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In the wake of the mid-term elections . . .
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I wrote a blog post for commercialdeals.com/blog that was posted last night. They had asked for my take on the mid-term elections, and I thought you might find this interesting.

There were five top issues for small businesses in this year’s mid-term election, and these same things should be carefully watched during the next two years:

1.       Uncertainty. I’ve been asked about the Republican surge in the recent mid-term elections, and the truth is that there are extremes on both sides of the aisle. The extreme on one side would further the growth of regulations and taxation, while the extreme on the other would do things like unfund the SBA. As with most things, a middle-ground is the best course of action. If reasonable heads prevail after the election, then we may not see tax increases, and we may see bad legislation and regulations (well-intentioned, of course) get rolled back. This would provide some certainty that things may not get much worse. When that occurs, the productive class (job creators, large and small) can start to plan their future growth. Without certainty, these folks (people like me) will continue to tread water and try not to take any chances (which are fundamentally necessary for rewards in the future).

2.       Taxation. When government “penalizes” the profit-motive for entrepreneurs (by increasing their taxes), the risk-reward ratio for owners of businesses big and small becomes skewed. Fewer people are willing to innovate and start new businesses (or try to grow and hire more people for existing businesses) when this occurs. Raising taxes will only strangle economic growth further. Every time taxes are lowered, receipts rise (partly due to increased economic growth). We need to make economic growth a primary focus, but some in Washington have let ideology trump that.

3.       Regulation. As with taxation, the government can (and has) made running and trying to grow a business more onerous by increasing regulations. We’re at a crossroads culturally where we have to decide if we want more entrepreneurs or fewer entrepreneurs. This election will help impact that cultural shift. Because we’re in difficult economic times, the knee-jerk reaction has been to tighten-up on regulations (to try to prevent mortgage bubbles, stock market crashes, etc.), but it won’t provide the economic stimulus we need. A few “bad apples” have poisoned the cart for everyone, tougher regulations are the result. The problem, as usual, is that the pendulum has swung too far in one direction. The results of the mid-term have potentially swung it back the other way.

4.       Attention paid to Small Businesses. As a rule, small businesses don’t get nearly the attention they should in Washington. Everyone, rhetorically, is “for” Small Business, but the fact that the ARRA provided only 0.899% of its funds to a sector that employs over 50% of the population is rather telling, just as one example. My online video, THE CRISIS ON MAIN STREET, put forth my explanations for this prior to the elections, but suffice to say we culturally genuflect to Big Business at the exclusion of Small Business. For a while there (maybe from the mid-80’s to the early 2000’s), we elevated entrepreneurs some, but those in Washington seem to be mostly looking out for those who can afford fleets of lobbyists these days (whether it’s Fortune 500 companies or labor unions). These “newbies” in Congress are mostly on-record as being for the “individual” over the “group” or “government.” This should bode well for America’s entrepreneurs IF they maintain those principles.

5.       Vilification of business and the profit-motive. The idea that “government is good” and “business is bad” needs to be moderated some. As I’ve said in previous speeches earlier this year, “Entrepreneurs are fundamentally Creators and because of that, we need more of them, not less.” These entrepreneurs are the ones who’ll boost the economy and create the jobs and wealth of tomorrow. These need to be priorities one, two and three right now. Nothing less will do . . . unless everyone wants another “historic” election in 2012.

What are your thoughts on the mid-term elections? Leave a comment below to voice your opinion about something I’ve written, or to simply share your side of things.

Dedicated to Your Continued Success,

Chris

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11 Comments

  1. Bob kirscher says:

    I believe the elections have shown that a majority of the nation believes our current Government Policies are misguided.
    We absolutely need more entrepeneurs and should help them or get out of the way instead of punishimg them with more taxes and forced healthcare.

  2. Nat Weiner says:

    1) Angst in this country has rarely been running as high as it is now. Right or wrong, Joe Sixpack blamed the Dems for the economic malaise and expressed his anger in his only tangiblem manner. It lost faith in hope and change.

    2) The younger demographic sat out this dance, the same demographic that installed Obama.

    3) If I were a betting man (that phase of my life is over), I’d look for massive tax breaks. It’s the only immediately implementable “solution.”

  3. Pontheolla Abernathy says:

    Thanks for the insights given as to the current political climate and what it means for small business owners.

  4. Kim Bigley says:

    I liked your post on 504 blog – interesting.

  5. Alan Davidson says:

    All good points.

    UNCERTAINTY: Absolutely. Businesses are sitting on reserves because they have no idea what is coming next. Their administration never passed a new budget, stalled on the tax issue and held possible Cap and Trade taxes and Card Check in the wings with the threat of reintroduction of these measures. Why any business would gamble on growth with such a potential threat looming is the core of the uncertainty.

    TAXATION: 250K income is “rich”? Most are small businesses with personal income flowing through an LLC or “S” status. Why invest when punishment for doing so is the result and growth is nowhere to be seen on the horizon?

    REGULATION: The death knell of small business. Imagine being a small contractor in California when this passed regulation becomes effective January 1st: http://www.documents.dgs.ca.gov/bsc/CALGreen/CALGreenGuideFirstEdition8-2010.pdf

    ATTENTION PAID TO SMALL BUSINESSES: This administration has demonized small business and cherry-picked which industries to favor. Big Oil is bad, Big Unions are good, etc. Not to mention locking out the Chamber of Commerce during their “Jobs Summit” and then later, going to full out war on the Chamber.

  6. Steve Pickering says:

    By the way, Chris, I greatly appreciate your efforts during the campaign season. Using your blog to discuss the issues was incredibly useful to many small businesses as well as candidates. “The Crisis on Main Street” is VERY powerful, and will continue to be relevant now that the election is over. Thanks for producing it!

  7. Rick Falls says:

    Hey Chris,

    You have been a stand up guy, and your insights on business and the entrepreneurs contribution to our economy are invaluable.

    I’m a little disappointed that control of the senate was left in the hands of the people who seem intent on destroying capitalism.

    I wish that more of us would show some respect to the founding fathers incredible vision of limited government.

    Paying attention to the history lessons of previous administrations, and the both positive and negative effects that their policies have had on our economy, are quite clear and yet lately we’ve managed to ignore those lessons.

    Top down push us around, is not working so well, but does it ever?

  8. Steven says:

    A “fair and balanced” assessment Chris.
    Our federal government has certainly adhered to the golden rule; the ones (fleets of lobbyists) with the gold make the rules.
    Unfortunately, over 30 years, they have upset the balance between regulation and business. It was deregulated, run amok greed that basically caused the recession and is contributing to the sluggish recovery. (John Dean, Robert Reich, Krugman)
    If you want to know who is doing what to whom, follow the money. The big banks / businesses do, indeed, have mountains of money and won’t lend or spend, not necessarily because of uncertainty, but because they cite, “sluggish demand.”
    Middle class Americans and small businesses are that “sluggish demand” because, through gratuitous deregulation, as more and more money is hoarded at the top, less and less is available to middle class America, which includes the majority of small business owners.
    As in a professional football game, the proper balance between regulation and initiative must be achieved. It is a moving target that in order to hit, the basic concept of Laffer’s curve should be applied.

  9. Tariq Jaffar says:

    Chris
    I will……..I will let you know next week.
    Have a good weekend.

  10. Luis Vanegas says:

    Thank you for sending the link, I could not agree with you more.

  11. Jim says:

    Great article. Keep up the pressure. Government has no clue. Banks refuse to accept the realities of the long term requirements of small business development, growth and success.
    Several weeks ago Michael Milken wrote an article for the WSJ that thirty year loans for businesses would be better for everyone’s economic well being than thirty year home mortgages.

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