Small businesses cheer midterm results
— George A. Cloutier is the founder and CEO of American Management Services and the author of the bestselling book, “Profits Aren’t Everything, They’re the Only Thing”. The views expressed are his own. —
Last week’s midterm elections have provided an emotional boost for many small businesses, according to a survey conducted by American Management Services.
About 73 percent of small business owners said they felt more optimistic about the future of their company due to the Republican gains, in a survey of more than 300 small business owners in 25 states following the Congressional elections. The participating companies all employ at least 25 employees and are considered the job-drivers most likely to hire new workers.
Still despite their optimism, just 5 percent said they were considering hiring more workers based on the election results and 64 percent were not planning on adding additional workers at this time – debunking some claims that small business would step up hiring quickly with a new and clear political direction.
Twenty-six percent did indicate they might hire, but are waiting to see if business actually improves.
One St. Louis, Missouri-area business owner stated it succinctly: “I’m from the ‘Show Me’ state and until I see real new business orders, I’m not making a $50,000 bet on a new employee.”
The prospect of potentially lower taxes, enacted job credits and payroll tax holidays does not seem to be having significant effect. Another owner from Houston, Texas stated: “If there is a payroll tax holiday and I save only $5,000 to spend $30,000 to $50,000 per employee, what’s the point of having them sit around doing little or nothing?”
Eighty percent thought small business would be better off going forward with “more Republican influence” and only 4 percent thought it would hurt. Over 70 percent thought the Bush tax cuts would be extended for at least a year based on the multitude of promises made during the Congressional campaign. The Administration’s version of healthcare was widely rejected, with 71 percent of respondents stating that the current bill should either be “repealed or dramatically altered.”
Over 70 percent of owners currently offering full healthcare benefits indicated they would be cutting back or eliminating their contributions to plans in the future, despite the bill’s mandatory fines for owners who fail to provide healthcare.
The Obama administration has countered that most small businesses don’t understand all the provisions of the new healthcare plan. If small businesses don’t understand the plan then our elected officials have clearly failed to explain it, or, as many small businesses believe, the plan is simply out of control and will be an economic monstrosity to implement.
Although these “driver” groups of small businesses are optimistic about the future under more Republican influence, they also believe there will be gridlock on the key economic issues of taxes, spending and healthcare. The large majority of respondents – 86 percent – expect some degree of gridlock and just 14 percent felt both major parties would work together in a new bipartisan effort.
Thirty-eight percent of owners thought the Tea Party impacted or “made a difference” in the election results. But only 5 percent admitted feeling “an affinity” for the Tea Party and 22 percent felt “a little” affinity for the Tea Party.
Only 20 percent thought the recent Republican gains would actually loosen credit for small and midsized companies.
Clearly these businesses are happy with the election results, but unfortunately are not willing to place real money bets on the future. They are taking a very cautious, but upbeat stance on the future of the economy.