Small business’ hope for the State of the Union: A remedy for uncertainty

The Washington Post

By , Tuesday, January 24, 2012

Politicians have made small business a frequent talking point in recentmonths, both in the nation’s capital and on the campaign trail. Naturally, mostexpect 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 theirexpectations for the State of the Union, and while their ideas of an effectivemessage varied considerably from one respondent to the next, most agreed thatsmall firms are currently looking for one thing above all else: a remedy foruncertainty.

“Especially for small businesses, the threat of new taxes and changingregulations 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, severalnoting that they are as concerned with the prolonged lack of clarity as they arewhich particular rules and regulations are coming down the pipeline. By andlarge, they expressed hope that the president will help them gain their footingby nailing down some specific policy, legislative and regulatory objectives.

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

Mike Mitternight, president of Factory Service Agency, ageneral contracting firm in Metairie, La., argued that “an announcement of thesuspension of the health care bill would send growth tremors through the entirebusiness community” by signaling less government spending and alleviating amajor financial burden on employers. More realistically, though, he would like to hear the president propose a revised tax code that makes life simpler forsmall 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 growfaster 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 anothercommon concern small business owners hope to have addressed on Tuesday — accessto capital. His Washington-based company plans to launch new products and opennew locations in the coming months, but those plans hinge on his ability tosecure 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 andretain 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 andEntrepreneurship Council in a statement advised entrepreneurs to keep aclose eye on whether the president uses the power of his office to push throughpending crowdfunding legislation that would give new businesses yet anothermeans of securing capital.

Most small business owners also said they would like to hear the presidentloosen his stance against the Keystone XL oil pipeline, however, Frank Knapp,vice chairman of the American SustainableBusiness Council, applauded that position and said he hopes the presidentremains firm in opposing the project. “Those mythical tens of thousands of jobspeople 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 themisinformation surrounding the project and explain that it really won’t lead us to energy security.”

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

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

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

Obama “has to note that we are long overdue for a budget deal and that he’swilling 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. Ifthere is nothing about the budget in there, it will be a glaring omission.”

Follow On Small Business and J.D. Harrison.

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