Government and its Policies for Entrepreneurs - Essay Example

Government & its Policies for Entrepreneurs Introduction Entrepreneurs in today's age of global economy are considered important force in a country's economy. During the 80s and 90s America saw phenomenal growth in the entrepreneurial sector. Government's role is crucial in the success of entrepreneurs. However, with the passage of time the entrepreneurial spirit of America seems to have died down. Government policies can help in sustaining the status of America as the enterprising nation. Government Critics A large number of entrepreneurs in the country consider that government does not have a better understanding of their needs. They think that red tapism and bureaucracy are biggest hurdles in government dealings with entrepreneurs. The legislations made with respect to entrepreneurs and enterprises are complicated and cumbersome. Entrepreneurs find these legislations difficult to grasp without the help of proper legal help. They think that legislations should be made in a way that they are easy to understand and follow by everyone. Also some critics of government believe that its policies have hurt the economy and market structures. By holding on to the status quo government has stifled entrepreneurial activities. People believe that government needs to do more to help them succeed in their enterprising efforts. "The American economy is dying, but not from natural causes. It is being strangled to death in a coordinated pincer attack. America's ability to survive, produce and prosper is being systematically destroyed by socialistic taxes and regulations that make U.S. production of virtually everything increasingly uneconomical. Simultaneously, the same legislators and government officials who are impeding American producers are opening the floodgates to cheap foreign goods that are not burdened with the same debilitating taxes, regulations and mandates" (Jasper, 2003). Government should pass legislations to support a market economy in support of entrepreneurs in particular. America still has many plus points in the face of global competition. It has a government that is based on democracy rather than communism or theocracy but the need is to realize the potentials and opportunities ad make policies in their support before others catch up fast in the global economy. Government Policies Government is currently making policies for different sets of groups. Different group have different needs and wants. There could be some policies that encompass all and sundry but at some level government has to look at the specific groups. Some groups make bigger investments in their enterprises while some start their business on a small scale. Some belong to a particular ethnic group with specific needs while some belong to another. Government can make policies on two different levels that general policies for all and specific policies for particular sectors or groups as one policy fits all can not work in case of entrepreneurs. Blanket Policies Government can pursue certain blanket policies applicable to all entrepreneurs. The government has already established special organizations like SBA that support small businesses. These organizations support start up firms regarding the whole procedure of conducting business. General legislations apply to all small businesses and industries. Following important blanket policies could be adopted by the government: Financing and Capital The most important blanket policies that US government could adopt would be regarding financing and capital availability. Whenever someone wants to start a new business the most difficult step becomes financing. Entrepreneur takes a lot of risk while trying to establish a new business venture. They put in all their efforts and hard work to make their business succeed. Some even leave their routine and comfortable jobs for their enterprising ventures. They can all do this only if a solid financing is provided to them. Government's rule becomes crucial here. Currently organizations like Small Business Administration (SBA) provide necessary help in providing help to the entrepreneurs for their business funding. They help by providing security to the banks for loans. Guarantee provided by SBA helps entrepreneurs in getting loans from the banks. The current set is helpful but it needs to be made more robust. Federal government should make policies that support federally guaranteed loans. The procedures required for obtaining guarantee and loans should be swift so that people can start on their enterprising business ventures fast and thus contribute to the overall economy. Skills & Training The next important step in establishing a business is to apply proper business policies and this could only be possible if entrepreneurs have the necessary skills. Not all entrepreneurs who start new businesses are equipped with business degree or prior business experience. Most entrepreneurs have the passion but lack the skills necessary to successfully run a business. Again, government can help the entrepreneurs by starting special projects and formulating policies that support their education. For example government can encourage the concept of business incubators in majority of Universities in the country. The benefit of this policy would be two fold. University scholars and students would be able to practically apply their knowledge while entrepreneurs would also get the necessary knowledge and skills from such an arrangement. Product development, sales, marketing, law and taxes are some of the areas that are considered troublesome for the starting business. Business incubator arrangement make entrepreneurs come in direct contact with experts and knowledgeable professors. In order to make this arrangement of business incubators with universities government will have to offer some financial and other incentives to the universities so that they encourage entrepreneurs to come forward and learn such skill for their business ventures. Similarly organizations like SBA could regularly arrange seminars, symposia, and tutorials for the new and old entrepreneur to learn new skill or update their skills. Internet also offers tremendous opportunities for government to impart knowledge. Government can really exploit different forums available on the Web like blogs, forums, websites and email groups to help different groups of entrepreneurs. Taxes and Legalities Taxes and legislations are the typical areas of government where it could help by making specific policies for the entrepreneurs. Tax codes and laws made by the government could really help entrepreneurs. Entrepreneurs really look for reduction in the corporate tax rates in particular. Government not only can reduce taxes but they can also make the procedure involved in taxation less complicated. Easy to understand, implement and practically use tax policies are necessary for the expansion of small business sector. "Various tax policies, both active and passive, are in place across U.S. states to foster entrepreneurship. In response to a recent survey from the Kauffman Center for Entrepreneurial Leadership, many states say they focus on lowering the overall tax burden by reducing tax rates or expanding exemptions in order to promote entrepreneurship. About 10 states have more active tax policies, such as capital requirements and targeted tax credits for business location and research and development. Several states also have reduced or eliminated their capital gains taxes and inheritance taxes" (Garrett & Wall, 2005).Government can make tax and legal policies in support of entrepreneurial culture and a thriving economy. Without proper help from the government in both these areas of taxation and legislations entrepreneur will find it hard to survive. Special Policies Government can also undertake certain specific policies for specific groups and sectors. Business/Sector Specific Policies A new business could be a small restaurant, a research firm, a lawyer's firm, a retail outlet and whatnot and whatnot. There various potential sectors in which small businesses are growing. It is government's responsibility to give out complete sector wise or industry wise information to the general public. Government should carry out special analysis for each and every sector so that a true picture of potentials and opportunities can be portrayed for the benefit of general public. Not only government should do the analysis but they can also make specific rules and policies for specific sectors. For example if a particular sector or small home industry has potential than reduction in taxes could be suggested for such a sector. Small industries and specific sectors have specific needs and so require specific policies. There are dozens of sectors and obviously government cannot make dozens of different policies but government has to point out certain special sectors which have the most potential or which can be promoted for the expansion of small business industry and then should draw specific programs so that activity can be encouraged in those sectors. Some sectors flourish because of fewer restrictions while some suffer due to protectionism. For example IT sector thrived due to relaxed government policies while sectors like health care, pharmacological and energy sectors have not seen much of entrepreneurial activities due to excessive protectionism. Legislation should be made with regard to these specific sectors to stir a healthy growth by encouraging entrepreneurship. Most other countries have now loosened up the noose around certain industries and in the age when globalization has changed the whole business scenario and countries like china have become a heaven for entrepreneurs and business activity. American industries can no more afford to have a narrow outlook and government must act to counter the business leaving America to other Asian countries in particular. China today has more small ad separate businesses thriving in their country due to the open policies of the government and its realization of the potential in the world market. Today many small firms stand in direct competition with American firms while in certain sectors some companies do not even compete. "America is in the midst of an enormous job outsourcing boom that gives every indication of accelerating. In addition to the continued massive hemorrhaging of America's manufacturing and blue-collar jobs that began two decades ago, we now have a huge and growing crisis involving the flight of millions of hi-tech and white-collar jobs. If appropriate action is not taken to address the factors propelling this massive exodus, it is not an exaggeration to say that America is headed toward has-been status. A much-quoted study by Forrester Research Inc. last year predicted that at least 3.3 million white-collar jobs and $136 billion in wages will shift from the U.S. to low cost countries by 2015" (Jasper, 2004). It is now government's responsibility to look at different sectors and formulate a plan to encourage entrepreneurs before it is too late. Today American firms are far ahead of their global competitors in the technology sector. The way other countries have won by encouraging entrepreneurship in low-tech industries by specific policies it will not be late when they will catch up in the high tech sectors as well. Today cheap computer hardware is available from outside America but with software and microprocessors from American companies but soon these sectors will also be taken over by outside countries and their start ups. With specific policies of different governments like free land, industrial parks and generous tax abatements for specific sectors the entrepreneurial activities are growing. American government should also look at policies of providing subsidy to its strong software industries. Women Entrepreneurs We have seen that women have come on the forefront due to their participation in business activities. Many women have proved their business acumen with their successful enterprises. This particular group with specific needs has proved that if given proper attention then this group can take the cause of entrepreneurship far ahead. It is because of women's potential and success that government should nurture the idea of separate policies for this group. Economic strategies should include a plan to increase women's enterprise rates. A women-friendly business support culture should be encouraged by the government and its policies. A number of women run their own businesses in the country yet women are still the most significant under-represented group in business. Government should start initiatives which facilitate the development of women's businesses. The project should be started for the purpose of integrating women into existing and new business networks. Many activities and policies like communications and publications, networking events, awards and role model promotion and research can be undertaken by the government. An important activity would be promoting inspirational role models and celebrating the achievements of successful women entrepreneurs. Some special women support initiatives have already started a number of these activities. The idea is to increase the effort so that all interested women can come forward and move on the path of starting their own business ventures. Women specifically face considerable barriers when setting up and growing a business. Governments women focused policies in particular can help in overcoming those barriers and raising the profile of women. Barriers still exist and the government is also making an n effort but there is still some way to go. Government at Federal and State levels working in partnership with women can help flourish and further boost the economy." In hearings of the U.S. House of Representative's Small Business Committee, four major barriers to entrepreneurship among women were cited: (1) limited access to credit, (2) virtual exclusion of women-owned businesses from government procurement activities, (3) limited management and technical training to "fast track" women into the marketplace, and (4) inadequate information and data on women-owned businesses. In the years ahead, venture capitalists, bank loan officers, and other businesses must decide how they will financially support businesses run by women" (Helms, 1997). Franchising Business Some entrepreneurs delve into franchising business. Their needs are different from the needs of a new start up altogether. Government can focus some of its policies on the franchising business. A number of people in America are opting for a franchising business and the number is growing. In case of franchise, entrepreneur reduces the risk as he gets management support by the owner. SBA can formulate special guideline for franchise business. They could help people explore the ideas of franchising. SBA can also be a platform for bringing owners and the potential entrepreneurs together. Specific programs and awareness projects can help entrepreneurs in deciding for their start up operation. Government specific policies and focus on specific issues like franchising within the realm of entrepreneurship can be really helpful for the people. Conclusions Government and its supporting organization SBA needs to take a stand on the issue of entrepreneurship. A combination of active and passive policies can help the entrepreneurs and entrepreneurship in the country. Government has to make both blanket as well as specific policies. Easy to grasp and implement legislations are necessary but it is not the only solution. Government has to make entrepreneurship a central issue in the overall economic strategy and should encourage it through all forums and on all fronts. References Jasper, W (2003, December 1). Engineered Extinction: Government Policies Threaten Our Jobs, Economy and National Security by Destroying America's Basic Resource Industries-Mining, Forestry, Farming and Ranching. The New American, 19(24), 10+. Jasper, W. (2004, January). Losing America's Livelihood: The U.S. Is Headed for Third World Status Unless We Change Government Policies That Are Driving U.S. Businesses Offshore, Destroying Jobs and Putting Entrepreneurs out of Business. The New American. 20(2), 10+. Helms, M. (1997, July). Women and Entrepreneurship: The Appealing Alternative. Business Perspectives. 10(1), 16+. William, P & Howard J (October, 2004). Entrepreneurs in the U.S. Face Less RED TAPE. Retrieved December 6, 2006, Web site: http://findarticles.com/p/articles/mi_qa3678/is_200410/ai_n9423324 Poole, W (April, 2005). Staying Out of the Way of Entrepreneurs. 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