Small-business owners here and across the country have the same goliath concerns – insurance, taxes and good help, just to name a few

Josh Moore meticulously rebuilds a Honda motorcycle engine at Southwest Cycles. The Albuquerque shop employs three to four full-time mechanics to repair mostly classic British and Japanese bikes. Like many small businesses, Southwest Cycles can’t afford a full benefits package. Moore’s first child was born last month, covered by his wife’s health plan.

By Dan Shingler
Tribune Reporter

http://www.abqtrib.com/archives/business04/060704_business_smallbiz.shtml

Carl Neiderman’s South Valley motorcycle shop is big on acreage, huge on customer loyalty, but small in most other respects.

Neiderman, along with three full-time employees, one part-timer and generally a dog or two, sits amidst 2 acres of old bikes and their parts – about 1,800 of them, if you include the 300 or so that aren’t much more than frames.

A true mom-and-pop shop, South Valley Cycle was opened by Neiderman’s parents in 1975. There, Neiderman learned from his dad how to fix bikes with what are now rare old British nameplates such as Triumph, Norton and BSA.

Today, he also works on old Japanese bikes, some of which have become classics in their own right. But those take a back seat to the Brits.

With his own salvage yard at his disposal, finding parts for the old bikes is not a problem for Neiderman.

Instead, Neiderman faces the same problems most small-business owners complain about here and around the country: taxes, a lack of qualified employees and health insurance he can’t afford.

In New Mexico some things – such as income taxes – are improving, but problems still need addressing, business advocates say.

For Neiderman, finding employees who either know or are willing to learn how to fix the bikes in his shop is a constant challenge.

"I’m looking for hard-knock mechanics, most of the time," he said.

The bikes in which South Valley Cycle specializes had their heyday in the 1960s. Most are older than many of the potential employees who come to Neiderman seeking work. When a potential new hire begins looking for the electric start button, Neiderman knows he’s in trouble.

"They don’t even know what a kick-start is," says Neiderman. "They look at ¹em and say, `What’s that long lever on the side for?’ "

But the older mechanics who already know the bikes are expensive to hire. They want $30 an hour – and more.

"I don’t want to pay their pension," Neiderman said.

So he often hires young men, some who need a kick-start themselves, and then teaches them on the job.

Health insurance? Not in the cards. Not that he wouldn’t like to provide it.

"We explain to them straight up front, we’re a small place and can’t afford that. That’s just the way it is," Neiderman said.

He pays them a straight hourly wage – a day’s pay for a day’s work with days off as needed for good employees.

It’s an old-school business model that’s been around longer than even Neiderman’s bikes. Unlike the bikes, though, it’s still commonplace, especially among small businesses.

Neiderman’s other chief business concern, aside from finding good employees?

"Like anybody else, it’s taxes," he said. "People ask who do I work for, and I say `the government,’ " he jokes.

If Neiderman’s business isn’t typical of most small businesses, his concerns are, said Garth Simms, state director for the National Federation of Independent Business in New Mexico.

Most small-business people are running very small companies, often just themselves and one or two employees, said Simms. They’re often too concerned trying to make payroll, including their own, to worry about fringe benefits such as health insurance.

"It depends on the business and its profitability. In a lot of small businesses in the state, people are just working for a paycheck," Simms said. "He’s making $40,000 a year just like he’s on a salary and he’s putting up with all the headaches."

Health and other headaches

Most of NFIB’s 3,000 New Mexico members are small, averaging around 10 employees apiece. About half of them try to provide health insurance, he said.

Local small businesses share the concerns of their counterparts around the country. More than 4,600 respondents to a national NFIB survey ranked rising health insurance costs as their No. 1 concern, just as they did when the group conducted a similar survey in 2000.

The survey, released May 25, reflects the group’s national membership, but "it’s no different here," said Simms.

"When we have meetings, that’s the first thing on people’s minds," Simms said. "For about the past four or five years it has been. Before that, it was further down on the list."

"The number-one concern for me as a business owner, and for my employees as well, is the rising cost of health care," said Samantha Lapin, president and chief executive officer of POD Inc., an Albuquerque computer consulting company.

Lapin, the U.S. Small Business Administration’s Small Business Person of the Year in New Mexico, said that while energy costs go up and down, health care costs seem to go only in one direction every year, Lapin said.

"It’s a concern, because it’s one of those things where we can’t see an end in sight," she said.

Simms said concerns about health care insurance and other issues voiced by his group’s members generally mirror the concerns of small businesses nationally.

Health care costs, taxes, government regulations, finding qualified employees and dealing with workers’ compensation and liability insurance were among the top concerns of small businesses polled by NFIB.

On the tax front, at least, things are improving in New Mexico, thanks to reductions in the state’s top income tax rates enacted last year.

"I’m not moving my clients out of state as much as I used to," said Skip Phillippi, a founding partner in the Albuquerque accounting firm Phillippi & Wright.

Lower income tax rates help small businesses and, in turn, help the state’s economy, Phillippi said. Business owners who used to quickly conclude that moving to Texas was in their best interest are now less likely to do so, because the tax savings aren’t what they used to be with New Mexico’s lower rates, he said.

"It keeps the businesses here, it keeps the employers here, it keeps everything here," he said.

What’s more, he said, it helps the state attract existing businesses and wealthy entrepreneurs.

"Now you’ve got some big companies with some big-money people coming in as a result," he said.

Helping – but still hurting

Small-business owners still say New Mexico can do more to improve the climate for small businesses.

Too often, they say, businesses are looked upon suspiciously by government officials, especially at the local level. That results in everything from an unwillingness to hire private contractors to handle technical matters to a slow approval process for business permits, they said.

"I don’t think it’s really getting any better," said Simms. "The psychology is there, just based on this income tax cut, but the attitude of state and local governments is very anti-business. Business is generally looked upon with suspicion and profit is a four-letter word."

Lapin said state and local economic development officials do a good job of helping new companies relocate to New Mexico, but not enough to help those that are already here.

"We’d just like to see more done to promote existing businesses in this state – more economic development initiatives are aimed at making our existing businesses more successful," Lapin said.

Lapin was pleased to learn that Albuquerque’s new economic development director, Fred Mondragon, recently said that retaining and assisting existing businesses would be a top priority for his department. Too often, out-of-state companies are offered incentives, such as industrial revenue bonds, when those same incentives aren’t extended to local companies struggling to stay in Albuquerque, he said.

But Simms said he believes New Mexico will be slow to truly adopt new attitudes toward businesses. Taxes may decrease and new incentives may be put in place, but local officials will probably always be slow to permit new facilities or enact changes in zoning and other regulations that businesses want.

"It’s part of our culture here to be suspicious of business," he said.

Like rising health care costs, inflexible government policies and attitudes are likely to continue to be a top concern of small businesses in New Mexico, Simms said.

Down in the South Valley, Neiderman said he feels wanted by the folks who matter most, his customers.

But he wishes small outfits like his would get a little less resistance and a little more help. And appreciation.

"The big world doesn’t understand – it’s all these little bitty businesses that keep the big guys going," Neiderman said.

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SMALL-BIZ WOES

A survey by the National Federation of Independent Business listed these as the top concerns of small companies:

1. Health insurance

2. Liability insurance

3. Workers compensation

4. Cost of natural gas, propane and gasoline

5. Taxes

6. Cash flow

7. Government regulations

8. Electricity costs

9. Finding qualified employees

10. Profitability

(Federal, state, and property taxes were consolidated for the purposes of this list and ranked fifth, sixth and eighth, respectively, in the survey.)