THE BLOG
10/10/2012 03:05 pm ET Updated Dec 10, 2012

Uncomfortable Tension for Small Business

The jobs report came out on Friday. If you are amongst those paying close attention to politics it was either a proof point that the president is moving us forward albeit much slower than anyone likes or it was a statistical anomaly sure to be corrected next month. For most of us, it was at least a tiny bit surreal to hear 873,000 people found jobs last month. It just doesn't feel like that could be possibly be correct.

But then again, I started a new business a month ago. I've been talking to many people who are also either considering starting their own businesses or actively looking to invest in a startup. These are proof points, at least in the world of entrepreneurs, things are changing for the better.

A couple interesting trends are emerging from my conversations with other entrepreneurs that are worth examining in the context of "will job creation continue to improve."

First, the good news, venture capitalists are reaching out to proven business leaders seeking their ideas for new ventures. I've seen estimates saying VCs are sitting on over $300 billion. At some point, they are going to start investing again. I'm seeing the same trend with angel investors. People are looking to diversify their investments and are willing to consider investing in development stage startups.

Equally good to hear is that these proven business leaders, who have endless choices, are seriously considering taking on the risk and stress of starting something new. That's a new development. A couple of years ago, most were hunkering down.

Now the bad news. There is tremendous concern regarding pending tax increases and worry over regulatory burdens. Most entrepreneurs choose to at least launch their business as a LLC or a sole proprietorship. They are dismayed and frustrated that government does not seem to understand that the "profit" that rolls through to a small business owner's 1040 is not "profit" at all. It is cash flow. It is investment in growth. It is the cushion that allows us to keep employees working during soft times. Sadly, it is also the set aside to deal with the anticipated costs of pending regulations.

The combined good and bad news creates an uncomfortable tension. Entrepreneurs and small business owners are willing to grow, but are uncharacteristically timid. They want to take the risks that are part of their nature, but they are hedging their bets in ways that stifle creativity, innovation and growth.

I predict, regardless of who wins the presidential election, entrepreneurship will pick up. There is too much pent up desire. Americans are tired of sitting on the sidelines watching our economy stagnate. It's just not in our nature.

But, and this is a huge but, growth will be highly controlled unless government starts to recognize the financial realities of small business. One of the easiest things for small business to control is the number of jobs it creates. I think it is safe to that say both political parties genuinely want to see job creation increase. We can only hope that they begin see they are hurting us more than helping!