Gene Marks: Are small business owners willing to take a risk on Trump?
Many people believe that running a small business means taking a lot of risk. “Oh, so you’re an entrepreneur,” one person recently said to me when I told him I owned my own company. “It’s courageous people like you who are the key to growth in our country.”
No, it’s really not. In fact, that couldn’t be more further from the truth. I am anything but courageous. I’m a Certified Public Accountant. I joined my dad back in 1994 when I got sick of my job. I’m not a risk-taker. I’m pretty much a bean-counter.
Sure, there are the entrepreneurs we read about in the media who are really taking risks – the venture capitalists, the dreamers, the passionate souls who gamble everything in pursuit of changing the world. It’s the stuff of inspiration. But it’s not the norm. The lion’s share of small business owners I know are not like that. They are mostly like me. We run companies that we inherited from our parents, or bought from others or started from scratch because we didn’t want (or couldn’t find) a job working for someone else. We’re business owners, not entrepreneurs. And we’re certainly not risk takers. If you don’t believe me, just take a look at the data.
According to a comprehensive survey from The Hartford insurance company late last year, nearly eight in 10 small business owners rated the current overall level of risks they are taking with their business as “conservative,” (and that number actually increased over the prior year). A 2014 survey conducted by accounting software provider Xero found that 68 percent of small business owners never or only occasionally take a risk. More than 75 percent of the small business owners surveyed by Wells Fargo said they were “extremely wary” of taking on more debt. We buy. We sell. We invest our money in equipment, inventory, technology and people only when we are almost certain of the return.
USA Today columnist and small business expert Steve Straus once wrote that most of the successful small business owners he knows are “smart” risk takers. “Usually,” he wrote, “the big bet is preceded by a series of smaller, far more prudent risks. A smaller risk can be used to refine an idea, to get it ready for it’s close up, to hone it until it is time to roll it out big. And by then, it won’t seem like such a big risk anyway after all, because the entrepreneur has tested the idea, knows what to expect, and is prepared for any eventuality.”
Exactly true. Which brings me to this year’s presidential elections. When a business owner looks at the candidates from a business and economic perspective, the differences between Donald Trump and Hillary Clinton are significant. And Trump really seems to be the much better candidate. But what about the risk?
Trump is proposing an enormous reduction in individual, corporate and estate tax rates – a plan that even the bi-partisan Tax Foundation agrees would add 5.3 million new jobs and grow the economy by 11.5 percent over the next 10 years. Clinton’s plan, according to that same analysis, would result in job losses and negative economic growth over that same period. The big “if” is national debt. Trump’s economic plan would add almost $12 trillion to our nation’s deficit during this period as compared to only half a trillion under Clinton. But Trump says he’ll be running the government so much more efficiently he’ll be able to find ways to mitigate this number. Do you believe him?
Trump’s trade proposals are welcomed by many of my clients and other business owners I meet around the country. “Start a trade war with China?” one said to me recently. “We’re already in a trade war with China. And they’re winning!” I frequently hear complaints that U.S. companies face large obstacles entering Chinese markets, and allegations that competitive goods from there are produced with government subsidies and then dumped here at lower than market prices. Many small business owners don’t have the resources to open up factories in Mexico, where wages and overheads are lower, and must compete against larger companies that do. Trump says he’ll fix this and create a more level playing field. Do you believe that too?
Healthcare continues to be a significant worry and profit drain and many of my clients are struggling with Obamacare’s new regulations in the midst of double digit price increases year after year. Clinton wants to expand Obamacare with more funding and support from the federal government. Trump favors repeal and wants to allow insurance companies to be more competitive, reduce the regulatory burdens of the law and give states more power over how they spend federal Medicaid funds. He has made it a priority to fix the health care system too.
A lot of this is music to a small business owner’s ears. And who knows? Trump may step up to his promises and actually get this stuff done, put together better deals, bring the best and the brightest to Washington and run the government like a business person would run it – efficiently and profitably. Then again, he may be a catastrophic failure with more Twitter wars, inappropriate comments and behavior that will further enrage both his supporters and opponents, not to mention foreign leaders and allies.
For the 20-30 million small business owners – an enormous voting block – a vote for Clinton means more of the same. And to many who are tired of higher taxes, a slow economy and government regulation, that’s not a great option. But we know what we’re going to get so therefore it’s not a risky vote. With Trump, we really have no idea what’s going to happen. And that’s a huge risk. Are we willing to take that risk? Given our track record, I’m not so sure.