A year-end, 2012 survey of consumer sentiment on small business found that almost 90 percent of Americans viewed small business leaders in a positive light. Respondents used words like “tireless,” “gutsy” and even “optimistic” as they heaped praise on small business leaders’ determined efforts to power our nation’s economy through a still fragile economic recovery.
If you’re a small business owner, you’re going to need all those attributes and more to weather the latest political stalemate on Capitol Hill.
In the absence of an agreement between President Obama and Republican leaders in the House, a series of spending cuts referred to as a sequester—expected to be about $85 billion in across the board, automatic spending cuts in every state—will begin to take effect on Friday, March 1. A few days ago the White House released its state-by-state analysis of what will happen in the absence of an agreement and, this morning, MSNBC Economic Analyst Steven Rattner described where those cuts will fall in layman's terms.
A Manta survey of 1,300 small businesses, released last month, found that small business leaders’ had already made tough choices, out of necessity, as they believe the political showdown may slow economic growth if the sequester is not averted. Manta’s analysis found the following:
• 82 percent of small businesses did not make any new hires from October through December, 2012, due to uncertainty caused by the threat of the sequester
• nearly four in 10 surveyed said they delayed hiring because of the unresolved fiscal cliff and debt ceiling issue
• three-fourths of those surveyed (76 percent) say they disapprove of the job that Congress and the President are doing in managing recent budgetary issues
As millions of Americans outside the beltway bemoan another ‘there they go again’ moment, what steps can small business leaders take to weather the economic uncertainty caused by policymakers’ inability to reach bipartisan agreement on tax and spending policy?
While there are no hard and fast solutions for small business owners, there are useful sources small business leaders can turn to for guidance on how to mitigate the damage that may occur after Friday's deadline.
Last fall, the Government Contracts Practice Group at Washington-based Arnold & Porter LLP provided detailed, prescient analysis on how small businesses, especially government contractors, could work to mitigate some of the damage from a loss of contracts and revenue.
For those small business leaders, and others, who are anxious about how to prepare to weather the looming sequester, here are additional sources and leadership insights that should spark ideas to help you chart a path forward.
• Fabio Rosatti, President and CEO of Elance, an online business that links skilled freelancers with clients, boldly predicted in an online forum sponsored by American Express that 2013 will be the ‘year of the freelancer.’ His firm is one of a growing number of online, service businesses that continue to thrive in the still expanding, online economy.
• Earlier this month, U.S. manufacturers’ top advocacy organization, the National Association of Manufacturers, made the case that because of its previous support of the “Budget Control Act of 2011,” they believed their support for a mix of responsible budget cuts to entitlement reforms, combined with potential cuts in discretionary spending, should rule the day. NAM's leadership and other industry observers believed their recommendations to policymakers, then, should serve as a balanced guide on how to avoid what they called an “across-the-board” approach. For now, it seems that “across-the-board” is precisely what will happen. On February 13, NAM President and CEO Jay Timmons spoke to The Detroit Economic. He laid out his "20-20 vision" for how to better position our nation's manufacturing industry for the 21st century.
Finally, as both sides of the political aisle continue to press their case to their respective constituencies, caught in the middle are millions of American families and anxious but determined small business leaders. For now, the best prescription for small business leaders is to be clear on the economic implications of the sequester to your businesses' bottom line and, in turn, to make your voices heard by your elected and appointed officials.