Invest in the Little Guy

In a previous article, I wrote that most people work for small businesses, and that such businesses are the source of most new jobs in pretty much any economy. As such, it is amazing how short-sighted some governments can be when it comes to spending stimulus dollars.

I’ll illustrate this with an example that I can relate to based on the industry that I’m in, but I’m sure you can find other examples (and please feel free to share in the comments below).

I work in technology, specifically in the area of software development. Currently operating as a corporation with a single regular employee (myself), most of the contracts I work on can be done by myself. For example, if I’m hired to build a program to parse and analyze some data, I’ll build that application myself.

If I were to land a larger contract, however, which was beyond the scope of my abilities, whether from a time commitment or because I lacked certain skills, I could still get the job done. I would simply go out and hire someone, which would give that person a job. If I got a really big contract, then I might hire several people, most of whom would have been unemployed until I gave them the job.

If that same contract were given to a large company, however, it is unlikely that a new job would be created. More likely is that an existing employee would be assigned to that project, perhaps allowing him to keep his job. So giving contracts to big companies doesn’t create jobs, it maintains jobs.

As such, because the giving of contracts to small businesses is more likely to create additional jobs, you would think that the various governments, when trying to stimulate the economy, would go out of their way to make it easier for small businesses to be considered for such projects.

It hasn’t happened.

As a small business, I find it much more difficult to bid on government projects than on private sector projects.

The government requires specific forms to be filled out, which is a time-consuming process. They have complicated rating rules for evaluating proposals. Last, but certainly not least, there’s the political element which could bias the entire bidding process from the start.

As a small business, I don’t have the resources to spend hours on each proposal unless I can be sure that my bid will be evaluated fairly, and that I have a reasonable chance of being selected. For me to be able to bid on government projects, the initial bidding process needs to be simple.

The one subject that I haven’t touched on here, but will in a future article, is that of cost. Using smaller companies can bring down the cost of larger projects – and help put limits on the cost of the projects. Yes, the risk may be higher with an untested company that few people have heard of. But the payoff can be higher as well, sometimes by significant amounts of taxpayers’ dollars.