Surveys across the board show small business owners’ optimism has skyrocketed in 2017. The promise of better business conditions and deregulation by the Trump Administration is building confidence among entrepreneurs, creating an environment for small businesses to rally.
The hopeful surge came just after the election and has since grown after President Trump signed an executive order on January 30, stating that for every new regulation adopted, two must be identified for elimination. This order came on the heels of a memorandum from White House Chief of Staff Reince Priebus to all executive departments and agencies to freeze new or pending regulations, providing the new administration a chance to review and examine their immediate impact. Republicans have long criticized regulation as stifling to small businesses.
However, small business owners are not united on their perception of the new president. Recently, Lendio conducted a survey of more than 330 random U.S. small business owners with 250 employees or less to get a better sense of how they believe Trump’s presidency will impact their business.
The study found that since Donald Trump’s inauguration on January 20, 53 percent of small business owners do not approve of his performance. Overall, only 27 percent of small business owners approve of Trump’s performance during his first days in office. Read the full survey results. But if approval is low and the outlook is optimistic, what are small business owners concentrating on?
Shortly after the election last November, a Wells Fargo/Gallup Small Business Index survey of 600 business owners showed 45% felt the operating environment for their businesses would improve the following year, which is the highest optimism rating since 2008. The Index of Small Business Optimism released in December 2016 by the National Federation of Independent Business (NFIB), reported a substantial jump in the number of owners who expect better business conditions, showing small business optimism at its highest level since December 2004. According to the NFIB report, survey responders indicated an expectation of better business conditions, as well as higher sales expectations and the current market being a “good time to expand.”
These results show the direct psychological effect of political news on the business community. Since the small-business sector creates two-thirds of the country’s net new jobs, a swell in sanguinity can have huge economic impact, in spite of a low presidential approval rating. An optimistic upswing such as this could increase business activity, capital spending, hiring, risk-taking and investment, resulting in economic expansion.
The Lendio survey showed 41 percent of small business owners believe Trump’s recent executive order on business regulation will help their business. When it comes to Trump’s deregulatory promises, there are some key areas where small business owners are paying attention.
A common thread of optimism among upbeat small business owners is hope in the Republican Congress’s plans to repeal the Affordable Care Act (ACA). A recent Manta poll of 1,575 small business owners shows 63 percent would like to see the ACA repealed and replaced during the Trump presidency.
While these small business owners feel the premiums are too expensive and hurting their business, others say they would be without health care if not for the ACA. Before the ACA, many small business owners report being unable to get health insurance or finding it hard to get coverage if they had a pre-existing condition or needed maternity coverage. This polarization in the small business community reflects the divide in the rest of the country over the ACA, and it’s unclear at this time what if anything would replace it if it is repealed.
Trump’s policy critics are less optimistic when it comes to taxes, pointing out that his promised lower business tax rates (the Trump plan is to cut corporate tax rates from the maximum 35 percent down to 15 percent) will only apply to C corporations, excluding the majority of small business that operate as pass-through entities including partnerships, limited liability companies or S corporations.
Simplified tax code may also mean that small business owners cannot take full advantage of certain deductions and write-offs, and tax incentives for investors to fund new businesses may be lost. If you’re a small business owner, you might want to consider taking your deductions right away before tax codes change.
Other concerns center around Small Business Administration (SBA) funding and whether republicans will lower the SBA budget, thus limiting the availability of small business loans. Though Trump’s pick for SBA Administrator, co-founder of the World Wrestling Federation Linda McMahon, may be willing to fight for small business owners. McMahon, who along with her husband, started the WWE from the ground up and may be sympathetic to struggling entrepreneurs.
Additionally, industry experts and politicians argue it’s time for sensible regulation of online alternative small business lenders, which may also affect small businesses looking to borrow money.
Small-business advocacy groups also want to see the Department of Labor’s overtime rules eliminated. Scheduled to go into effect December 1, the rules were put on hold by a federal court in Texas. President Trump’s pick for Labor secretary, fast-food company CEO, Andy Puzder, opposes the regulations. The Obama administration’s plan would make 4.2 million salaried workers eligible for overtime. The rule impedes the efforts of some small businesses that have shifted workers to hourly pay and limited hours to contain overtime costs.
Additional employment regulations include rulings by the Equal Employment Opportunity Commission and the National Labor Relations Board which operate independently of the executive branch but can be influenced by Trump as he appoints more conservatives to fill vacancies in each.
Other regulatory concerns of note include the Clean Water Act which protects wetlands, and according to critics, gives the government too much control over private landowners and restricts business owners moving forward with building permits and projects. There are also the EPA’s rules on coal-fired power emissions, which the Supreme Court put on hold and small business groups hope will be nixed by Trump or Congress.
Whether Trump will follow through on all of his regulatory reform promises remains to be seen; however, it’s clear he’s starting down that path and garnering attention from the small business community. As the data demonstrates, if small businesses feel heard and the burden of government regulation is eased, we will see welcomed growth in the sector that employs more than 50 percent of the working population.