May 20, 2009 06:34 AM UTC

How Colorado can support small businesses

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• by: DavidThi808

The Colorado state government helps certain classes of business. Large businesses, and businesses who have enough financial interests in front of the state. Both have lobbyists, consultants, etc. who work effectively to get their needs in front of our state’s leaders. Sometimes they get their way. Sometimes they don’t. But they get support.

And then you have businesses that the state chooses to pay attention to. In the case of the Ritter administration this falls into two groups, green energy businesses both in the state and ones they try to bring here. And targeted industries where they try to get companies to open facilities in Colorado (but ignore ones already in Colorado).

So who is missed in this? The vast majority of businesses in the state – small and medium businesses (aside from those industries who sell primarily to the state). Ok, so the state favors a few and ignores the rest – but we live in a free enterprise system. So shouldn’t we just figure that’s the way it is supposed to be (aside from those that Ritter chooses to elevate)?

Well, yes and no. Because it is in the state’s interest to look at local businesses for two very important reasons. Reasons of self-interest. Reasons that will benefit the state and its residents.  

First let’s look at two companies that sell absolutely identical products, provide identical service, at the same price. So it makes no difference to the state, absolutely no difference, which it buys from. But if the state buys from a local company and because of those purchases has to hire 2 more people, then 2 people go off of unemployment and instead become taxpayers. Those two people move from the debit to the credit side of the state’s ledger.

On the flip side, if the state buys from an out of state company, those two people remain on unemployment. So all things being equal, there is value to the state in purchasing locally.

Second let’s look at two companies where one is a large multinational (i.e. out of state) and the other is a small (usually local) company. And the small company has a better product. The state is better off if it uses the better product. But the large company has a lock on the state where the state is not interested in looking at alternatives.

So the state spends more money than necessary, money that could otherwise go to underfunded parts of the state budget. And at the same time the state ends up with more unemployed and fewer taxpayers.

I am not proposing a repeat of the ultra-dumb Always Buy Colorado. The point is not to force purchases from local companies because that can saddle the state with inferior products.

Instead what I propose is to create an SBA for the state – a small group focused on making state agencies take a real look at local alternatives for products & services they buy. That’s it – just make them fairly evaluate local companies as alternatives. The return to the state in reduced unemployment, increased tax revenue, and improved efficiencies should more than pay for this effort.

And to those that say, well of course the state does this – no it doesn’t. To use a personal example, for two years we have attempted to get the OIT to take a look at our product. Not to buy it – just to look at it. We’ve got the state complaining that it can’t create the reports required by the stimulus package – and we still can’t get the state to even look at our system (which can do this better than what they have in place).

Even if Governor Ritter is not interested in supporting local businesses (unless they are very large or green), he should at least be interested in improving the efficiency of the state. One would think. Or if he doesn’t care about improving the state’s efficiency – at least pretend you’re interested. Fake it so you build up some support in the business community and among the jobless.

And yes this diary means the state will never seriously look at my company. If in return this can get the state to look at other local businesses for the first time – that’s worth it. Because Governor Ritter, your blowing off local businesses costs this state jobs and costs this state money. And in the present economic climate those costs are severe.

It’s time this state gave our small & medium businesses equitable treatment.