There is a great post over at the Journal by Eric Morath that talks about how the best job creating businesses are not the small ones, but the new small ones. You can view the post here:
http://blogs.wsj.com/economics/2014/02/24/say-it-together-young-businesses-not-small-ones-drive-job-growth/
In it he talks about how the Chicago Fed Chairman Jason Faberman explains how the largest creator of jobs are small businesses that are less than 4 years old.
This concept sound confusing at first, but can be easily explained when thinking about the difference between a fledgling tech company and an established barber shop. Both are small, but the barber shop is probably not going to be hiring at the same clip that the tech company might be.
Faberman, according to Morath, advocated that governments encourage policies that support new business, not just any small business. While the article does not go into too many details, I would like to suggest one possibility. Many new business are cash starved, while older businesses feel the weight of growing taxes as time goes by. Perhaps governments can make the tax credits and exemptions that are granted to many small businesses transferable. This would allow new businesses to sell their credits to established firms, allowing greater capital access and improving the financial strength of all small businesses.
There may be some logistical, and revenue challenges, that could reduce the success of this idea, but at face value it could help both the corner barber shop and the hot new tech start-up.
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