John Arensmeyer

The Small Business Take on Minimum Wage

2013-04-26T09:55:05-04:00

Small businesses are oft-times at the center of political debates -- whether they're knockdown drag-out fights, amicable conversations or something in between. One of the reasons small businesses are central to so many issues and why politicians curry their favor is because of how integral they are to our economy.

Small businesses represent 99.7 percent of all employer firms in this country. They pay nearly half of the U.S. private sector payroll and have created two out of every three net new jobs over the past couple decades.

Put simply, small businesses are our economy. Given that it's still recovering, the economy needs all the help it can get to make it over the proverbial hump and flourish. Small businesses will play a key part in that journey.

Given their importance, politicians should stand up and take notice when small business owners say they strongly support a policy that has and will continue to elicit political fights of the knockdown drag-out variety, such as increasing the minimum wage. The minimum wage is a business issue that impacts a wide swath of small firms, and according to scientific opinion polling Small Business Majority released this week, two-thirds of them support increasing it and adjusting it annually to keep up with the cost of inflation.

Some have claimed that raising the minimum wage would put small firms out of business because they won't be able to afford to pay their workers more. Our polling found a whopping 85 percent of small businesses across the country already pay their workers more than the minimum wage, though.

"You need to pay workers enough to survive. It's in your best interest as a company because if you don't there is nothing tying them to you." That's Clifton Broumand, the president of Man and Machine, a specialty computer product business in Landover, Md., who pays his workers more than the minimum wage and supports increasing it. "I want my employees to have the chance to grow and improve here. I want them to want to stay so we don't have a lot of turnover. And I pay over minimum wage because it's the right thing to do."

A minimum wage worker currently brings in just over $15,000 a year, which is significantly lower than it was in the '60s. Two-thirds of small businesses polled agree with Clifton Broumand that it's just not right.

Moral issues and the ability to attract and retain quality employees aside, there's another reason small businesses support increasing the minimum wage: consumer demand. Putting more money into workers' pockets doesn't just benefit the worker; it benefits the business community and our economy, as well. Two-thirds of small business owners agree increasing the minimum wage would make low-income consumers more likely to spend money, driving up demand for small firms' products. Another 65 percent agree increasing the minimum wage would help decrease pressure on taxpayer-financed government assistance programs that are needed to supplement low wages.

As I mentioned above, this issue has been and will continue to be a political hot potato. Given politicians' proclivity to bring small businesses into the fray, many lawmakers will likely be invoking our job creators when they discuss this issue. And given the environment in Washington, the debate will likely split along partisan lines. That's why the political breakdown of Small Business Majority's polling is so important to note. Of those polled, 46 percent identified as Republican, 35 percent as Democrat and 11 percent as independent.

This shows small businesses don't make decisions based on politics. They make decisions based on what's right for their business, what's right for their communities and what's right for our economy.

Politicians should follow their lead.

Immigration Reform Key to Small Business, Economic Success

2013-04-11T15:56:41-04:00

Arnulfo Ventura considers himself one of the lucky ones.

Most people might say hard work had more to do with it than luck, given what he had to do to achieve the success he has today--owning and operating Coba, a successful Mexican beverage company in Los Angeles. The son of Mexican immigrants, whose mother cleaned houses and father served in the Army in Vietnam, worked tirelessly to receive the Pell Grant that enabled him to get his degree from UC Berkeley and MBA from Stanford. He then put that Masters in business to work and started his company--something every single one of the 28 million entrepreneurs in this country will tell you takes tremendous hard work and determination. But this is where Arnulfo's "luck" came into play.

About 40 percent of Arnulfo's business school classmates at Stanford were foreign students. Come graduation, nearly all of them tried to stay in this country, many looking to start their own businesses, just like Arnulfo. But they weren't so lucky. Most were forced to leave because of our nation's immigration system. Arnulfo, the son of immigrants, got to stay in this country and realize his dream and, in the process, give 10 people jobs and offer Americans a new product.

Sending talented individuals away--individuals who could make meaningful, even groundbreaking contributions to our economy--is just one piece of our broken immigration system that needs to be fixed. It makes no sense to educate talented foreign-born students and force them to leave upon graduation--just when they are about to begin contributing to the economy by working, innovating, starting new businesses and, perhaps, creating new jobs. We need immigration policies that give immigrant entrepreneurs a clear way to navigate opportunities to start and grow a business in this country.

Small Business Majority released opinion polling this week that found the majority of small business owners feel the same way Arnulfo does, and see immigration reform as a crucial rung in the ladder to small business and overall economic success. A sweeping 87 percent of small employers believe our immigration system is broken, and a large majority support comprehensive immigration proposals currently on the table to fix it.

Like Arnulfo, they recognize the need to allow not only more high-skilled workers into this country, but more low-skilled workers, as well. When you look at their labor needs, it makes sense why they feel this way. One in five small business owners who have hired immigrants say it's because they can't find enough U.S. citizens to fill jobs.

What's more, many small employers who have chosen to hire immigrants say one of the biggest challenges they face in using immigrant labor is concern about following the letter of the law: next to differences in language and culture, a combined 41 percent cite concerns about whether they are complying with the law in hiring immigrants and the time and expense involved in verifying legal workers. This underscores why it's critical to improve our immigration system and make it easier for employers to understand and comply with its requirements.

The current reform proposal being hammered out in the Senate by the bipartisan "Gang of Eight" takes aim at many of these concerns. And small businesses strongly support every component of the plan we asked them about. Eighty-three percent of small employers support increasing the number of visas for legal immigrants who have advanced degrees in science, technology, engineering or mathematics. Another 87 percent support requiring illegal immigrants with no criminal record to register for legal status, pass a background check, learn English, pay a fine and pay taxes. A vast three quarters agree we would be better off if people who are in the country illegally became legal taxpayers, so they pay their fair share and can work toward citizenship in the future. And three in four owners support revamping the guest worker system to create a new worker visa, eventually letting immigrants move beyond temporary status and switch employers to protect themselves against unscrupulous ones.

All these reforms, if passed by Congress, will help small business owners looking to employ immigrants feel more comfortable about their hires, give immigrants who want to become small business owners the opportunity to do so and put much-needed tax dollars into our country's coffers, helping the economy on the whole.

It's easy to see why small businesses support comprehensive immigration reform. For small business owners like Arnulfo, for which immigration is near and dear to his heart, it's clear why he supports reform. However, of the small business owners we polled, 1 in 5 were sons or daughters or immigrants and 1 in 10 were immigrants themselves. That means the majority of small businesses don't have the tie to this issue Arnulfo has, but still feel strongly that immigration reform is needed for the good of small business and the country.

In essence, small employers believe fixing the system will help them more easily tap into the immigrant labor workforce, make their existing workforces more stable, make them more competitive and help aspiring immigrants become entrepreneurs. Clearly immigration reform is crucial for current and aspiring small business owners' pathway to success.

John Arensmeyer is the Founder & CEO of Small Business Majority

Help on the Way for Small Businesses Struggling With Health Care Costs

2013-03-22T23:09:28-04:00

This week marks the third anniversary of the health care law's passage. Given the amount of airtime the law still gets, it's hard to believe the Affordable Care Act has been on the books that long. The law continues to generate controversy from the corridors of Capitol Hill to the sidewalks of Main Street, but in fact many important provisions impacting our country's primary job creators have been quietly helping small business owners better afford health insurance. However, next year when the bulk of the law's provisions go into effect, we'll see even more changes that will help rein in insurance costs for small employers and the millions they employ.

The most important provision coming online in 2014 are the health insurance exchanges, which are the cornerstone of the new law for small businesses. In a nutshell, the exchanges will be a one-stop shop where small businesses can find the right health insurance policy for their needs and budget. It will enable them, for the first time, to band together and leverage their buying power, giving them the kind of clout large businesses currently enjoy.

In the past, the high cost of health insurance made it difficult for many small business owners to offer health insurance to employees. In fact, Small Business Majority's opinion polling found of those small business owners who don't offer coverage to their employees, seven in 10 say it's because they can't afford it. Additional research found that 56 percent of small business owners offered health insurance to their employees in 2011, which is significantly less than in years past. The Affordable Care Act, and exchanges in particular, will help change that. Our polling found 66 percent of small business owners say they would use an exchange or at least consider using it, compared to a mere 8 percent who say they would not.

Besides allowing small business owners to pool their buying power, the exchange will give them access to support tools enabling them to compare plans and make meaningful choices. The current health care market is incredibly difficult to navigate. Bringing transparency to the costs of services and products in the exchange will enhance entrepreneurs' decision-making ability, pushing insurers and providers to be more upfront with price information and giving entrepreneurs much-needed clarity as to where their health care dollars are going.

With open enrollment for the exchanges fast approaching in October, it's important to note that small business owners are also supportive of specific elements of this new marketplace. Three-quarters would want the exchange to provide plans offering prevention and wellness programs and 74 percent hope the exchange educates employees about their plans and helps them enroll, which would do a great deal to cut down on business owners' administrative duties.

Despite what some politicians or talking heads might say, entrepreneurs support many elements of the law in addition to the exchanges. Our polling found nearly 8 in 10 small business owners support prohibiting health plans from denying coverage based on preexisting conditions, and 72 percent support requiring insurance companies to spend at least 80 percent of small group premiums on patient care and quality improvement, as opposed to plan administration, marketing and profits. Additionally, 65 percent support allowing states to review and potentially reject excessive premium rate increases.

It's critical small business owners are aware of the many benefits the new law offers. The fact that small businesses have been suffering from high health care costs for decades isn't front-page news, but that something is coming online soon to help them is.

Rein in Wall Street, Say Small Business Owners

2013-02-01T09:28:26-05:00

The latest jobs data shows small businesses are off to a running start in the job creation department this year, proving entrepreneurs are doing more than ever to lift post-recession employment. But it's also true that small firms aren't immune to the lingering effects of our disrupted financial market. Despite the mantra that slackening Wall Street's reins will promote economic growth, recent national opinion polling reveals the majority of entrepreneurs believe the opposite: Wall Street should be held accountable for the financial crisis with rules that are stronger, not weaker.

A whopping 80 percent of small business owners agree with this, according to scientific polling conducted in January for Small Business Majority. Considering the oft-politicized nature of this topic, it's noteworthy that not only was this a majority Republican sample, but more than seven in 10 Republican owners believe we need tougher rules for holding Wall Street accountable. Entrepreneurs aren't politically minded, they're business minded. That's why this isn't a party line issue for them. It's a bottom-line issue, plain and simple, meaning it impacts their capacity to grow and hire.

With that in mind, it shouldn't be surprising that nearly six in 10 entrepreneurs agree that for far too long, Wall Street banks and financial companies wrote their own rules while nobody was looking out for small businesses and consumers. They believe we need the Consumer Financial Protection Bureau (CFPB) -- a federal organization that helps prevent financial companies from using abusive lending practices that can affect small businesses. Eighty-four percent of owners generally support the CFPB, underscoring the consensus that our nation is long overdue for a fairer financial system.

Small business owner Shaundell Newsome couldn't agree more. Shaundell, the president and CEO of Sumnu Marketing in Las Vegas feels more work needs to be done to give small businesses the ability to push back against unfair financial practices. "A lot of small businesses don't have the power or the resources to fight against the big banks and financial companies," he said. "These companies' practices haven't really changed since the recession, which is why it's incredibly important the Consumer Financial Protection Bureau was created to keep them accountable. However, another factor is that many of the protections individuals are seeing should be afforded to small businesses, as well."

Herein lies another issue the poll shed light on: the strong link between small business finance and personal credit. Fifty-eight percent of respondents have used a personal credit card to finance their business, and 53 percent have personally guaranteed a loan for their business. This helps explain why small businesses strongly support provisions of the 2009 Credit CARD Act -- although 'strongly' might be an understatement.

Every single provision we polled on from this law, which established a series of consumer protections from banks and other financial institutions, was supported by nearly 100 percent of respondents. For example, 98 percent support requiring credit card companies to provide clear descriptions of what factors trigger a higher interest amount. But this requirement and others only apply to personal credit cards. Echoing Shaundell Newsome, a sweeping majority of 19 in 20 small employers want consumer protections expanded to protect businesses, too.

If businesses had stronger protection from predatory financial practices, imagine how much more they could do to grow the economy. New employment data indicates firms with fewer than 50 employees created six in 10 new jobs in January. That's a big step in the right direction. However, positive steps forward don't mean it's time to ease back on Wall Street financial institutions, as small business owners have made clear. If we want them to continue playing a significant role in rebuilding our economy, entrepreneurs need protection from the practices that caused our fiscal crisis.

Streamlined Home Office Deduction Could Mean Extra Bread for Small Business Owners

2013-01-23T17:16:15-05:00

Small business has been the focus of Washington's high-profile tax debate, both prior to and following the "fiscal cliff" fracas that closed out 2012. But as noisy as the small business tax issue has been, there's been considerably more time spent debating cuts that will help a thin sliver of taxpayers in the top brackets than hashing out solutions that will help the vast majority of entrepreneurs

Fortunately, last week the tax code was improved in a fashion that will put a very helpful tax deduction within reach of the bulk of our nation's job creators. The Internal Revenue Services announced that a new, simpler option for calculating the home office tax deduction will be available on 2013 tax returns.

Tales of tax deductions aren't something you normally regale friends and family with around the dinner table. But when you get down to it, what this improved deduction means is that small business owners and employees working from a qualified home office will be able to deduct up to $1,500 per year. And that's a lot of bread.

What's more, an estimated 52 percent of small businesses have home-based offices, according to the 2007 U.S. Census. Our own 2012 polling tells the same story. Nationally, 52 percent of the smallest businesses -- those with 10 or fewer employees -- are home office-based, including some with employees working remotely.

Although the deduction has been around for some time, it's been underused. In this economy, anything that can help small businesses save cash is a good thing, which is why this is such big news. The Obama Administration made the change expressly to make it easier for small businesses to file their government paperwork, which will give them more time to do what they do best -- create jobs and grow the economy. It also increases the likelihood that small business owners will claim this credit and save some money.

This new development shows there are ways to help small business owners beyond just cutting income taxes. Closing loopholes favoring big corporations is a perfect example. Our polling found 72 percent of small business owners believe it's about time Congress puts a finger in the corporate loophole dike. A sweeping 90 percent favor removing tax breaks for moving production overseas and providing incentives for bringing it home, and 7 in 10 entrepreneurs support a proposal designed to help spur small business job creation by rewarding companies that hire more workers or increase wages by giving them a tax credit.

It's also important to remember that small business owners are very busy people who often don't have Human Resources departments, and they want simpler ways to deal with exactly this kind of issue. Our national polling found about three-quarters of entrepreneurs agree we should allow for one-stop electronic filing of government paperwork. Simplifying this deduction is an important step toward streamlining filing processes, and that's something small business owners have asked for.

The bottom line is, dealing with personal tax cuts is an epic battle, as we've seen lately. There's no reason Congress can't work smarter instead of harder, and push through proposals that, like this tax deduction, will do some real good for the majority of small businesses and their employees -- who, as consumers, are critical to our economy. Making the home office tax deduction easier to claim means more people are likely to take advantage of it. That can lead to more money in small business coffers and consumers' pockets.

Entrepreneurs on the 'Fiscal Cliff:' Get It Done

2012-12-31T14:03:28-05:00

By John Arensmeyer and Todd McCracken

Small business owners make hard decisions every day. They compromise on things they sometimes wish they didn't have to, but they do it for the good of their business, their employees and their families. They do it because they have to if they want to continue running a successful business. Congress is in the business of running this country, and their job right now is to make some hard decisions, compromise even if they don't want to, and ensure the country avoids the "fiscal cliff." Congress should follow the example set by our entrepreneurs and find a way to make the compromises needed to ensure we don't topple into a financial abyss the likes of which we're just now climbing out of.

The end of the year is mere hours away, when a vast array of tax provisions -- many that would take money directly out of the pockets of small businesses and their core customer base -- are set to expire at the same time across-the-board spending cuts start to kick in. This dilemma, dubbed the "fiscal cliff," could spell disaster for the small business community and the slowly recovering economy. Scores of economists have predicted that failing to avoid the cliff could send the nation right back into recession. However, it's not just avoiding the cliff that's worrisome. Not having a deal in place creates uncertainty for small businesses and their customers. That translates into more cautious consumers -- something small business owners certainly don't need. And it hamstrings small businesses trying to make financial plans for the coming year. Small businesses can tackle most anything that comes their way -- that's the entrepreneurial spirit -- but they can't plan for a policy that hasn't been established.

There are many important issues facing the small business community in 2013 -- issues we all feel passionately about working on with Congress, such as tax and immigration reform and other critical issues. Getting a bipartisan agreement on the fiscal cliff puts us on the path to a better future and will allow us to focus on finding smart, pragmatic solutions to these other important issues. If the fiscal cliff situation isn't resolved immediately, however, it will continue to plague small businesses and the nation and keep Congress from working on other important matters.

Small businesses were a powerful theme during the elections. The politicians who campaigned on the importance of small business cannot now forget about them during this critical period. No one expects this to be an easy job for lawmakers, but it's a job that must be done. The small business community is watching, waiting, and hoping Congress and the president come together now and frame an agreement that keeps their needs in mind. The future success of many small businesses depends on it.

Todd McCracken is the president and CEO of the National Small Business Association

Small business groups that signed onto this post include the National Association for the Self Employed, National Small Business Association, Small Business & Entrepreneurship Council, Small Business Majority, U.S. Black Chamber, Inc. and U.S. Hispanic Chamber of Commerce

Entrepreneurs to Congress: Extend Middle Class Tax Cuts Now

2012-12-18T18:24:43-05:00

The New Year is just around the corner, which means we're mere days away from falling off the so-called fiscal cliff. This impending situation -- created by a vast array of tax provisions set to expire January 1, at the same time that across-the-board spending cuts start to kick in -- could spell disaster for the small business community and our slowly recovering economy.

Unemployment is at its lowest rate in four years, thanks in large part to those small businesses that, in spite of challenges, have thrived in 2012. But if lawmakers and the president can't find a way to avoid plunging over the fiscal cliff, that progress could be reversed -- and small business owners and consumers would be hit hard.

Small businesses are very aware of the dire situation our economy is in and are concerned. Polling by Small Business Majority found nearly 8 in 10 small business owners are aware of the fiscal cliff, and they're worried about practically every aspect of the fiscal cliff they were asked about. They realize how disastrous many of the cuts scheduled to take place could be for our fragile economy and their customer base, the middle class.

A key provision the debate is focused around is tax cuts for middle class families -- those earning less than $250,000 a year. Included in this segment of the economy are 97 percent of small businesses and 98 percent of Americans. Small Business Majority's polling found 86 percent of small business owners support extending these cuts for middle class families.

In entrepreneurs' eyes, these cuts are crucial because of the role middle class Americans play in the overall success of our economy and small businesses. These cuts, along with a number of other tax provisions scheduled to lapse at the same time, put money back into the pockets of middle class consumers. This drives demand for small businesses' goods and services more than anything else. Customers with less disposable income translates into less demand for small businesses' goods and services, meaning their bottom lines suffer, and with them, their ability to hire.

We can all agree the economy doesn't need that. And what we especially don't need is to tumble back into a recession. Yet according to scores of economists, that's exactly what could happen if the fiscal cliff isn't resolved.

For the good of our economy, lawmakers would do well to focus on a compromise that works for the majority of small business owners and American consumers. Small business owners and their customers need fiscal certainty right now. Without it, small businesses will lack the confidence they need to invest in hiring, and consumers will be less likely to spend extra cash at the mom and pop shop down the street.

The following small business groups signed onto this post: National Association for Moms in Business, National Association for the Self-Employed, Small Business Majority and the US Black Chamber, Inc.

Credit Union Lending Bill Would Help Small Firms

2012-11-29T15:00:50-05:00

A look at the numbers makes it clear that America's economy relies on small business. After all, they create a majority of new jobs and employ four out of six American workers. And it's not often political leaders miss an opportunity to tout the importance of this critical constituency.

Like all businesses, small businesses need credit to innovate, expand and prosper. That's why the two of us -- whose organizations often come down on opposite sides when it comes to political issues -- both believe Congress must act to free up more small business credit. In particular, we think lawmakers should approve a regulatory relief effort that would allow credit unions to lend more money to small business. Doing so is simply common sense.

First, some background: Small businesses today face a dire credit situation. As a result of the financial crisis, not a single new commercial bank has received a federal charter in the last two years. During the 1990s and early 2000s, more than 100 banks received charters in a typical year. Since small businesses tend to rely heavily on start-up banks, this presents a problem. A survey from Small Business Majority found that more than 60 percent of small business owners find accessing credit to be a major challenge. Furthermore, a Pepperdine University study found less than one out of five business owners seeking a loan of $5 million or less got what they wanted. Even as the economy has recovered, some indexes of small business lending have actually dropped. Congress has made an effort to change this situation, such as creating a "small business lending fund," but the numbers demonstrate it's just not enough.

A pragmatic solution to this problem is to change outdated regulations that limit credit unions -- democratically governed, nonprofit financial cooperatives -- from meeting consumer needs. Right now, federal regulations bar credit unions from lending more than 12.25 percent of their assets to businesses. As a result, businesses that belong to credit unions have $13 billion less in capital available to them. Legislation in Congress would change this and allow credit unions to lend up to 27.5 percent of their assets. This change would have no additional risk for taxpayers and create thousands of new jobs at small businesses.

The proposals to change the regulations have significant bipartisan support. In the House of Representatives, 141 representatives with significant numbers from each party have signed on. In the Senate, 21 members, many more of them Democrats than Republicans, also support the bill. The real opposition to the proposal comes from banks that believe they'll lose business. While these banks certainly deserve a place at the table, the banks' own interests should not come ahead of those of small businesses or the economy as a whole.

The bottom line is simple: The slow recovery has not been good for the small business community. Getting more credit to small business owners can get them, and the national economy, on track to a full and sustained recovery. There's no reason for Congress to delay action. Credit unions must be allowed to make more loans to small businesses.

About co-author Erica Schoder, Operations Director, R Street Institute:

A third generation small business owner, Erica Schoder owned and operated an independent bookstore in Colorado for over eight years. Schoder uses her entrepreneurial experience to bring a personal perspective to business issues in her role as Operations Director at R Street Institute. R Street is a national think tank that supports free markets; limited, effective government; and responsible environmental stewardship. It strives to craft pragmatic solutions to domestic policy challenges involving regulation, public health, the environment, entitlements reform, and the federal budget.

Poll Finds Small Businesses Wary of Fiscal Cliff, Looking for Pragmatic Fix

2012-11-15T08:38:17-05:00

As Fairfax, Va., small business owner Mike Brey prepares to close the books on 2012, he's also starting to make expansion plans. But he hasn't sealed the deal on his two new Hobby Works stores yet -- largely because of growing economic uncertainty as we race toward the edge of the "fiscal cliff."

Mike isn't the only entrepreneur who's worried about how business will stand up to the fiscal cliff. In fact, the vast majority of entrepreneurs, 78 percent, are familiar with this situation, marked by a host of tax increases and billions of dollars in automatic spending cuts to begin Jan. 1 if lawmakers don't devise a plan to reduce the deficit by then. According to a scientific opinion poll Small Business Majority released this week, strong majorities of entrepreneurs are concerned about nearly every fiscal cliff issue they were asked about.

Polling also indicates that these job creators want spending and tax policies targeting the majority of small businesses to be preserved and ones that benefit only a few removed. By nearly a 2:1 ratio, they believe spending cuts for education, healthcare and infrastructure would hurt the economy more than a tax increase on the wealthiest 2 percent.

Similarly, the majority of respondents -- more of whom identify as Republican than Democrat, an important distinction given the partisan nature of this debate -- also agree raising taxes on the wealthiest 2 percent is the right thing to do in light of our budget crisis. Tax cuts for high-income earners simply aren't targeted at the vast majority of small businesses, and therefore won't help them or their customers, the middle class. That's why a sweeping 86 percent of small employers oppose raising tax rates on households with income below $250,000.

Mike Brey noted that from a business perspective, what he's most concerned with is consumer demand. That's what drives his decisions to open new stores, create new jobs and further invest in the company. For demand to be there, he said, "We need to ensure middle class taxpayers have spending money. That means keeping their tax rates where they are now rather than letting them go up, and extending the employee payroll tax holiday so consumers don't see smaller paychecks next year."

More than three-quarters of small business owners are worried about a potential 2 percent increase to the employee share of payroll taxes, and more than half are very worried. This tax cut saves the typical household $1,000 annually. Its expiration could lower workers' take home pay and inhibit customer demand, while also leaving less money in entrepreneurs' own pockets.

When entrepreneurs have more cash in their coffers, on the other hand, they can invest in their businesses in many ways--by purchasing new equipment, for instance. That ability to invest is also tied to the fiscal cliff. More than eight in 10 entrepreneurs are anxious about impending cuts to the amount of qualified capital investments small businesses can expense.

Small business owner Eric Blinderman, owner of restaurants Mas (farmhouse) and Mas (la grillade) in Manhattan, would love to see an increase in the dollar amount of capital investments small businesses can expense, rather than the major decrease scheduled to kick in. "I'd be far more inclined to invest in new equipment for the restaurants if I could expense more of it. That saved money would go directly back into the economy by helping me expand and create new jobs," he said. Small business owners across the nation clearly agree with him, as polling found 76 percent are supportive of letting small firms expense these investments up to $1 million.

In addition to tax increases, entrepreneurs are also concerned about spending cuts to occur if no action is taken. About two-thirds find $500 billion in defense cuts over the next 10 years worrisome, as these cuts would impact small businesses working as defense subcontractors. More than three-quarters are worried about infrastructure cuts. And there are several lifelines providing assistance for small businesses that owners show concern over: 68 percent are worried about funding cuts for government contracts and 62 percent are concerned about funding reductions for small business loan and counseling programs under the Small Business Administration (SBA).

Having utilized SBA loans to help build their businesses into the success stories they are today, both Mike and Eric can attest to the importance of robust policies that provide the targeted support small firms need. Across the nation, entrepreneurs are looking for a balanced approach to spending and tax revenues that is mindful of our deficit. But they're also cognizant of the fact that our economy isn't out of the woods yet, and we need to foster job growth. Pursuing policies that target the majority of small businesses, not just a few, is a promising way do that.

October Employment Reports Offer Small Business Rejuvenated Encouragement

2012-11-02T17:35:23-04:00

With the news Friday that the private sector added 171,000 jobs in October, according to the U.S. Bureau of Labor Statistics, it's evident our country is on its way to recovery. As the economy improves, it's also clear small businesses are becoming more confident in their ability to rebound. This heightened optimism -- critical in putting America back to work -- is exemplified by our recent opinion poll that found, despite recent reports claiming otherwise, most of our nation's smallest businesses believe success is on the horizon for their companies.

It makes sense entrepreneurs feel this way, given the economy has added private sector jobs for the last 32 straight months and the unemployment rate is at 7.9 percent. Hiring has been steadily picking up over the last 12 months, and the Bureau of Labor Statistics reports the economy has created an average of 173,000 jobs a month since July. While there's still plenty of work ahead to fix our country's unemployment problem, our polling helps underscore the significant impact America's smallest firms have on our economy: over half of them report increased sales or revenues over the last two years and another 50 percent plan to hire within the next two.

The Bureau of Labor Statistics wasn't the only bearer of good news this week. Additional jobs numbers out Thursday also show small businesses are living up to their reputation as job creators. Automatic Data Processing Inc. (ADP), a payroll service that calculates monthly jobs figures and breaks them down by company size, issued its monthly employment report showing 158,000 new jobs created in October -- and small businesses were responsible for about half of those new jobs.

That's not too shabby, and ADP's report also indicated nearly all business sectors surveyed saw job growth last month. It's extremely encouraging to see that small businesses, in industries all across the spectrum, from construction to professional business services, are getting back on track to success. But while four out of the five industries in ADP's survey appear to be flourishing, there's one sector where employment actually dropped: manufacturing.

We gleaned some insight recently on how entrepreneurs view the role of manufacturing in job creation, in another national poll we released last month. We asked 500 randomly selected small business owners about specific proposals to create jobs, and the plan most favorably viewed by entrepreneurs focused on manufacturing. A striking 90 percent of small business owners agree that we should get rid of tax breaks for moving production overseas while providing incentives for bringing production back to the U.S, and more than 6 in 10 support cutting the top corporate manufacturing tax rate to 25 percent while also cutting the rate for advanced manufacturing even lower.

All in all, we still have much to do to strengthen the economy. But October's employment reports, combined with scientific opinion polling helping to keep a finger on the small business pulse, show we are on the right path -- and that small businesses have played an integral part in that progress. Over the past two decades, Main Street firms have created two of every three new jobs in America. When they do well, everyone does well. Let's do what we can to keep them thriving.

New Poll Dispels Myth That Entrepreneurs Want High-Income Tax Cuts Preserved

2012-10-29T13:25:26-04:00

The politically charged debate over high-income tax cuts is reaching a fever pitch, and the question on everyone's lips is whether small businesses' hiring ability will suffer if these cuts expire. Scientific opinion polling released last week shows what real small business owners think, and it might surprise you. The majority of small employers in the poll -- more of whom identify as Republican than Democrat, an important distinction given the partisan nature of this debate -- believe allowing tax cuts for the wealthiest 2 percent to expire at the end of the year is the right thing to do in light of our budget crisis.

The truth of the matter is that small business owners are far more concerned about improving economic conditions for the middle class -- a category virtually all their customers fall into and which 97 percent of them are part of, too. According to an independent telephone poll we released last week, 86 percent of small business owners oppose increasing tax rates for household income below $250,000, and 7 in 10 strongly oppose it. What's more, a 52 percent majority supports letting cuts on household income above $250,000 expire.

These entrepreneurs recognize the important role middle class Americans play in the overall success of our economy. If they see an increase in their tax rates, as is scheduled to occur at the end of this year, middle class customers will have less disposable income. Less money in their pockets means less demand for small businesses' goods and services, and that's something that could affect small business hiring decisions.

As someone who has been in the top income brackets before and who probably will be again this year, Anne Zimmerman, owner of Zimmerman and Company CPAs in Cincinnati, Ohio, should understand the situation better than most. "I can tell you with certainty that being in the top tax brackets has nothing to do with my hiring decisions," Anne said. "There's no way I'd let a couple percentage points being added to my personal tax rate get in the way of business decisions. I make those decisions by considering demand for our services, plain and simple."

That ties into another widely-used, but misguided, small business argument for extending the high-income tax cuts: Since a large number of small business owners (like Anne) file their taxes as individuals, their businesses would be extra-sensitive to an increase in the top individual income rates. While 54 percent of small business owners we surveyed do in fact have their business revenue passed through to their personal taxes, only 5 percent reported household income exceeding $250,000. And for that sliver who do earn more than $250,ooo? The increase only impacts income above that threshold, a fact that is vastly misunderstood. Earnings below that amount will continue to be taxed at the lower rate. So how many small business owners are making the really big bucks -- say, over $1 million? We released polling in February that found out of 500 randomly selected small business owners across the nation, only one had income in that range.

These statistics are vital to cutting through the rhetoric surrounding this issue. We wish more small businesses did fall into those top brackets, but that's just not the case. And using small businesses as pawns to pass policies that don't impact them is unethical and frankly "incredibly aggravating," as Anne Zimmerman puts it. "Let them expire!" she said. "It's the middle class that drives demand for my business and it's middle class folks who run most small businesses. Those are the job creators who can drive our economic recovery and who need a tax cut."

In addition to tax cuts, we also asked small business owners what they thought about the role of government and what lawmakers should be focusing on next year. Nearly 6 in 10 agree government can play an effective role in helping small business thrive, and the majority also believes that during the next year it is more important for Congress and the president to focus on a plan to create jobs than on reducing the deficit.

Real Main Street business owners are pragmatic people who know what kinds of policies can help them. And despite spin-doctors who will continue to say otherwise, scientific opinion polling shows these entrepreneurs simply don't believe it's in their best interest to extend tax cuts for high-income earners. Of course, nobody likes paying taxes, but we have a grave budget crisis on our hands. Small business owners get that. Policymakers should listen to what they have to say -- that they'd do better to tailor tax policy to needs shared by the majority than to pocketbooks of a few.

New Poll of Micro Businesses: Who They Are and What They Do for the Economy

2012-10-11T16:28:47-04:00

They've been in the spotlight for months, and the attention small businesses got during the first presidential debate sent them into the stratosphere in terms of media coverage. So let's try to answer the question a lot of people are asking: who are these small business owners everyone's talking about?

Despite being one of the most respected constituencies in the country, small businesses are a group that many people understand little about -- the very smallest ones, especially. An opinion poll released Tuesday by Small Business Majority, the National Association for the Self-Employed and Association for Enterprise Opportunity, sheds light on the true nature of these businesses and reveals their important role in our economy and its recovery.

In showing who our nation's very-small-business owners really are, the poll of micro businesses -- businesses with 10 or fewer employees -- helps counter a number of misconceptions pervading the airwaves. Recent reports, many by organizations polling their membership, have portrayed small business owners as practically devoid of optimism about the economy. But we used a scientific, random sample of small business owners and found just the opposite. A majority of the 470 micro business owners we surveyed are confident about the future of their business and the economy.

Specifically, seven in 10 believe their business will be faring well over the next couple of years and an overwhelming 81 percent of respondents under 40 feel the same way.

Another mistruth floating around is that small businesses aren't our chief job creators. Despite a lagging economic recovery, micro businesses have been growing and show strong signs they'll continue to: a 54 percent majority have employed a contractor or 1099 employee in the past year and nearly a third have hired a full-time employee. Fully half of them plan to hire within two years.

Small businesses' appetite and capacity for growth is supported by employment data. Automatic Data Processing, Inc. calculates monthly job figures and breaks them down by company size. According to ADP, small businesses, as traditionally defined, continue to create the vast majority of new jobs -- upwards of 90 percent in 2012. Where has the most notable growth been? The smallest companies, those with 1-49 employees, have been responsible for about 50 percent of added jobs overall.

So where do micro businesses fit into the picture? As it happens, a sweeping 95 percent of all businesses have fewer than 10 employees--meaning micro businesses basically are the picture. Even when counting only the firms that currently employ people besides their owner, those with fewer than 10 employees still represent a whopping 80 percent of employer firms. So all things considered, it's safe to say small and micro businesses have a thing or two to do with job creation.

Another point of confusion this poll helps clarify is the perception that micro businesses are merely hobbyists selling tchotchkes on the Internet. Rather, nearly three-quarters report their micro business as their sole source of income and 57 percent have been in business 10 years or longer. Micro businesses are clearly real businesses providing a real living for their owners, employees and their families.

As misunderstood as they often are, micro businesses are vital contributors to the economic recovery ahead. They've been doing well and growing. This proven success, coupled with their undeniable air of optimism about the future, helps underscore the importance of creating conditions for micro businesses to thrive. Oftentimes, their ability to expand is tied to their ability to access working capital. However, 58 percent of the ones who are in need of that credit to grow and hire say getting it is a serious problem. Just this week the Small Business Administration announced it supported more than $30 billion in loan volume this year -- the second largest total ever. That's great news. Getting capital into small business owners' hands is one way we'll dig ourselves out of this recession. But as our poll shows, more needs to be done.

Among other small business issues, access to capital is one we hope to see addressed in the remaining debates. It's great to see the focus being placed on our 28 million small firms. We just hope it translates into some real good being done for this vital community.

Small Businesses Take DC

2012-09-18T12:15:31-04:00

As we move beyond the recession, it becomes increasingly apparent that our smallest businesses are the ones putting America back to work. These hardworking entrepreneurs deserve a chance to tell legislators in Washington what kinds of policies are going to help them grow and flourish. And that's exactly what they got this week, when Small Business Majority flew 14 entrepreneurs from 11 states out to D.C. for their first annual network council trip.

From Sept. 11-13, the group of small business owners -- who are extremely diverse in industry and political affiliation -- crisscrossed DC meeting with policymakers and elected officials on the Hill, in the Capitol Building and the White House. As seasoned small business owners whose companies have seen good economic times and bad, these individuals had a lot say about what it will take to get our nation back on track to prosperity.

From clean energy policies, such as the new fuel efficiency standard recently set in stone, to the implementation of federal healthcare reform, topics discussed at the meetings ran the gamut. Network council members offered anecdotal stories about issues their businesses had faced, such as accessing loans to open up shop or to expand and grow. Moreover, they explored potential legislative solutions to concerns many of them shared about today's economy.

One thing that was on everyone's mind was jobs. Since our recent economic recovery began, small businesses have not only been generating more jobs than large companies, they're also creating them at a faster pace than during our recovery from the 2001 recession, according to Automatic Data Processing (ADP).

It's absolutely critical for these job creators' needs to be met if they're going to help sustain the economy. Many of them want to expand and hire, as any practical business owner would. But oftentimes they need a leg up in the credit arena, first. New York's Eric Blinderman is one of several network council members who can attest to that.

As the owner of two restaurants in Manhattan, Eric knows what it takes to build a strong business. However, accessing a loan to get things up and running wasn't easy. After an exhaustive search, a state-chartered company finally agreed to help Eric and his partner open Mas (farmhouse) -- which instantly became a hit. The restaurant did so well, in fact, that the duo decided to open a second eatery.

Enter the Small Business Jobs and Credit Act.

"When I started looking for loans to open the second location, Mas (la grillade), I found there were many more financing packages and options than there were the first time around," said Blinderman. "And it was all thanks to the 2010 Jobs and Credit Act, which invested in projects to help entrepreneurs like me grow our businesses. Without that help, and without the help of family and friends who invested in us, there would be no Mas."

Eric's story is one of many that offers proof of how important it is to support entrepreneurship in the United States. And there are so many ways for Congress to give that support to the people who deserve it. One smart way to address entrepreneurs' lack of access to capital -- the problem Eric faced -- would be for Congress to pass bipartisan legislation allowing more credit unions to lend to small businesses. In fact, during the trip, Eric and another network council member, Zachary Davis from Santa Cruz, CA, sat on a panel moderated by The Hill newspaper discussing the proposed legislation.

With this proposal, lawmakers are showing they're capable of reaching across the aisle and working together for the good of small business. And it became strongly evident this week that that's what small businesses want from Washington, regardless of the issue in question: a productive effort to put politics aside and respond to small businesses' needs.

In their plethora of meetings this week, Small Business Majority's network council made that message clear. And for that, we thank them.

Small Employers Who Offer Health Care: Check Your Mailboxes

2012-08-03T16:47:19-04:00

Here's a riddle for you. What did the small business owner do when she opened the letter from her health insurer?

If it's Lynn Petrazzuolo we're talking about, she did the happy dance. Because in that envelope was a $1428 rebate check from her health insurance carrier, who was reimbursing Lynn because it had failed to spend her premium dollars the way the new federal healthcare law requires.

Under the Medical Loss Ratio (MLR) provision of the Affordable Care Act, insurance companies must spend at least 80 percent of small groups' premium expenses on patient care and quality improvement. That limits what they're allowed to spend on administrative costs, marketing and profits to 20 percent of premium dollars. If carriers exceed that cap, they must reimburse their customers for the difference.

The deadline for insurers to send out rebates was Aug. 1, so small business owners should start looking for them. Insurance companies across the nation -- including UnitedHealth, the most colossal of all U.S. insurance giants -- owe Americans $1.1 billion, collectively, according to the Department of Health and Human Services. And based on an initial report by the Kaiser Family Foundation, 28 percent of small employers offering benefits in 42 states will see part of that money. Those aren't bad odds.

For Lynn Petrazzuolo, who pays $73,000 annually for health insurance at her small business, the rebate was a welcome surprise. Lynn owns Avanti Corporation in Alexandria, Virginia, a 21-employee business providing earth protection services focused on tribal environmental regulations. Lynn pays 100 percent of employee premiums. But it was only recently that she was even able to start offering insurance.

During the first two years, coverage for Avanti employees was cost-prohibitive because two of their five full-timers had preexisting conditions that insurers wouldn't cover at reasonable rates (a practice that will be banned in 2014 under the new law). In 2006, Lynn's group was finally able to get their hands on an affordable plan after hiring new workers who happened to be healthier. But since then, rates have increased about 10 percent annually.

"Luckily, our increased revenues have offset the increased costs of our health insurance. If the company wasn't doing as well as it is, I'd have to consider passing some of the cost to employees or raising the co-pay on the plan," she said. "And the rebate of nearly $1500 that we got for our 2011 costs further offsets our expenses and makes me feel confident we can continue paying 100 percent of our employees' premiums. It's nice to know that insurance companies are being held accountable for keeping my insurance costs tied to actual healthcare expenses."

And the MLR rule isn't the only insurance-related provision of the Affordable Care Act that's in the spotlight this week. Many women-owned businesses will also happy to know that as of Aug. 1, new or renewing health insurance plans must cover a host of preventive services for women at no out-of-pocket cost -- such as annual well-woman exams, birth control and more.

Entrepreneurs likely support this measure, as Small Business Majority's recent opinion polling found that nearly three-quarters of small business owners are in favor of the new law's provision requiring that insurers charge women the same rates as men. And in fact, about the same percentage also support the MLR rule.

So, if you're a hardworking small business owner who provides health insurance for your employees, or if you're a female small business owner, you might want to read up on the benefits you could soon be receiving. This rebate map will show you if your insurer is issuing refunds in your state. Plus, HHS also has new information showing the percentage of premiums each insurer spent on patient care versus overhead in 2011, along with information on women's preventive services kicking in.

As you can see, it's a big week in healthcare reform for small business. And that's something to be thankful for. Small businesses' premium costs have spiraled so far out of control over the past decade that more and more of them are being robbed of their ability to afford coverage for deserving employees, or like Lynn, have to try repeatedly to even access it. It was time something was done to start bringing these entrepreneurs relief, and the Affordable Care Act is off to a pretty good start.

Pushing High-Income Tax Cut Under Small Business Guise: Not Good Fiscal Policy

2012-08-01T11:01:35-04:00

As the year progresses, small business owners are becoming increasingly iconic in Washington. In the latest round of legislative battles over whether to eliminate tax breaks for high-income earners, the small business voice is unscrupulously being leveraged to push a partisan agenda -- an agenda that assumes small business owners are high-income earners. But there's a problem. For the most part, they're not. And the real voices of small business owners are fighting to be heard.

The argument for extending the tax cuts for earners with income exceeding $250,000 annually for the sake of small business survival is erroneous and misguided. The vast majority of small business owners simply don't make that much money. According to the nonpartisan Tax Policy Center, less than 2 percent of small businesses are in the top two income brackets -- individuals earning more than about $170,000 a year and families earning more than about $210,000 a year. We wish these hardworking entrepreneurs were rolling in $250,000 a year, but they aren't.

That said, it's not surprising they actually support ending the upper income tax cuts. Small Business Majority's national opinion polling recently found small business owners broadly agree they're at a disadvantage when it comes to taxes. The majority of them would like to see tax cuts for those with annual household income exceeding $250,000 eliminated.

In reality, many of the owners who would be affected by ending these cuts are wealthy individuals who have created partnerships or S corporations to lower their tax obligations. They may not even be small businesses, but just appear that way on paper to the IRS. These are not your average mom-and-pop shops.

On the other hand, most small businesses benefit from the middle class tax cuts also set to expire at year's end. Senators voted to extend these cuts last week when they approved the Middle Class Tax Cut Act, and the House is expected to vote on the bill Wednesday. If we want to keep afloat an important life raft small businesses depend on, the House of Representatives should pass it. Main Street entrepreneurs need it to continue saving money and growing their businesses.

When real small-business owners sit down to pay their bills and plan for the future, they worry about boosting sales, meeting payroll, affording health insurance, reducing their energy costs and the pending loan application at the bank. Our focus should be on helping them take advantage of provisions in the Affordable Care Act or increasing their access to capital, which will do far more to help them create jobs and grow our economy than ill-advised tax breaks for the super rich.

While the House of Representatives has the chance to stimulate small business growth by keeping the middle class tax cuts in place, it needs to take it. If it doesn't, small business owners and their potential customers will only be left with more fiscal uncertainty. Middle class Americans make up a huge customer base for Main Street firms. Putting more disposable income in their hands will help pump money into small business coffers.

Our polling has found time and time again that low customer confidence is either the biggest or one of the biggest problems facing small business owners. Increased consumer demand for small business owners' goods and services would mean more cash in small business owners' pockets -- and that could be spent on expanding and hiring new workers.

For the sake of the economy, the House should approve the legislation passed by senators last week. Entrepreneurs need it. What they don't need is to see their hopes for the future dashed in favor of keeping the rich, rich, and they especially don't need lawmakers shamelessly channeling their political influence to make that happen.

John Arensmeyer is founder and CEO of Small Business Majority