For The People

How is your governor treating small business?
6 min read

This story appears in the August 1997 issue of Entrepreneur. Subscribe »

Schocles said, "I have nothing but contempt for the kind of governor who is afraid, for whatever reason, to follow the course that he knows is best for the State." Today, that course leads to small business, and thankfully, fewer governors are afraid to pursue it.

While the federal government often seems content to dangle its usual carrots before small-business owners, state governments are taking tangible steps to make life easier for entrepreneurs. "There's no question that this current crop of governors has been about as pro-small business as any group we've seen in 20 years," says Stephen Moore, director of fiscal policy studies at The Cato Institute, a Washington, DC, think tank, which publishes a biannual Fiscal Policy Report Cardon America's Governors. "Whereas the federal government in recent years has been raising taxes, in 1995 and 1996, we saw more tax cuts for small business [on the state level] than in any period since the late 1970s. More than 28 states enacted tax-rate reductions that will improve businesses' bottom lines and help attract entrepreneurs and small-business owners to their states.' Moore reports that governors have also excelled lately in cutting the costs of workers' compensation systems, reforming product liability laws, and cutting or even eliminating capital gains taxes.

This strengthening of support comes at a time when governors are arguably wielding more power than ever. With California and New York state budgets both exceeding $60 billion, The Cato Institute's report likens state governments to large-scale enterprises and the '90s governor to a state CFO. Also, Congress continues to promote a new federalism that relies more on states, giving governors the opportunity to become leaders in future public policy innovations and government programs.

Why are governors cozying up to entrepreneurs? Moore points to the "Whitman wanna-be" factor. Christine Todd Whitman of New Jersey "was really the first of this new wave of pro-business governors to come into office," Moore explains. "Because of her economic and political success, a lot of governors have pledged to do the same thing: Cut taxes, and make their states places where [entrepreneurs] would want to do business."

Quite a contrast to the logic of the 1970s and early '80s, in which many states competed for large companies like Toyota, Nissan and United Airlines. "Everyone who played the game of going after the big companies eventually played one in which they lost," says Jay Kayne, director of economic development and commerce policy studies for the National Governors' Association. "States that spent a great deal of money trying to attract major companies found that, in terms of cost benefits, they were getting a much better return from working with smaller businesses and entrepreneurs. What the governors collectively realized is that you need to focus on the macro issue because then the whole pie will get bigger."

It will be interesting to see whether governors cling to this state of enlightenment as their political careers progress, perhaps along the same path as that of former governors Bill Clinton, Ronald Reagan and Jimmy Carter. With the emergence of strong leaders on the state level, many expect one or two of today's governors will be tomorrow's presidential candidates. "There's no question that these governors tend to have the best experience for being elevated to the White House," says Moore. "And their experience of what works on the state level will be very valuable to them if they become president." -Janean Chun

Code Red

Don't forget to monitor your company's vital signs.

Most would agree it's important to monitor the status of your health. But many entrepreneurs fail to realize the health of their companies is of equal concern. According to a recent survey by Coopers & Lybrand LLP, a significant percentage of business owners aren't taking proper care of their enterprises.

Tracking Your Company's Vital Signs set out to identify the critical operating components of America's fastest-growing businesses and determine how often these factors were monitored. Thirty-four percent of the CEOs interviewed admitted they were not spending sufficient time looking at key indicators such as sales, cash flow and accounts receivable.

The survey also found that for most companies, items such as sales and accounts receivable were usually monitored on a daily, weekly or monthly basis; comparatively, expenses, profit margins and inventory were studied less frequently, anywhere from every three months to annually.

The lesson to be learned? If you're too busy focusing on the big picture, beware: Ignoring the nuts and bolts that keep your business running could sink your company. Says David Grand, a Coopers & Lybrand business assurance partner in Albany, New York, "This 34 percent has put themselves at risk, and their businesses could be running out of control."

-Charlotte Mulhern

Up To Par

Scoring a hole-in-one with your business

Alas, those pin-stripe, corner-office types who like to hit golf balls on miniature indoor putting greens may be onto something. In Keeping on Course: Golf Tips on Avoiding the Sandtraps of Today's Business World (McGraw-Hill), author Gary Shemano contends that valuable business lessons can be learned by playing the game of golf. And just how well entrepreneurs do on the green may determine how much of the green stuff they see.

"Golf is a microcosm of life,' says Shemano, an investment expert at institutional broker/dealer The Shemano Group Inc. in San Francisco and a top amateur golfer. "Golf teaches patience, discipline and, like in business, the harder you work, the better you get.'

How do golf principles apply to business? Take the element of risk, says Shemano. In every round of golf, there's a key moment that determines a winning or losing round, when a golfer decides to sink the ball or take the conservative shot. Many golfers never realize the moment is upon them. Or, some choose always to lay up, opting for the safest route. True entrepreneurs, however, make the most of the situation by asking for the highest price or knocking on a big client's door when they're feeling good about their golf swing, Shemano says. Likewise, they recognize the right time to cut their losses when a business deal sinks into the sand trap.

Of course, that's just the lesson from the first hole. Want to go the entire 18? Shemano says golf pros perform well under pressure by having confidence in the shots they've practiced hundreds of times. He insists that businesspeople must also learn to master their trades so they can forget about "technique' and rely more on instinct. And, as Shemano's logic would have it, just like pro golfers have their caddies to offer advice in sticky situations, so, too, must business owners learn to surround themselves with trustworthy advisors.

If that isn't enough to persuade you to get your golf skills up to par, consider this: While Shemano believes playing golf is a great way to hone your business skills, it's also an excellent way to evaluate potential business partners.


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