October 10, 2012

Attention readers: Please welcome our latest contributor, Daniel Schuler. Dan is a writer who focuses on business, finance, and technology.  Dan will provide insight and opinion that will add a new and compelling dimension to our humble blog site. His posts shall heretofore be known as “Dan’s Business Blog.”

This post was originally published on Bootstrapper on September 19, and subsequently posted on on October 10, 2012.


It is inarguable that small businesses represent the American dream. The family-owned business is a direct reflection of the capitalist system that make it possible for anyone to establish trade of a product or service and to make a living doing so. The image of the little guy doing battle against corporate behemoths has become as much a part of our social fabric as Norman Rockwell’s paintings. As the 2012 Presidential election approaches, small businesses’ interests are high on the lists of both the Democrats and Republicans.

Why are Small Businesses Important?

The U.S. Small Business Administration (SBA) defines a small business as one that is independently owned and operated, organized for profit and not dominant in its field. Depending on the economic sector a business operates in, this qualifies as a business concern for both the Mom & Pops and small corporation of less than 500 employees. While this is a broad range, the SBA estimates that nearly 80% of business concerns in the U.S. employ fewer than 10 people, and nearly 90% employ fewer than 20.

Small businesses are important to politics. During the last two years of record, the phrase “small business” was mentioned over 10,000 times in Congressional sessions, second only to discussions of taxes and more popular than the phrase “debt limit.” Small businesses are important to Washington because they drive two-thirds of the nation’s job growth.

As members of this powerful voting bloc, small businesses have much at stake in the upcoming election. Entrepreneurs are under extremely heavy federal regulation; a recent Gallup poll listed governmental compliance as the most difficult problem these business owners face. They are also heavily taxed; the U.S. has a higher business tax than nearly any other country. Smaller firms bear the brunt of this burden because they lack the resources that let large corporations abuse many tax code loopholes.

Also of growing concern to small businesses is the power that large corporations have in Washington. Corporations may legally donate large amounts of money to campaign funds, which gives big business clout on Capitol Hill. While corporations finance the excessive amount of money spent on campaign funding, politicians will continue to drum up the concerns of small business owners because of their voting power.

Small business owners are politically active. A survey by the National Small Business Association (NSBA) reports that 97% of these business owners vote in national elections and 94% vote in state elections. Economic and fiscal policy drives these voters, who are rarely known to vote along straight party lines. Both the Obama Administration and Republican Candidate Mitt Romney’s campaign have much to prove to this voting bloc, which amounts to a third of the electorate.

The Two Sides and What it Means for Small Businesses

Thus far, President Obama’s administration has attempted to assist job growth in small business with 18 tax cuts, some of which were temporary. The SBA has also set a record high for small business loans, of which more than 150,000 were made since 2008. While Obama has also increased the SBA’s funding by $2 billion, business owners are no longer allowed to borrow against personal property to fund their companies – a decidedly unpopular outcome

The incumbent Democrat’s campaign platform includes the Startup America initiative, a capital matching fund for investors. If re-elected Obama promises additional support to the SBA as it attempts to provide $26 billion in loans to the private sector. Additional proposed tax cuts are designed to reward new hiring and investment in these companies. “Small businesses create 2 out of every 3 jobs in this economy, so our recovery depends on them,” said Obama on the campaign trail.

Romney’s governmental record in Massachusetts is less than stellar, as startup businesses dropped by 10% during his last year in office. However, his presidential campaign platform contains plenty of juicy incentives for business owners. Proposing enormous tax cuts for households earning over $250,000 per year, Romney claims that small businesses will be largely unaffected. The idea is that a relatively small number of profitable companies under the small business umbrella create the most new jobs, and so, small business as a whole will not feel the pain.

Romney plans to cut SBA funding by nearly 20%. However, he promises to repeal portions of the controversial Dodd-Frank Act that allows banks to tighten the reins on business loans. Another major talking point of his campaign, the promise to end Obamacare, directly affects these business owners. Under the provisions of Obamacare, federally mandated healthcare legislation has the potential to be very costly to business owners. Romney also promises to stop regulatory increases by capping that spending at zero. Business owners struggling under a heavy load of governmental compliance may find this appealing. Lastly, Romney is a believer in state’s rights and if elected, will give individual states the power to develop healthcare solutions.

A Manta survey in August 2012 among small business entrepreneurs revealed a definite swing toward the Romney campaign. Only 26% of survey respondents claimed they would re-elect President Obama, and 61% said they would definitely cast their vote for Romney. President Obama, in spite of the changes he has offered for entrepreneurs, is dropping in popularity among these voters. A prior Manta poll of the same group of voters in May 2012 showed 6% better numbers than in August. The National Federation of Independent Businesses conducts analysis and endorsements of candidates in all elections and offers detailed information for these entrepreneurs

The opinions expressed on Dan’s Business Blog do not necessarily reflect those of

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