Mr. President, as a small business owner for over 25 years it was very encouraging to hear you acknowledge some of our contributions to the economy.
According to the Small Business Administration (SBA) Office of Advocacy, small businesses have been responsible for all the net new jobs since the 1970’s. We are the ones that hire and train most first time job seekers or retrain returning workers.
We are also credited with inventing: the airplane, audio tape recorder, fiber optic examining equipment, heart valve, optical scanner, Pacemaker®, personal computer, soft contact lenses and the one thing none of us can live without, the lowly zipper. SBA research indicates that small businesses produce 13 to 14 times more patents per employee than large firms. My own father was one of those inventors.
We bring diversity, artistry, strong value systems and uniqueness to our communities. We provide an opportunity for anyone who wants it to participate in the American dream of independence. The SBA estimates that three quarters of all businesses are non-employer business, those with no paid employees. Most are what we call “part-time entrepreneurs” who supplement their income with a business on the side. In addition, we see more workers with a disability starting a business when a job is not available or will not work given the kind or severity of the disability.
We also pay more than our fair share to support our neighbors and to protect the planet. The IRS says that we pay 60% of the taxes while big businesses only pay 10% and individuals pay the rest. We also pay significantly more for regulatory compliance than businesses with 500+ employees.
Thank you for the offer of access to capital. You’re right that is critical. But, no offense to banks and credit unions, they really are not good at getting money out to us. Even with a 90% loan guarantee from the federal government’s SBA programs, they are reluctant to let go of the cash you give them. My banker friends tell me they cannot understand why perfectly good loans were turned down. I can’t either.
But now there are other problems. Many have laid off most, if not all, of their loan officers so they have to rehire and retrain people which takes time. Even when there were more loan officers and staff, most did not have direct experience working for a small firm. The corporate attitude has been that a small business is just a big business that has not grown yet and should behave that way. They forget that every big business was a small business first and had to be more creative and buck the trend to make their dream a reality. They get upset when we don’t play like “the big guys”. They don’t realize that we don’t have full-time lawyers and accountants on staff or the time to keep filling out the same paperwork over and over as we go from one financial institution to another hoping they will graciously consider lending us our money that we gave to bail them out.
Actually though, most of us like staying small. We are “roll up your sleeves” owner-operators who like finding the work, doing the work, and administering the work. We may complain about the hours, the money etc. but there is nothing so freeing as being your own boss and doing things the way you consider the best way for all concerned.
You asked for ideas in your State of the Union address. Here are my top seven small business recommendations.
1. Give us the money directly. Cut a check for every small business under 100 employees and less than $5 million in revenue that has an active federal tax ID number. No tax credit please because you have to have income to need a tax credit and we don’t have the jobs to need the credit — yet.
Then we can decide to buy equipment, upgrade, move to a new location, or add staff. If we are smart enough to invent the heart valve, we are smart enough to know what our businesses need instead of being told what we can use the money for. Yes, you have most of the gold and can make the rules. But for years, we have been making bricks and mortar out of straw we create ourselves and spinning that straw into new gold.
2. Subsidize our new hires and retraining as you suggested. We used to have a state program, the Joint Training Partnership Act, which got federal funds. It had some fiscal and accessibility problems. It was really not set up for micro businesses (those under 20 employees and who create the bulk of the new jobs). Regulations favored larger businesses but it could have worked. Maybe it can be revived, revised, and tried again.
3. Access to affordable healthcare is vital. We are fortunate to have fought the battle for small business coalitions in Texas but we have not won the war. The reason: insurance companies are reluctant to underwrite even when they only have one administrator to deal with. Can you make them play? Maybe you can.
4. We need help getting our employees get through the torturous path of care and reimbursement, It is a huge time waster and added expense. Big businesses have benefits people that do nothing but that all day. We don’t have that luxury.
Require providers and insurance companies to use uniformity in forms and share information electronically. These two things would save a lot of time and effort and result in more thorough care. It might even get everybody paid faster and would definitely save owners money.
5. We need jobs for our workers or for any workers we would hire. Require every federal contract or any entity, organization or business that gets federal money to unbundle their contract requests. These groups may have great small business participation goals. But because they put out one contract and want everything from soup to nuts only extremely large corporations who have a “department store” of offerings can win the bid. This may save the entity paperwork and some time since they only deal with one vendor but it is short-sighted. It costs the nation and their community tax revenue, jobs, and the retention and growth of its local businesses.
6. Texas law (Texas Government Code: Chapter 2006.002 — based on HB3430 which was passed in 2008) requires an economic impact statement on every piece of legislation proposed. This is supposed to provide lawmakers with how it might affect micro and small businesses. The federal government needs such a law. I realize the President does not make the laws, but the President can work to suggest that lawmakers do make laws happen.
7. Finally, here’s a thought. Ask us what we need and want and not a government bureaucrat who probably has an MBA but who has never worked for a small business or never had to make payroll and pay taxes when they hadn’t collected the money owed to them yet.
Why don’t you convene a new White House Conference on Small Business? The last one was in 1995. We came out with 60 top recommendations which we presented to President Clinton and the Congress. Some have been adopted. There are still some good ideas there that are worth looking at again.
I recognize you have a lot on your plate. Another option is to subsidize each state to hold a State Conference and then use a web-based national town meeting with you and the Congress. Small business owners representing each state could share their top recommendations.
Here’s to our success! I do wish you and our country the best of luck. Together, we can move mountains — or at least go around them. Speaking for other small business owners, we are ready to help. Just ask us.
Jan Triplett, COO Business Success Center
1991 Small Business Advocate of Texas
1995 Governor’s Delegate, White House Conference on Small Business
2000, 2001 NFIB Delegate, Congressional Summit on Small Business
Co-author Thinking Big, Staying Small & author Networker’s Guide to Success