by Doug Hill
During my late teen years, I drove an ice cream truck. It was my own business. I paid daily rent ($35), bought the ice cream wholesale, and charged retail prices. Yup, I was the ice cream man.
For four summers, I drove up and down the beaches and neighborhoods of Wells, Maine... hustling, ringing my bell. They were long hours, and a lot of work. I loved every minute of it. Those years taught me a lot about business. The importance of inventory planning, breakeven points, costs of goods sold, spoilage (aka eating your profits), and customer psychology.
Today, some 25 years later, my friend who still runs the business is desperate. After taking it over and growing it to over 70 trucks in three locations, he’s about to fold the business. The last five years, he’s seen declining sales because he can’t find entrepreneurs who want to run their own ice cream truck.
Where Have the Entrepreneurs Gone?
You might think with splashy new tech companies like Google, LinkedIn, Facebook, and Uber that the U.S. is experiencing a renaissance of entrepreneurship. But that just ain’t so. While it’s unclear as to why — the what is clear. Startups are stuck. In fact, 2008 was the first time that more businesses exited the market than entered.
J.P. Morgan economist Michael Feroli suggests business consolidation of large companies has led to monopoly-style profits. Thus, startups see those profits as “incontestable” and avoid entering the space. That argument doesn’t pass my sniff test, though. Large profit margins usually suggest an opportunity for smaller players to carve out a niche, adding startups to the industry.
What Else Could Be Going On?
Starting a business today just isn’t easy. The red tape is overwhelming. Just ask Andria and Zoey Green, whose lemonade stand in Overton, Texas, ran afoul of the law. “It’s illegal to sell lemonade without a permit,” Overton Police Chief Clyde Carter told ABC News. “But we didn’t tell them to shut down, we just asked them to get a permit.” When they went to get a permit, the girl’s mother said, they learned they first needed to get licensed by the Rusk County Health Department. Down the regulation and bureaucracy rabbit hole they went.
Obamacare, the poster child of government largesse and overreach, contains 13,000 new regulations. Senate Majority Leader Mitch McConnell
(R-Ky.) in 2013 said of Obamacare, “Implementation has also become a bureaucratic nightmare, with some 159 new government agencies, boards, and programs busily enforcing the roughly 20,000 pages of rules and regulations already associated with this law.”
Entrepreneurship is being strangled by the very people who claim to “create new jobs.”
Copyright Laissez Faire Books LLC.