The US presidential elections are getting into high gear with both the democrats and the republicans putting their houses in order very fast. All these hastened moves to appeal to different constituents are efforts in readiness for the biggest political showdown globally this year. Whichever way the elections result goes, there will be positive outcomes and negative outcomes all affecting the small businesses in different ways and in varying magnitudes.
Small business owners are often individuals running their small enterprises from which they hope to generate enough income to pay their monthly bills. However, despite the fact that they are small in size when viewed in isolation, collectively these businesses cannot be ignored and the presidential candidates know this too well. The numbers speak for themselves and paint a much clearer picture of why the small businesses in the US are an important part of the election campaigns and why the outcome matters to them.
In the US we have about twenty eight million small businesses which account for about 54% of total sales in the US. In addition, these small businesses provide about 55% of the total jobs in the US. Their contribution is even higher on new jobs creation averaging at about 66% since the 1970s. According to data provided by the Small Business Administration, there are more than 600,000 franchised small businesses in the United States of America which account for about 40% of all retail sales in the country. In addition to that, they also employ about 8 million people, hence contributing to a great deal in job creation and dealing with the unemployment challenge within the US economy. On the real estate sector, the small businesses in the US occupy between 30% – 50% of all commercial space; which translates to about 20 – 30 billion square feet.
With the above facts explained in numbers, it therefore becomes very clear why the small businesses are a very integral part of the economic discussions and debates for most of the presidential candidates. First they have a large number of voters who each presidential candidate would like to woo to their camp. Secondly, the small businesses contribute a very high proportion of the economic development in the US such that they cannot simply be ignored. If well taken care of, they will create more jobs, increase production and eventually boost economic growth across the US. On the other hand, if ignored, the small businesses will collapse and a lot more industries that rely on them for outputs or other services will suffer a big blow too. Unemployment will kick in, high dependency ratios and ultimately the US economy will slide away from being the icon it is today globally.
Strategies to woo the small business owners are therefore very important for each presidential candidate. Whichever policy stand each of the presidential candidates takes must therefore be examined carefully by the small business owners in order to understand how that will translate in their businesses after the elections.
First is the issue on income inequality. Most candidates are pushing for a higher minimum wage from the current USD7.25 an hour. With most of the proposed minimum wage rates at USD15 an hour, small businesses are likely to be affected the most. This is because the small businesses are the ones who pay their employees at rates around the minimum wages. If the rates are to double, it therefor means that the small businesses will have to deal with bulging payroll expenses at the same level of production. This will eventually eat into their profits and cash flows, resulting to others getting out of business.
The other campaign issues that affect the small businesses are healthcare, taxes, regulations and access to capital. With more visibility into how Americans are now using Obamacare, insurers will tend to seek more premiums and this will increase costs for the small businesses. On taxes, the common drift throughout the campaigns is to reduce the tax burden on small businesses so that they are able to grow much faster. This is positive news to small businesses since any policy that lifts some of the tax burden from them will be actually increasing their bottom lines and hence helping them expand their operations.
On regulations, just like on taxes, the issue is on streamlining the regulatory systems so that it is easy for the small businesses to access all the government services they need without wasting a lot of time in the government offices. Access to capital has been a major problem to small businesses since the recession in 2008. With only 33% of them able to access the financing they seek, the small business owners will have to look for other borrowing options away from banks such as business credit cards that will help them access financing much easily.
As discussed above, the small businesses are indeed a very important part of the US election campaign debates due to their numbers and their contribution to the US economy. All presidential candidates are aware of this and we can only hope that they will come up with unique packages to lure this voter constituent.
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