I had a most unusual conversation the other day. In the wee hours of morning, in a darkened coffee shop, a man sat off in the corner, no coffee, no scones, just an intense visage and furrowed brow. He appeared deep in thought. Occasionally he grasped his pen and jotted something on a well-worn legal pad. A struggling writer? A mid-life crisis? I had to find out.
I sidled up to the worn looking man and like a good American asked him about his profession. Poet? Journalist? Speechwriter? His answer surprised me. “Businessman, actually.” Now I was truly curious. I hadn’t thought businessmen frequented edgy coffee shops. Something must be amiss. Our conversation went something like this:
Me: What brings a businessman to a coffee shop like this?
Businessman: I needed a place to think without distractions.
Me: What distractions could a businessman have? I thought everything was pretty easy for you guys.
Businessman: Easy?! Why would you say that?
Me: Well, you are a billionaire, right?
Businessman: Not hardly. Not really a goal of mine anyway.
Me: A millionaire then?
Businessman: Well, I guess if I sold my business I would be a millionaire.
Me: Well there you are then. You’re set.
Businessman: But I don’t want to sell my business.
Me: Why not?
Businessman: Lots of reasons. I like what I do. I’ve worked hard to build a good reputation. I have customers, colleagues and employees that I care about and I feel an obligation to. Sell the business and who knows what the buyer does. Gut it. Sell off the parts. Lay people off. No, not really something I am willing to risk. I’d rather leave it as a legacy for someone willing to take care of the employees and customers the way I have.
Me: But I thought the primary goal of business people was to make money?
Businessman: That’s a nice benefit of working hard and doing a good job, but it’s not what gets me up in the morning or keeps me up late at night.
Me: But you are one of the richest 1% that I hear so much about, yes?
Businessman: I guess so, technically. Of course, I have taken out loans and taken a great deal at risk to get this business off the ground and keep it thriving. I don’t think they take that into account when calculating the 1%. A substantial portion of what I make I use to pay back debt or reinvest in the company, yet I pay taxes on the revenue as if it were income landing in my wallet.
Me: I hadn’t thought about that. I thought if you were in the top 1% you were living without a care.
Businessman: Some might. Most business owners have a great deal to care about.
Me: Really? So what are you here working on? How to make more money? A new jingle for a product?
Businessman: Actually, it’s more challenging than that. See, we expect to have a decent year and have built up more cash than usual.
Me: That’s a good problem.
Businessman: It is, except I’m wrestling with what to do next. Cash doesn’t earn any interest now.
Me: What are your options?
Businessman: I could hire another employee or two.
Me: Excellent. There are a lot of talented people out there.
Businessman: True, true, and we could certainly expand our services and products; however, I don’t know how much an employee will cost or how other expenses might take priority.
Me: Don’t you set their salary?
Businessman: The salary part is fairly easy; it’s the benefits and taxes that are the tough part. And benefits and taxes at my company represent about 30-40% of the compensation package.
Me: Are you kidding? I thought that successful businessmen didn’t pay much in benefits.
Businessman: Not true. Good business owners want to retain their employees and help them be more productive. We help out with health care, retirement benefits, flexible schedules, those kinds of things.
Me: So what’s the problem?
Businessman: I don’t know how much those things will cost. Health care costs had been increasing dramatically for the last decade, and then last year they went up 40% for many small businesses like ours. I can’t dump all of that on my employees and I can’t afford to absorb it all. Who knows how it will increase next year or the year after that? And there are so many other expenses to consider.
Me: Like what?
Businessman: Well, our regulatory expenses went up significantly last year, you know, costs to comply with the agencies that monitor our industry. I expect those costs to keep increasing for the foreseeable future.
Me: You don’t believe in regulation?
Businessman: I have no problem with good regulation and knowledgeable regulators. But at least in our field, it’s our integrity, not government regulation, that protects our customers and employees. The regulatory hoops don’t stop their real malefactors.
Me: That’s discouraging.
Businessman: I don’t mean to sound cynical, but the costs of increased regulation falls on those like us who are doing our jobs appropriately, not those who are taking advantage of people. Still, the regulatory cost is insignificant relative to uncertainty about taxes.
Me: How do you mean?
Businessman: We all know that taxes will be increasing—local, state, and federal. It’s simple math. So when I’m considering hiring new employees or investing in capital equipment or technology, I also have to think about keeping cash on hand to pay for what likely will be significantly higher taxes.
Me: Are you saying you don’t want to pay taxes? I’ve heard that business owners don’t think that they should pay taxes.
Businessman: Of course I expect to pay taxes! That’s part of being a member of society; everyone should pay taxes. We have to finance our defense and education systems, our social safety net, foreign policy, infrastructure, the whole works. I get that. Indeed, a large proportion of our net income goes back out in taxes, let alone property taxes, employment taxes, unemployment insurance, licensing fees and other government-related expenses. We pay taxes, and I’m okay with that. However, it seems that some people forget that every dollar our firm pays in taxes is another dollar we can’t use to hire someone or otherwise invest in the firm.
Me: But I was under the impression that business owners didn’t care about society.
Businessman: What gave you that impression?
Me: I keep hearing that the wealthiest Americans don’t support charities and education and things like that. And that if they do, it’s just a tax dodge. Is that true?
Businessman: No! We don’t make a big deal about it but we support organizations that are doing good work throughout the community and around the world. Like many companies, we encourage our employees to use paid time to volunteer as well. Still, the more we pay in taxes or regulatory fees or health care costs, the less we have available to support these worthy organizations.
Me: Are you sure you are a businessman?
Businessman: What do you mean?
Me: You seem rather sensible, not quite the troll that I would have expected. Perhaps you’re an exception.
Businessman: Hardly. I’m just a regular person who runs a business and tries to make a difference. There are tens of thousands of us. Indeed, many of the most generous people I have known have been in business. They are great role models of leading by example.
Me: But you don’t see many business people out there protesting and calling for the government to meet people’s needs.
Businessman: It’s one thing to be generous with other people’s money; it’s another to be generous with your own.
Me: I never thought about it like that.
Businessman: Listen, I’ve enjoyed our conversation here, but I need to get back to work. We have some big decisions to make and I want to do it right. A lot of people are counting on me.
I thanked the businessman for his time and stepped away from the table. How curious! It was hard to believe that he represented that much maligned business class. He had to be an oddity.
Later, while writing about the conversation in my notebook, it dawned on me that the businessman really was an outlier, though not in the manner I had thought during our conversation. What kind of crazy person would work so hard to build something that would benefit society knowing that if it failed, almost the entire cost of that failure landed in his lap, impacting his pocket book and his reputation? And what if he succeeded? All of society would benefit—people would have jobs, customers would have products and services they need, and the government would have the revenues generated by taxes and fees, monies then spent to benefit everyone. Shoulder the burden; share the success.
Most people would never agree to such an odd bargain. Indeed, my new friend in the coffee shop was a bit unusual, but perhaps there was something to his kind of life, something about working in the wee hours of morning to create something, protect it, to grow it.
Perhaps those who think that business owners are such a drag on society should spend a few minutes with one in a coffee shop, in those wee hours while they scribble on a notepad trying to make it work for all of us.