Archive for June, 2016

Small Businesses Are Waiting For 2017

June 19, 2016

On many fronts and despite attempts to say otherwise, small businesses appear to be waiting for 2017.

Small business hiring is frozen; investment in new equipment is down; physical expansion is stagnant.

Prudent small business leaders say they fear additional end-of-term regulations coming from President Obama.  They are already smarting from regulation overload.  His administration has formulated more regulation than any other president, with more expected.

Alone, the just instituted overtime labor regulations are causing an eruption of change.  Most of which does not add to a company’s profit picture but adds more regulations to adhere to.

Major features of the Accountable Care Act swing into effect with this year’s enrollment period.  Staying below the 50 employee total to avoid compliance with more onerous regulations is stifling adding workers.

The Labor Department’s drive to count franchises together rather than individual establishments is also hurting expansion, planning, and hiring.

Provisions of the tax code to foster expansion also die with the year.  Hurting small business growth.

All of these factors combined with a slow economy, staggering unemployment, and a presidential election are making small business leaders extremely hesitant to expand.

Another factor weighing on small business expansion is the reluctance of small businesses to take on debt.  This trend coupled with confusing lending trends has given little expansion leadership to the small business sector.

The nation’s debt, expanded to unprecedented levels over the past eight years, is also of great concern to small business leaders.

In their mind, debt is used to expand, in government it is used to cover tax shortfall.

The Federal Reserve has shown little appetite to raise interest rates, another abdication of leadership.

In fact, as focus groups have shown, small businesses have found no leaders in which to rally around.

Neither are they finding comfort from measures of economic growth.  Various metrics contradict each other, providing no clear clues to point small business proprietors to future growth.

Unemployment rates issued by the government are distrusted.  A survey by Information Strategies Inc. (ISI) revealed on average small business leaders thought the real unemployed rate was above 10%, versus the government figure of half that.

The US Bureau of Labor Statistics reports that more than 90 million are not in the US labor force.  The non-partisan Congressional Budget Office (CBO) suggests that there is a pretty clear reason: an unusually large number of people have stopper looking for work.

While many pundits think the Presidential election will be won or lost on the issue of the economy, neither presumptive nominee has truly addressed those issues.

Small business leaders will play a heavy role in this coming election.  It is up to the next president to show them leadership and begin to turn the economy around.