Small businesses hoping for a remedy for uncertainty


In his fourth State of the Union address on Tuesday night, President Obama will try to convince Americans that he deserves a fifth. (Melina Mara/WASHINGTON POST)
January 24, 2012

Politicians have made small business a frequent talking point in recent months, both in the nation’s capital and on the campaign trail. Naturally, most expect that to continue when President Obama delivers his annual address to Congress on Tuesday evening.

So what do small businesses want him to say?

A group of small business owners and advocates shared with us their expectations for the State of the Union, and while their ideas of an effective message varied considerably from one respondent to the next, most agreed that small firms are currently looking for one thing above all else: a remedy for uncertainty.

“Especially for small businesses, the threat of new taxes and changing regulations goes right to their bottom line,” Dan Danner, president of the National Federation of Independent Business, said in an interview. “So when the cost of doing business is a moving target, it’s hard to with confidence make any sort of major investment like purchasing new equipment or hiring new people.”

Small business owners across the country echoed the same point, several noting that they are as concerned with the prolonged lack of clarity as they are which particular rules and regulations are coming down the pipeline. By and large, they expressed hope that the president will help them gain their footing by nailing down some specific policy, legislative and regulatory objectives.

That said, many employers were quick to pinpoint a handful of moves they think the president should outline in his speech, including a tax reform plan and a change of heart of the health care reform law, though all acknowledged that the latter was a longer-than-long shot possibility.

Mike Mitternight, president of Factory Service Agency, a general contracting firm in Metairie, La., argued that “an announcement of the suspension of the health care bill would send growth tremors through the entire business community” by signaling less government spending and alleviating a major financial burden on employers. More realistically, though, he would like to hear the president propose a revised tax code that makes life simpler for small business owners. Steve Caldeira, chief executive of the International Franchise Association, made that same plea in a letter to the president, noting that franchises could grow faster than their projected 2 percent growth rate this year if the government offered long-term certainty surrounding tax reform.

Michael Gilman, owner of hair product retailer Grooming Lounge, brought up another common concern small business owners hope to have addressed on Tuesday — access to capital. His Washington-based company plans to launch new products and open new locations in the coming months, but those plans hinge on his ability to secure funding.

“I’m hoping the president lays out his thoughts on loosening up the credit markets via making it easier for businesses like ours to ramp up, hire and retain great employees,” Gilman said. “Our two cents are that this could be done by extending tax breaks for employers and employees, making it possible for companies and employees to succeed and actually put some money away.”

Along those same lines, the Small Business and Entrepreneurship Council in a statement advised entrepreneurs to keep a close eye on whether the president uses the power of his office to push through pending crowdfunding legislation that would give new businesses yet another means of securing capital.

Most small business owners also said they would like to hear the president loosen his stance against the Keystone XL oil pipeline, however, Frank Knapp, vice chairman of the American Sustainable Business Council, applauded that position and said he hopes the president remains firm in opposing the project. “Those mythical tens of thousands of jobs people are talking about just aren’t there,” he said in an interview, noting that government estimates place the number of jobs closer to a few thousand, most of which will be temporary. “It would be nice if he would clear up all the misinformation surrounding the project and explain that it really won’t lead us to energy security.”

Knapp also commended the president for elevating Small Business Administrator Karen Mills to the cabinet but said he was concerned about the the president’s recent proposal to combine six federal agencies, including the SBA.

Robert Litan, vice president for research and policy at the Kauffman Foundation, said the president was running out of options for “magic policies left for entrepreneurs” but said he hoped Obama would call on Congress to make permanent a capital gains break for investors who pour money into small businesses. The measure, part of the Small Business Jobs Act the president signed into law in September 2010, helped encouraging early-stage investments in small firms but expired earlier this month.

Still, those individual legislative initiatives are relatively trivial compared to what Litan calls the big picture: the country’s growing need for a finalized budget.

Obama “has to note that we are long overdue for a budget deal and that he’s willing to do whatever he can between now and the election to get a deal done,” Litan said. “He has to at least wave the flag and show that he is serious. If there is nothing about the budget in there, it will be a glaring omission.”

Follow On Small Business and J.D. Harrison .

J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he manages the Post's On Small Business blog.
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