It's not because credit is tight or because I can't handle the risk right now.
I'm getting real tired of the financial news media telling me why I'm not hiring. Those who speak on the issue blame tight credit markets (lack of lending by banks) as the primary reason. They also blame concerns about the economy, and concerns about the consumer not spending money, but those are always secondary. That may be the case for a small group of companies, but most of this is trite commentary by folks who don't know the real reasons that hiring has stalled.
Let's take a moment and kill a dumb myth — most of us don't borrow from banks in order to hire. We borrow to buy equipment, and rely on cash flow to pay for hiring new employees. This is especially true in the service sector.
Yet this raises a question. It's clear that cash flow is strong — there's trillions of dollars on corporate balance sheets. If companies wanted to hire, we would.
So why aren't we hiring?
It's simple: uncertainty. I wrote about this concern earlier in the year, and not much has changed. We're still waiting to learn what recent legislation will mean for us. And I'm not just talking about the Financial Regulation passed in July. When politicians told us we had to pass the Health Care bill to find out what was in it, business owners suspended their plans to hire. The risks are too great.
To be clear, business owners can handle risk — it's a very big part of what we do. But we're not idiots. The myth propagated outside of business is that we're all cowboys and will risk it all regularly. (These are the same folks who push and beg us to hire.) Here's the thing — entrepreneurs like calculated risks, risks that we think are likely to yield profits for us. Very few successful entrepreneurs will gamble with their companies, betting the whole enterprise on a lark. We want to be comfortable with most of the variables before we take a leap. That's how we built our companies, and that's what we need in order to continue to grow them.
And there's the rub. We won't jump back into the hiring pool until we know that we won't be blindsided by new taxes, that the new taxes won't push us into a double dip, and that new regulation won't swamp us with needless paperwork. So if Congress and policymakers are serious about getting the economy back on the right track, my advice to them is to get out of the way. Stop regulating and pushing agendas, and let us build. It's what we do, and we're champing at the bit to do it.