I see so many examples of employees being mistreated / exploited by small business owners that I have been trying to do some research to understand the phenomenon better. This post is focused on the United States simply because that is the limit of my experience.
First, there is absolutely nothing special about becoming a business owner. Anyone can do it. All it takes is about 100-200 dollars depending on the state you are filing, and about 3-5 pages of paperwork with the state's filing entity (Secretary of State, etc). In my home state, you can do it all online and be a business “owner” in about an hour. No background check, no education check, no reference check. In some states, you can even do it as a minor. So the next time a business “owner” is trying to leverage their status as a way to lord over you / lecture you / belittle you, please remember this.
Next, a small business is defined as a private, for-profit business by revenue ($1 million to over $40 million) and/or employees (100 to over 1,500 employees). (source: https://www.census.gov/library/stories/2021/01/what-is-a-small-business.html)
I only added that definition as a reference for the following information. According to the fundera site page regarding financing for small businesses, there are some interesting facts. The information is dated a year behind but I assume that current data is similar.
- 43% of small businesses applied for a loan last year.
- Only 48% of small businesses overall have their financing needs met.
- 70% of small businesses have outstanding debt.
There are other items with detailed explanations on the page I sourced but I felt these three were the most important. (source: https://www.fundera.com/resources/small-business-lending-statistics)
The truth is a lot of businesses just aren't successful and the longevity of the business depends less on the innovation of the owners / management and more on how good their line of credit is with their lenders. Since they can't negotiate prices down for inventory, overhead, and vendors, etc, they take it out on their employees since they usually have the least bargaining power. I feel this is especially true in economically depressed areas where jobs are scarce.
TL;DR: The bar is set so low, almost anyone can own a business. Most businesses are in debt and have outstanding loans. Owners resent having to pay employees with borrowed money while their unsuccessful business model fails so they take it out on them through exploitative measures.