It is no secret that the COVID-19 pandemic has taken a toll on small business. U.S. small business optimism recently declined to an eight-month low, with just over half of entrepreneurs (55 percent) confident in their business operations lasting another year.
However, entrepreneurs are nothing if not innovative by nature. While the pandemic economy has added a new layer of adversity for the entrepreneurially minded to overcome, the small business journey was never for the faint of heart. As a small business owner, you grow accustomed to adversity on a daily basis, hoping for the best but preparing for the worst. It may sound like a cliché, but perseverance is perhaps an entrepreneur’s most valuable currency. To quote the late Steve Jobs, “I’m convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance.”
Let us look at a glass half full. Yes, the pandemic and its attendant lockdowns are nearing their one year-anniversary, which has led to waning confidence and optimism within the small business community. Yes, job loss and business closure remain key concerns for most entrepreneurs. Many have failed already, through no fault of their own.
But, no, not all is lost. Based on a new survey, more than half of small business employers plan to hire new employees in 2021, across a variety of departments. Among those businesses likely to hire, over a third (35 percent) are seeking help with information technology, while 31 percent are beefing up their marketing and sales teams. This will benefit workers and their families, who depend on small business for financial security.
Expecting a small business bounce-back in 2021, Goldman Sachs recently projected 6.8 percent economic growth in the new year and 4.5 percent in 2022. With unemployment claims down, the U.S. economy is trending upwards. There is reason for hope.
However, Goldman Sachs’ new projection assumes that the federal government will continue assisting small business owners financially, without major delays. For example, the Wall Street firm expects the government to approve another $200 billion in fiscal aid to state and local governments, as well as an extra $150 billion in unemployment benefits and another $100 billion in other discretionary spending.
While direct financial assistance can help entrepreneurs coping with COVID-related restrictions (in addition to consumers), they would also benefit from pro-business tax and regulatory policies. There is more to being “pro-business” than just throwing money at problems. Elected officials can and should focus on more structural reforms, alleviating the tax and regulatory burdens that often plague entrepreneurship. Tax complexity and excessive red tape routinely rank among small business owners’ top concerns, granting policymakers a popular mandate for reform. Democrat or Republican, Americans generally back small businesses, so reforms that promote entrepreneurship would be more popular than not.
However, policymakers should also exercise prudence. Now is not the time to enact polices that may adversely affect small business employment, and employer concerns need to be taken into account. Most small business owners oppose a $15 hourly federal minimum wage, for instance, with one-third claiming the wage hike would likely result in lay-offs. Their concern is not unfounded: The nonpartisan Congressional Budget Office has estimated that an increase in the federal minimum wage to $15 an hour would lead to a loss of 1.4 million jobs by 2025, outweighing potential reductions in poverty.
As we navigate today’s turbulent waters, good-faith, common-sense public policies are in high demand. Raising labor costs for small business owners, at a time when job loss and business closure are more common than ever before, does nothing to advance entrepreneurship. Policymaking at the federal, state, and local level should prioritize business expansion and job creation, fueling a small business engine that can generate short- and long-term economic growth.
The stakes are higher than many realize. “Buy local” and “Support small business” have become common refrains in today’s discourse, but few Americans truly understand the economic impact of America’s smallest employers—in numerical terms. According to new research from the Biden administration, small businesses account for nearly half of U.S. economic output, creating two-thirds of the economy’s net new jobs and employing tens of millions of workers. What helps or hurts the small business owner affects us all, directly or indirectly.
Now is the time to make the small business owner’s job easier. Help employers, and their employees are sure to benefit too. In good times and bad, that is the reality in small business America.