Who Killed the American Work Ethic?

A restaurateur friend of mine recently opened a new restaurant in North Shelby County.  When I asked him how it was going he was very excited and especially pleased with the friendliness of the customers that frequent his restaurant.  His biggest problem?  “Stewart, it is nearly impossible to find people who are willing to work,” he told me.  “Oh, we get lots of people applying for jobs…and they all say they’re willing to work hard but once they’re hired, they then say they don’t work evenings; don’t work weekends; want to know when they can use their cell phones; want to know when they can take a break.”

So here we are at the tail end of the worst recession since the nineteen thirties with true unemployment topping ten million and there are jobs available but very few job seekers who are willing to do what the job requires.  This is not just a North Shelby County problem but a nationwide epidemic.

I have the good fortune of owning a company full of hard-working associates so I surveyed them on this topic.  What emerged is our thoughts on the causes and cures for restoring work ethic in America.

The Cause: The Entitlement Mentality. It is natural for parents to want the very best for their children.  As we have become a more affluent society we’ve used our increasing resources to benefit our children.  In some ways this can be very positive such as the ability to live in a community with a great school system or allowing for a private school education.  However, in many ways, parents have used financial power to enable their children.  Children growing up in more affluent communities often expect to be given a car when they turn sixteen; expect to have a cell phone paid for by their parents; expect to tap into their parents pocketbook for all matter of spending and aren’t expected to ‘do anything’ in return. Many affluent families are substantially helping their children buy their first home or are buying it outright for them.  I have so many friends that continue to financially support their adult working children, allowing them to live a lifestyle not supported by their income.

At the lower end of the income spectrum, there are now third generation welfare recipients.  These teens and young adults have never seen their parents work and there is an expectation that the government will take care of them as well.

The Cure: The Work Mentality. The common thread of my hard-working associates was that each was expected to work starting at an early age.  One’s first job was a lifeguard at age fifteen.  Another was a stock-boy at a shoe store at age fifteen.  At age twelve, my father dropped me off in a neighborhood with a case of fire extinguishers and said, “Don’t come home until you’ve sold them all!”

Here are our three rules for restoring the work ethic in America:

  1. Chores. At a very young age, children can learn the concept of responsibilities of being a member of a family unit.  One of my associates requires that her four and five year old children keep their bedrooms clean.  She’ll pay them ‘allowance’ for special chores such as sweeping the kitchen floor.  As a youngster, I had to mow the lawn every Saturday before I could go play in the neighborhood.
  2. Work. Once children are old enough to get a summer job, they should be expected to work.  If they can’t find a job, require that they serve as a full-time volunteer.  During summers, I had to either have a job or be in summer school…and sometimes both.
  3. Team. Require that your children be involved in some type of team activity.  Sports are great but there are many other options such as math club, debate team or choral team.  In this age of non-stop texting, our children are losing the ability to communicate and work together as a group.

By the way, if any of you live in North Shelby County and are willing to work hard, email me at stewart@welchgroup.com and I’ll be happy to pass your name along to my restaurateur friend.  Just put ‘job’ in the subject line.



Choosing the Right Entity for Your Business

The 2008 stock market crash set off what is now referred to as ‘The Great Recession’ and is responsible for millions of hard-working Americans losing their jobs.  As a result, there has been a resurgence of entrepreneurial activity where people are turning money-making ideas into a small business.

How important are small businesses to America?  According to the Small Business Administration (SBA), they represent 99.7% of employer firms and employ roughly half of the private sector workers.  Importantly, small businesses have generated 64% of the new jobs created in the U.S. over the past 15 years.  These are remarkable statistics especially when you consider that over half of these small businesses are home-based.

For a business owner, one of the most important decisions you will make is what type of entity you will use to operate your business.  Your primary choices include: Sole Proprietor, Partnership, Corporation or Limited Liability Company (LLC).  For the next few weeks, I’ll explore each of these business forms along with the advantages and disadvantages of each. If you are one of the millions of Americans who either own a small business or are contemplating starting one, this series may be worth millions of dollars!

Let’s begin our discussion with the two main reasons that entity selection is so important:

Liability protection.  It’s unfortunate but true that here in America, we live in a very litigious society.  As a business owner, consider yourself as someone walking around with a bull’s-eye on your back…you are an excellent target for a lawsuit!  How do you protect yourself, your personal assets and your business?  One of the ways is through the entity you choose for your business.  A properly structured business entity can effectively shield your personal assets from a lawsuit against your business.

Tax benefits.  If you are a ‘W2’ employee (working for someone else drawing a paycheck), your tax deduction opportunities are very limited.  For most people this amounts to home mortgage interest, charitable contributions, and a few miscellaneous deductions.  However if you start a business, you open the door to literally hundreds of potential tax deductions. While your primary reason to start a business should be for profits, access to massive tax deductions is certainly an excellent secondary reason.  Certain types of entities will offer additional tax benefits over other types.

Sole proprietorship is the simplest and most-often used form of business comprising 80% of the businesses in America. With a sole proprietorship, you and your business are inseparable…you ARE the business.

The primary advantage of a sole proprietorship is that it’s easy and inexpensive to set up and operate.  In fact, most people run their sole proprietorship out of their personal checkbook.

Perhaps the main disadvantage is that if a lawsuit arises that is related to your business, not only are all of your business assets subject to claims, but all of your personal assets are fully exposed as well.

If you’re just ‘testing’ a business idea to see if it has ‘legs’, you may want to start as a sole proprietor in order to minimize organizational set-up costs and time.  As soon as you determine that you have a viable business, consider adopting one of the other business entity forms I’ll review in the coming weeks.