Entrepreneurship 2011

George Rebane

[This is the submitted form of my July column that appears in the 11jun11 edition of The Union and in its online form here.  A related graphic on the impact of the stimulus is on NC Media Watch here.]

This administration has taken a bad economy and, by any measure, made it unimaginably worse.  We all know the litany of government stimulus packages, corporate bailouts and takeovers, new reams of regulations designed to drive business and finance off-shore, and, of course, Obamacare.  That nationalized healthcare monstrosity is proving to do exactly the opposite of every one of its touted benefits.  And parodying Nancy Pelosi, the more we find out about the Patient Protection and Affordable Care Act, the worse it gets.

Polls now show President Obama’s disapproval ratings well above 60% for his handling of the economy, yet enough people are being paid sufficiently that 44% of voters would still re-elect him.  With so many people ignorant about or out of today’s economy, it will take a miracle to replace him.

Meanwhile both Democrats and Republicans agree that small businesses are the nation’s job creators, and success there paves the road to recovery.  Yet the social engineers and vote buyers in Washington continue hindering the very economic activities they tout from the other side of their mouths.

Few people know what it takes to be an entrepreneur and start a job-creating business.  A successful entrepreneur comes with an over-arching dream, a practical approach, tolerance for considerable risk, and enough funds to last through the ‘cash minimum point’ when revenues start exceeding costs – whenever that may be.

Entrepreneurial risk is a many-headed monster, both vicious and sneaky, waiting to torpedo the fruits of your planning, investment, months of sweat, and maybe much more.  Most entrepreneurial efforts require that you quit your day job, run a gauntlet of regulations, filings, and fees, and work 80-hour weeks while holding your breath.  That also means taking a hit in the progress of whatever career you had going with that regular job.

And your family, it is going to go through a time of belt-tightening and stress.  Not regular stress, but the kind that can put your marriage, relationship with your children, friends, and relatives on the rocks.

To fund your dream venture, that final big push to put you and yours ‘on the beach’, you need money.  And unless you belong to a government-approved class, you get this money by draining your own resources which may involve refinancing your home and putting your kids’ college educations on the line (remember stress?), and also tapping into friends and relatives who believe in your dream.

If professional vulture capitalists get involved, then you must be doubly careful that you don’t wind up losing your business through some small print that you overlooked.

But let’s say that you did everything right, and the long hours and late nights and missed weekends with the kids, and … have started.  You hire staff and proudly create a few jobs with more to come.  You’re working your proverbial south end off as you try to make your business financials head north.  And then you finally start seeing light at the end of the tunnel.

To keep things as simple as possible while building the business, you formed the corporation under the Sub-S law which allows you to take revenues and manage business costs as part of your personal tax filings.  The profits accrue to you as income, and your plan calls for reinvesting a hefty chunk to really start growing the business.  But not so fast.

Finally your ‘income’ is well over $250,000, and the state now calls you “rich”.   Being “rich”, you are the next enemy of the people whose income should be docked, and put to much better uses than expanding your business.  The tax money that you pay will decrease your reserves for the inevitable bumps ahead, and push off into the future that new position you planned to fill.  ‘I’ll tell Sally that I have to reschedule her start date to next spring, and hope that she’s still available.’

And this is how it goes in today’s America, where the creation of wealth through individual dreams and perseverance is a suspicious enterprise.  Taught in schools is the myth that government creates wealth, along with more approved methods that involve ‘private industries’ working closely with government in favored channels of commerce.

From such relationships with business and labor, politicians can count on enormous amounts of cash to finance re-election campaigns.  And these relationships are so easy to set up – all you have to do is talk privately with a few people, instead of all those thousands of independent small entrepreneurs who are hard to contact and then convince.  They are so yesterday.

George Rebane is an entrepreneur and a retired systems scientist in Nevada County who regularly expands these and other themes on KVMR, NCTV, and Rebane’s Ruminations (www.georgerebane.com).

Comments

[D. King]

George,

I don't think most will understand the process and therefore the ass pain involved.
I’ll be happy to go through my experience, but fear it will be viewed as an advertisement.

[George Rebane]

Agreed, but do it anyway, please.

[D. King]

I’ll go through my experience.

I had had an idea for a shallow water buoyancy system for an ROV (remotely operated vehicle)

A closed loop system.

I proved the technology by building a prototype.

Watch the first part and then scan to 3:30.

http://www.youtube.com/watch?v=pyX5x6fwdtQ

I got a utility patent on the science (different than the easily obtained design patent)
You may have to down load a plug-in to view.

http://tinyurl.com/2g3vayv

Having a U.S. patent awarded and being published is a wonderful experience!

O.K.; now I need money. Where to get it?
I had already spent money on the patent and the prototype and the amount needed to build an ROV was more than I could afford. Since I cloaked my ROV intentions by calling it a water toy and only mentioning it in passing in the patent (companies harvest ideas by reviewing patents for the purposes of reverse engineering (stealing!) the technology) I decided what the hay, why not build a few cheap toy prototypes and see if I could interest pool toy companies.

http://i666.photobucket.com/albums/vv22/David-C-King/BTTpic.jpg

http://s666.photobucket.com/albums/vv22/David-C-King/?action=view&current=SinkySwim.mp4

http://i666.photobucket.com/albums/vv22/David-C-King/Mermaid.jpg

http://s666.photobucket.com/albums/vv22/David-C-King/?action=view&current=MermaidProto.mp4

Were they interested? You bet they were! But they wanted me to make refinements.
Well, the refinement process was never ending. I made changes, they wanted more changes.
It got to the point where I asked them to commit. They said they might be interested at some point in the future. Starting to get the idea? They were going to keep me and my patent tied up as long as they could. This happened with several companies. For what I was asking, they would have come out way ahead…instead; they are now fighting each other in court.
Take a look at this. I submitted this diving lightshow idea to them and here is what I got!
Here is the block out of my muli-dive / rise lightshow and fountain I submitted 3 years ago.

http://i666.photobucket.com/albums/vv22/David-C-King/EpcotDivingLightShow.jpg

Here is their new diving lightshow.

http://www.swimways.com/kaleidomotion-p-77.aspx

No, not exactly the same, but where do you think they got the idea?
They have the money to play these games; I do not.
There is some solace for me though! The two companies I submitted to are now locked in a court battle over this, that either one could have avoided by dealing with me, and for a lot less!

http://news.priorsmart.com/great-american-duck-races-v-swimways-l3Th/

I could go on for hours, but would rather answer any questions you may have.

[Mikey McD]

As long as we are sharing war stories...

"Eat the “Rich”- That Which Is Not Seen

January 15, 2005 I started a business. August 1st 2005, my bank account balance was $70; that’s seventy dollars. In the next 3 weeks I had office rent to pay, payroll to make, student loan payments to make, business loan payments to make, various government taxes to pay [everything from business license to FINRA fees], grocery bills for my family, mortgage payment, etc. I couldn’t even sell my paid-off car quick enough to cover my expenses. I didn’t have a friend or relative I felt comfortable hitting up for a loan. But I had three weeks and 8 previous months of hard work in my favor.

Insert Lots of deep breathes and prayers.

I trusted my business model and my abilities to execute. I increased my daily hours of work from 12 to 18 hours a day [I would work from 6:30 am-6:30pm, break for dinner and nursery rhyme time with the family before heading back to work from 8:30pm-2:30am]. I was charged by passion that my business model was right [on multiple levels] and that I was called to this vocation. I don’t remember ever being tired. I remember my nervous stomach rejecting coffee but accepting mountain dew.

I regret not having sincere time for friends and family during this period of my life.

Enter August 31st 2005. I did not miss a payment. I paid every bill on time and in full. This small victory projected my attitude even higher. September, October, November, and December of 2005 are still a blur. I do remember feeling 10 feet tall and bullet proof, except on Friday nights. It was on Friday nights that my body would pay me back for the transgressions I made against it previously in the week. I can’t remember a Friday night in 2005 or 2006 when I was not sentenced to the bathroom with violent stomach illness. I grew to hate Fridays. I blamed my Friday night “episodes” on the previous week’s combination of sleep deprivation, extreme stress and my steady diet of Mt. Dew.

Sometime in 2007 I got my life back. My Friday nights were often (not always) free of illness, I was back to only 12 hours of work a day and my diet was far more balanced (no more Mt. Dew!). My success in 2007 also projected me to a point where I paid an extremely high amount of tax. 4 months of my 2007 earnings went to pay taxes. In 2008 I attained the status of ‘rich’ by Obama’s standards and over 5 months of earnings went to pay taxes. Oh how I wish I could have used those tax payments to pay off student loans, my business loans or to treat my patient, trusting and encouraging wife to a nice dinner. Early in 2008 the financial crisis struck and revenues plummeted. The previous years savings were used to bridge the business through late 2008 and early 2009. I did not want to lay off any employees during that mess though it would have lowered my stress level and protected my savings. I retained all my employees (using savings to make payroll) and lived to work another day.

What will future years bring?

I tell my story in hopes that those intent on hating or targeting ‘the rich’ will see how human ‘the rich’ are. May the collectivist see the God given traits/personality of capitalists who take incredible risks, sacrifice health, sacrifice relationships, and work extremely hard to earn a living for themselves and their employees as neighbors; as humans. "

[Douglas Keachie]

Did your employees sit around and do nothing while you paid them a check anyways? Or were they actively engaged in activities which contributed to the business rebound? If the latter, then you were not doing charity work. During the lean period, did you pay just as much in taxes, or will you be income averaging over the next three years, paying less taxes?

[Douglas Keachie]

If you are not in farming or fishing, what benefits will accrue to you taxwise, for your years of loss, in place of income averaging?

[Douglas Keachie]

Since I saw no responses here, I sent my own "Other Voices" column in to The Union. Enjoy your coffee this morning.

[Todd Juvinall]

No one responds here to such ridiculous comments to Keachie. Without real life experience in business we just don't care to respond to a book learner.

[Mikey McD]

Did your employees sit around and do nothing while you paid them a check anyways? MY EMPLOYEES WERE ACTUALLY BORED DURING THE SLOW 'SEASON'; SPENDING TIME SURFING THE WEB AND EVEN READING NOVELS. Or were they actively engaged in activities which contributed to the business rebound? THE TURNAROUND (STILL HOPEFULLY IN PROGRESS) CAME ABOUT BY A RISING STOCK/COMMODITY MKT. SOLE PROPS (OUTSIDE OF FARMING) CANNOT 'INCOME AVERAGE' ANYMORE (NOT SINCE THE 1980S I BELIEVE). I did not feel any tax benefits in the lean years and more importantly I had less to reinvest thanks to the high tax years. The problem arises from the progressives belief that what I earn first belongs to The State (the collective).

[George Rebane]

I saw DougK's Union piece this morning, and since it mis-featured me and this post so prominently, I thought a response would be appropriate. It is posted here - 'Keachie Again Misreads Rebane'.
http://rebaneruminations.typepad.com/rebanes_ruminations/2011/06/keachie-again-misreads-rebane.html