Monday, March 16, 2009

Small Businesses Shoulder Burdens

Submitted by ASO member: Tom Sullivan

Today, President Obama announced some of his plans to help small business. It will be difficult to distract people from pouring over NCAA tournament brackets, but it is worth directing some attention to how the President approaches the sector which we are all counting on to rescue our economy.

Well before newspapers were carrying news of the economic collapse, large companies were shedding jobs and out of the wreckage grew newly self-employed entrepreneurs. This is not a description of some job-layoff silver lining. Rather, it is a statement of what employment data show over the past several years. Now that small and large businesses alike are deep in the trench of an economic recession, the national focus is appropriately how to climb out.

Small businesses have rescued the economy from past recessions. Entrepreneurs grow businesses through innovation, ingenuity, creativity and unbridled energy. Businesses grow as entrepreneurs succeed. As small business goes, so goes the economy. My advice to the President is to carefully examine what policies stimulate entrepreneurial activity and what policies stifle that activity. And, I advise, go full steam ahead with the policies in the “stimulate” category.

Health care and taxes should be the top two issues of focus for President Obama as he details his plans for the entrepreneurial sector. Small businesses will applaud a concentrated effort to address costs when re-shaping the health insurance system. The top question that needs to be answered is, “how do we make it easier for small employers to provide health insurance?” On taxes, the President should acknowledge that the more cash small business has, the more likely those profits will result in new hires. Postpone the rhetoric of “tax the rich” until those wealthy employers hire more people.

Next, I advise the President to focus on how government agencies treat entrepreneurs. Small businesses shoulder a disproportionately high percentage of regulatory burden compared to their larger business competitors. The cost of keeping up with the massive amount of federal rules, regulations, standards, guidance, filings, reports, and permits is 45 percent more for very small businesses compared to businesses with 500 or more employees. Federal regulatory costs for small businesses total $7,647 per employee per year. On a per-household basis, this cost exceeds the cost of healthcare. The President’s small business plan should start with a pronouncement that his White House will hold regulatory agencies directly accountable to small businesses. He can do that by adding a small business empowerment section to President Clinton’s executive order on regulatory planning and review. The small business section should stop federal mandates that unnecessarily stifle entrepreneurial growth and should encourage regulatory actions that unleash the economic potential of small enterprise.

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