

"After that deadline, that is the tier you will remain on," said Amy Susan, a spokeswoman for the state Labor Department. "Once you exhaust those, there are no other benefits for you at this time."

Carnahan also said she would support extending federal unemployment benefits.

Blunt refused repeated requests for an interview.

The state's 9.3 percent unemployment rate in September has been nearly stagnant for the last year. It's draining the state's unemployment insurance fund, leaving it $722 million in debt. Missouri is borrowing from the federal government to keep sending checks, but businesses will eventually be responsible for paying the money back.

The hole could eventually grow to $2 billion, Missouri Chamber of Commerce Taxation Director Tracy King said. She said other states have tried to raise business taxes to pay back the debt, but that's failed in such tough economic times.

Higher taxes certainly wouldn't help Elson, back at the printing shop. He said he's hoping to build a client base and make enough money to start advertising. Despite the difficulty of owning a small business, it's also rewarding, Elson said.

"It's really cool seeing the excitement on the customer's face," he said.

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