SmallBiz Vote

Pessimistic small business owners react to election

Which of the following describes how you feel about the general economic outlook for your business now that the presidential election has been decided? More optimistic, less optimistic, or exactly the same? Judging by reader responses to our post-election post in this blog, SmallBizVote readers largely agree with the 59 percent of the 1,227 small business owners surveyed immediately after the election by Manta who say "less optimistic." Only 23 percent of respondents to that survey said they feel "more optimistic."

Several commenters to our blog suggested that they would be making layoffs, selling their companies, or entering retirement due to the hardships they foresee during four more years of Obama Administration policies.

Some might sympathize with a Las Vegas business owner who, as Salon reported today, fired 22 of his 100+ employees after the election, citing the cost of Obama's policies to his business. Or they might applaud the CEO of the country's largest coal company, Robert Murray, who, the Washington Post reported, laid off more than 150 employees after praying aloud to ask God forgiveness "for the decisions that we are now forced to make to preserve the very existence of any of the enterprises that you have helped us build."

At the least, such reactions seem premature: the Obamacare requirement for employers of 50 or more FTEs to provide health insurance to them all or pay a fine doesn't kick in until 2014, and the true costs to small business owners will only be known once states establish their healthcare exchanges.

Some say the reactions are also exaggerated and misinformed. Salon reported that the Las Vegas employer:

"seems to have been relying too much on Fox News to inform him about the President's policies on small business. In reality, Obama has proposed tax cuts that would benefit many small business owners, including reducing the corporate tax rate [to] just 25 percent for manufacturing companies."

And the Wall Street Journal reports the comforting news that:

"For business owners struggling to obtain capital, the Jumpstart Our Business Startups Act signed by Mr. Obama earlier this year could provide relief."

In addition, the Journal reports that Obama's record, "such as his support for the JOBS Act, also shows that he has supported measures aimed at helping startups and small businesses raise capital so they can grow and hire more workers."

There's evidence that, more than Obama policies, it's the debt that is causing businesses the most angst, and that would not have magically disappeared had a Romney administration been elected. Raleigh, NC, financial information company Sageworks reports that responses to a survey it conducted before the election indicated that many businesses are hesitant to hire or invest in growth due to the national debt. Nearly three-fourths of accounting and banking professionals told Sageworks that the national debt would make it less likely that their clients would increase hiring in the coming year.

Sageworks CEO Brian Hamilton explained: "Businesses understand that the national debt is bound to result eventually in an increase in the cost of their own borrowing. Why would they want to take on additional employees, equipment and infrastructure on our current debt load?"

The national debt is perhaps of greater concern to smaller businesses, Sageworks executives propose, because "they may lack the rainy-day resources and cash reserves that a larger company may have available to ride out tough times."

To be sure, President Obama says he has a plan for reducing the debt. As Crain's New York Business reports today:

"The president has pledged to cut projected deficits by $4 trillion over 10 years. He says he'd do so in part by raising the tax on investment gains. He would also raise income tax rates for individuals who earn more than $200,000 and married couples who earn more than $250,000. And a minimum 30 percent tax would be imposed on incomes above $1 million."

They seem to be strategies that would impact few small business owners. Those layoffs and firesales might be premature.

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