Gene Marks: In appealing to small businesses, Trump’s timing couldn’t be better
Don’t believe what you hear from the presidential candidates. 2015 was a good year for business. Especially small business.
Businesses with less than $5 million in annual revenue experienced, on average, a 7.8 percent annual sales growth during 2015, an increase of nearly a full percentage point from the previous year, according to a recent study from research firm Sageworks. Not only that, the study found, but their net profits rose to 7.5 percent from 6.4 percent of revenues–the fourth consecutive year of improvement. A February, 2016 Wells Fargo report confirmed this data, with two-thirds of 600 small business owners saying their companies’ financial situation is good.
So yes, 2015 was good. And 2016 is shaping up to be pretty good too: 71 percent of the businesses in the Well Fargo survey said that they expect their companies to be in good financial shape this year. A unit of Western Union says that 68 percent of “larger” small businesses (those with $20-$100 million in sales) and 43 percent of mid-sized companies ($5-$20 million in sales) expect international trade conditions to improve this year. And 73 percent of businesses surveyed late last year in a study by the Hartford felt that their businesses are operating “successfully” with 52 percent feeling “optimistic” about the economy this year.
You would think this kind of news would be great for Hillary Clinton, no? Of all the candidates running for the White House, she’s the most likely to continue on a similar path as President Obama and it seems that most businesses are doing pretty okay under Obama. And yet, she’s not winning the small business vote. Donald Trump is.
Small businesses seem to love him. In a poll of small business owners conducted for Manta at the start of February, Trump claimed 38 percent of the vote to 21 percent for Clinton. And according to research also released last week by the Center for Public Integrity last week Trump is attracting the most contributions from business owners. “Excluding retirees,” the report said. “The most identifiable contributions to the billionaire businessman have come from owners, presidents and CEOs, in that order. According to the organization, the businesses included heating and air conditioning contracting companies, exterminators, auto dealerships, real estate offices, retail outlets and small manufacturers.
It seems strange. Because even when you dig into the details, it’s not as if Trump’s policies are all that great for a small business owner.
The best thing going for him is his commitment to lower taxes. As I’ve written before, his proposed tax plans are just better for us because he favors significantly reduced individual, corporate and capital gains rates as well as “closing the tax loopholes” on big companies that everyone else promises. All business people I know favor a lower tax environment as a key component of economic growth. But Trump’s pretty cagey about how he would address our healthcare problems (which consistently finds itself at or near the top of issues facing business owners in every survey I see and everyone I meet) and hasn’t shied away from big government spending commitments. For example, he has repeatedly refused to cut social security and Medicare programs and supports more spending on defense and expensive immigration controls (that Mexican wall?). He promises, like all the others to “cut waste.” But his ideas, when coupled with his proposed tax decreases, would likely add billions to our already out of control national debt which terrifies the business community, according to many economists.
Lots of explanations are given for Trump’s popularity with small business. He’s different. He’s an outsider. He’s a businessman and not a politician. He’s rich and successful and flies around in a gold-plated plane and speaks his own mind, regardless of how crazy he sometimes sounds. He’s brash and unapologetic and competitive and passionate. He’s a winner. Yes, it’s some of that. It’s all of that. But it’s also one other big thing. It’s timing.
These are not the times of crisis or catastrophe. We are not facing imminent war, famine or another Great Recession. Sure, we’ve got our challenges like every generation before us. But as Warren Buffet just said this past week in a letter to his shareholders “the babies born in America are the luckiest crop in history.” After seven long years of recovery, we’ve cleaned up our balance sheets, embraced technologies, picked ourselves up and pointed ourselves forward. We’ve proved that we can profit even in a sluggish, over-regulated environment. We don’t want more of the same. We want to capitalize on these times.
And that’s what Trump promises. His brand of optimism is the perfect message that’s being delivered at just the right time where American businesses have recovered and are now poised for growth. Trump brings a different kind of hope. Not one of dreamy visions of an equal and loving world where everyone lives in blissful harmony in a shared community. It’s a realistic vision of winning against the competition and saying what needs to be said and making hard, unpopular decisions. Business owners live in a world where the competition competes unfairly, customers lie, employees don’t show up to work and suppliers don’t deliver as promised. And this is the same world where nations compete unfairly, economic partners back out of deals, people demand unrealistic handouts and governments don’t deliver as promised.
Trump is short on details and long on personality. He wants us to buy into his ability to solve problems, cut deals and run the government like he’s run his businesses. There’s no evidence he can do this. Voting for him would be a huge risk. Voting for Clinton is much less so. And yet, like it or not, a great many business owners seem ready and willing to take that risk. The times seem better suited for him, not Clinton.