I know... I know... Politics is on that "do not discuss" list, but Friday's inauguration is going to impact all of us in one way or another. It doesn't matter whether you are Republican, Democrat, Green, or Independent, if you are stepping into the ring — Your Business VS Uncle Sam — you'll need to know what a Republican President and Congress will mean for your small business after Friday's big events are over.
For at least the past 20 years, I have believed our government needs to be run more like a business, and specifically, a small business. Why? Because small business owners don't have the luxury of a seemingly endless budget, or any leeway in the tax laws, or the ability to quickly recover from ill-advised mistakes or miscalculations. While we all work hard to plan for the future, small business owners live in the here and now. A five-year-plan is awesome, but sometimes it's hard enough to just plan for next week!
Small business owners are politically split, but they do tend to lean toward the Republican side. A 2014 survey by the National Small Business Association found that 39 percent of small-business owners affiliate more closely with the Republican Party and 22 percent with the Democratic Party, while 29 percent consider themselves independents. (Relatively small numbers side with the Tea Party or Libertarian Party.) However, 82 percent of those surveyed said they don’t vote straight party lines. In fact, most small business owners are very political, with a whopping 95 percent saying they vote regularly in national and local elections, and 62 percent having donated to a candidate.
No one can say for sure what the new Trump presidency will mean for your particular business, especially when you factor in that Donald Trump is about as far from "small" business as he can get. But it's been a while since the United States has had a Republican president and Republican majority in Congress, so I went digging to see what this could mean for small business owners.
The Affordable Care Act, more commonly referred to as “Obamacare,” has been touted as a success by the Democrats and has been the target of harsh criticism by Republicans. While Republicans are preparing for an immediate repeal of the program, it is more likely they will rename the program and modify the legislation to ease the mandates on small businesses. Even many owners of businesses that are too small to be affected by the mandate will cheer modifications that can clear the path for future growth.
Minimum wage earned a lot of coverage during the debates and stump speeches. It was a popular topic, but was generally divided along party lines, with Democrats typically in favor of raising the minimum wage and Republicans opposed to it. Trump, himself, publicly opposed a wage increase, but then back-tracked to say he would consider a moderate increase. For small business owners, this is a double-edged sword. While most would prefer to be able to pay their employees more, every dime spent on day-to-day operations cuts into an already tight budget. Being mandated by the government to pay employees more could mean the difference between afloat and under water.
Although small businesses are not usually impacted by organized labor, Republicans have been supporting anti-union “right to work” laws enacted by states that prohibit employees, as a condition of employment, to join or not join a union or pay dues. Democrats argue that these laws result in lower wages and less benefits for workers, both of which are potentially good for business owners.
A recent Manta poll of 815 small business owners revealed that Donald Trump was the top choice among all candidates in both parties by a wide margin. Outside of Jeb Bush, Ben Carson, and Carly Fiorina, Trump was the only leading candidate with significant business experience, polling at 38% among small business owners. Despite concerns about his lack of political experience and his confrontational nature, Trump seems to have the support of the small business world for now.
When surveyed about the current state of their business and their outlook on the upcoming year in terms of the economy, government involvement, marketing, and the outcome of the presidential election, small business owners were loud and clear.
1. Small businesses are unsatisfied with government involvement. Half of all small businesses say the government doesn’t do enough to support them, one in ten don’t want the government involved in their business at all, and only larger companies tend to embrace government involvement.
2. Small business owners prefer a Republican president. Of those surveyed, 39 percent expect a positive result from a Trump presidency, while the other 61 percent were split among 21 other candidates.
3. Hiring and healthcare are two of the biggest pain points. Half of small business owners said that hiring new employees was more difficult in 2016, and 43 percent said employee healthcare is their top concern. Other common challenges include increasing profit (45 percent), growing revenue (43 percent), and cash flow (36 percent).
4. Business owners are (mostly) optimistic about revenue this year. Although smaller companies with five to 50 employees are more pessimistic about the economy, 71 percent of small businesses still expect an increase in revenue in 2016. Most small businesses predict a modest revenue growth of 1 to 4 percent, while only 7 percent expect declining revenues.
5. Social media marketing remains a challenge. Eight out of 10 small businesses use social media, though many neglect SEO, blogging, and video. While the use of Twitter, YouTube, Pinterest, and Instagram has increased, Facebook, the most used social network, actually declined in 2016.
But small business owners also face some very sobering statistics when considering the incoming Republican administration and majorities when compared to earlier administrations.
When comparing stock market performance, Democrats outperform Republicans five-to-one. A $10,000 IRA would have grown to $72,539 during the 16 years of Democratic administrations, but only to $14,986 during the 16 years of Republican administrations.
All six of the major market crashes happened under Republicans - Hoover (1), Nixon (2), Reagan (1) and Bush (2).
The worst crash ever was the 58% decline which happened in 17 months of 2007-2009, during the Bush administration.
The longest bull market run in presidential history occurred under the Obama administration, which ends on Friday.
Oxford Economics project a Republican/Trump Presidency will knock $1 trillion out of America's economy and lower the GDP by 5%, mostly due to trade and tax policies.
A Trump presidency is anticipated to cause a deep recession in America, but also quite possibly the first global recession.
During the eight years of Reagan's administration, the best for a Republican, corporate profits grew only 26.82%, compared to 55.79% during the last eight years.
New job growth is generally ten times higher under Democratic administrations than their Republican counterparts.
Across 35 years of Republican presidencies, black unemployment went up a net of 13.7 percentage points. Across 22 years with Democrats, the black unemployment rate fell 7.9 points.
Whether your business will succeed or fail in the next four years will depend on a variety of factors, many of which will be directly influenced by Friday's historic inauguration and our nation's first "businessman" president. But when push comes to shove, what you do for your business locally and at the grass-roots level will likely have a far greater impact on your ability to grow and thrive.
Five Free Ways to Improve Your Business Credit Before Inauguration Day
1) Build a strong corporate credit profile. If you don't already have a D&B business credit profile, create one for free at http://iupdate.dnb.com. If you already have a D&B D-U-N-S® number, update your profile to insure the most accurate information about your growing business is presented. Pay especially close attention to the spelling of the business name, address, and phone number, but make sure the employee count is accurate, the SIC codes define your business, and that your history section is completed.
2) Change the way you shop for business purchases. Always create a business account before making purchases for your company. Even if you are buying online or paying small suppliers, always make sure that the sale is being associated to your business. Oftentimes, vendors or suppliers (or their credit underwriters) report automatically to the business credit bureaus, and every transaction has the potential to boost your scores up to 90 percent.
3) Change the way you pay for expenses. Pay for all business-related expenses and purchases using a business bank account or credit card. Most banks and credit card companies report automatically to the bureaus if the transaction is associated to the business and the debt is paid using business resources. If you pay for purchases using a corporate credit card, and also pay the credit card bill using a business bank account, both can get reported to the D&B file and boost your business credit scores and ratings faster.
4) Change when you pay your bills. Most vendors and suppliers who report to the business credit bureaus do so when they run their statements. You should make sure you always pay your bill with enough time for your payment to reach it's destination. Mail payments 10 days in advance of the due date. Any payments made by phone should be processed 3-5 days before the due date to allow time for the payment to clear processing.
5) Make sure all of your company's vendors, suppliers, bank accounts, and credit cards have the correct business name and address information exactly as it shows in your D&B file. Even something as insignificant as an abbreviated or out-dated address can keep your payments from reflecting into your credit file.
As always, reach out to me directly if you have any questions. Free consultations and paid credit-enhancement services are available for small business owners who need assistance.