What the U.S. Election Means To Small Businesses and Entrepreneurs

August 21, 2012 – I recently met with a fantastic group of Entrepreneurs at a West Coast Angels event. These groups are typically attended by both investors looking to help start-ups and business owners seeking capital. Think of it as the reality television show “Shark Tank” on steroids.

I was asked to provide my opinion on how the small business economy would react to whatever the results would be of the upcoming Presidential election. I stated unequivocally “no matter who wins in November, small business will have at least a few more years of severe pain, and possibly a lost decade.”

This was not a partisan statement, and it is never my intention to discuss my political views (outside the obligatory Thanksgiving dinner debates and occasional friendly Facebook soapbox).

I answered an economic question, which is based on measurement and statistics. Regardless, we are in a highly partisan election cycle, so while my response shocked some people, many others nodded their heads.

What I followed with was, again, non-partisan fact: “The current metrics we are seeing are based on a combination of factors such as a low (1.5%) gross domestic product, decreasing consumer confidence, financing/lending challenges, increased regulations and a high level of uncertainty pertaining to upcoming taxes and health care expenses. Small businesses are also dealing with the much reported Eurozone crisis, and the hardly reported slowdown in China.”

I discussed how the Eurozone crisis and China slowdown may have significant impact on manufacturing/ factory orders for the near term future.

However, a potential silver lining with the international concerns may be that we see the U.S. become the de facto ‘strongest kid on the block’, much like post World War II, where America enjoyed 4 decades of unparalleled manufacturing power. Whether this could happen again is yet to be seen and to which level, no one can predict.

In the meantime, small businesses are having a hard time justifying hiring new employees, and those they do hire are now seeing their earning power reduced. This is causing a widespread reduction in the standard of living for many crossing middle class, upper middle class and even the wealthy.

Recent reports show Canadians are now worth more per capital than their American counterparts. This is not by a few thousand dollars either. Canadians net worth is now over $40,000 higher than Americans. Some of this has to do with the collapse in U.S. real estate values while Canada has enjoyed an increase. But other issues, more complicated issues such as a devalued U.S. dollar due to the printing of U.S. currency through QE 1, 2 and possibly 3 may also be having an impact.

I then turned the discussion back to a more micro view, especially for those Entrepreneurs attending the conference. That there will always be opportunity, and those with a good idea, work ethic and who are not risk adverse CAN prosper, even in a recessionary period.

The goal for anyone contemplating starting up a business should be to ensure they are providing a service or product that is needed, especially in these economically challenging times. After all, the Entrepreneurial screed is simple: Find a Need and Fill It!

I discussed how many of our Licensees were sitting where these fledging entrepreneurs are now… nervous, excited and motivated to succeed. But the most important aspect is to work with someone that can provide assistance and mentoring. Whether it’s an association like the Angel group, the SBA or a company like mine (Valcor) who are training individuals to start their own business service.

If you are considering starting up your own business, ask yourself if you have the fortitude, patience and determination to succeed. With that, no matter who is in the White House, you can succeed if you are tenacious, even in these challenging economic times.