Pew Research reports that two-thirds of the nation’s 33 million small-business owners have fewer than four employees. Also, 85 percent of them are white and 76 percent are men. More than half are over age 50.
Today, these small-business owners are not a happy bunch. Despite a surge in startups, lower inflation, a softening labor market, fewer supply chain issues and a growing economy, their sentiment and confidence levels are still at historic lows.
Not surprisingly, more than half of small-business owners in one recent survey say they believe another Donald Trump administration would have the best impact on their businesses, compared with only 14 percent for Joe Biden. In another recent survey, 33 percent of small-business owners believe that Trump winning the election will positively impact their business, versus 16 percent for Biden.
Today, Kamala Harris has taken over for Biden as the Democratic nominee. So now this is her challenge. Can she win over small-business owners this election year? I believe there is a way.
When government is friendly toward business, businesses feel more comfortable investing, hiring and taking risks. Taxing “the rich,” going after “the wealthy” to “pay their fair share” and vilifying “big corporations,” on the other hand, makes businesses seem evil. This may be a great plot line for a Hollywood movie or for populist fringe groups, but it’s not a terrific strategy for a government that needs to win over a large swathe of voters.
Remember that there are many small-business owners who, with their spouses, do make more than $400,000 per year (the “wealthy”) but use a substantial amount funds to reinvest in their companies. Also remember that countless small businesses — from pizza shops to landscapers — rely on big corporations and their employees for their livelihoods. And while it’s important to help business owners of color or in historically disadvantaged neighborhoods, it’s also important to recognize that 85 percent of us would not be included in that group. We need support and a little love too.
As I’ve previously written, the Republicans will work hard to make permanent the 2017 Tax Cuts and Jobs Act, which includes many provisions that benefit small-business owners. Without that, my tax bill personally will increase between 20 and 30 percent.
Harris has so far been mostly silent on this issue, so most of my clients are assuming she’ll continue with Biden’s policies, letting the tax cuts expire. My advice for her is to compromise and champion a few of the TCJA’s provisions that specifically benefit small businesses — most importantly the Qualified Business Income Tax. She should also support making permanent first-year deductions for capital equipment and research and development expenditures. That would make me, and many of my clients, much less concerned about a tax increase if she were elected.
Over the last few years, we’ve seen many new regulations emerge from various government agencies working under Biden’s direction that require all businesses to reclassify certain independent contractors, pay more overtime wages, eliminate non-compete contracts and be subject to new and more rules (and fines) for safety, harassment and discrimination violations. These are important. But they come with significant costs.
Big corporations can absorb these costs, which is why an overwhelming number of both Republican and Democratic small-business owners say business policies today favor large companies over small businesses. Small businesses struggle to keep up with and pay for these regulations. A blanket exemption on many of these rules for employers with less than 10 employees or so would win over many voters.
Isabella Guzman is perhaps one of the best Small Business Administration leaders I’ve ever seen. She’s worked hard and travelled extensively. She deserves a promotion to the Department of Commerce or Department of Defense, where she can do the same thing for the many small-business programs there that need attention. And she should be significantly involved in choosing her successor at the SBA to ensure that her work continues.
Harris also needs to set forth a plan on immigration, which needs to be a priority. Congress must compromise and pass a bill already. No one wants to see families physically deported, but everyone knows that illegal immigrants are breaking the law and creating a burden. Sort this out with Congress, secure the border and create a better legal path for citizenship. Small businesses need workers. The economy needs more entrepreneurs. Law-abiding business owners need help competing with those that flout the law and hire illegal workers. The country needs a strong president who will work with Congress to fix this major problem.
Finally, consider a new funding program for succession. As mentioned above, the majority of small-business owners are over the age of 50 (the average age is about 55). Many of my clients are thinking hard about exiting their businesses over the next few years, and many others have already gotten started. Sales of business are up more than 20 percent from a year ago. But tax, financing and other obstacles remain.
Harris would do well to support and expand the tax benefits for Employee Stock Ownership Plans, so that more workers can have equity in their workplaces and business owners can get help cashing out. Direct the SBA to create special financing programs for those looking to buy businesses. This is not only an enormous opportunity to provide for retirement but also a chance for younger generations — and even employees — to own businesses.
I’m a moderate Republican business owner. My vote is still up for grabs. Taking the above actions would go a long way toward winning my support — and the support of many other business owners — for Kamala Harris.
Gene Marks is founder of The Marks Group, a small-business consulting firm.