Dashboard: Is Small Business Optimism Eroding?

[Music] welcome to another 21 hats dashboard I'm Lauren Feldman and I'm here today with John aens Meer who is founder and CEO of small business majority and advocacy group for businesses and entrepreneurs happy Monday John happy Monday Lauren good to be here welcome back always great to have you here so John as as he promised Donald Trump hit the ground running last week with a slew of executive orders many of which will have a very direct impact on business owners I want to ask you about that but but first remind us uh what does small business majority do we're a small business advocacy organization we do um lobbying and advocacy on behalf of small business in uh the nation's capital and also um in 11 states across the country uh we have 12 offices across the country and in addition to advocacy we provide connections to resources we educate small businesses um and we do a lot of research to support our work and in particular we focus on the smallest businesses and in many cases those the most underresourced communities they're the ones that really need the help the most and know so we you know we act to serve them be a connector with them to government and connected with them to resources and um you know it's it's all kind of a know sort of a hub and spoke model that um you know it's a unified home do you have members do owners join your organization or do you have followers do you just represent business owners in general how does that work we have a network of 85,000 small businesses and they've come to us in a variety different ways they've joined us for events they've signed on to petitions they sign up for our newsletter um and um you know we we regularly communicate with them uh and that that's sort of the core of what we use to figure out the issues to focus on and then to uh have real small businesses be spokespeople for their concerns and needs and provide us with real information about what we need to be doing you mentioned that the businesses involved with your group tend to be smaller do you have a range of General size well it actually matches the uh demographics of businesses across the country about 80% have 10 employees or fewer and many of those are actually solo entrepreneurs and that really reflects the reality and particularly in the last uh four years when you've had about 20 million new business started many of those are very small and in most cases are still um solo businesses and they're the ones who have the the the least voice and the least power and the ones who really need uh support the most uh that said your group is nonpartisan correct we are nonpartisan so tell me uh what are you and uh and those 85,000 businesses as best you can judge making of the Trump administration's first week well I mean um there's a lot of um uncertainty and in some cases fear uh a big issue now um and one that really wasn't on our radar screen before the election is tariffs that's something you actually featured last week on your podcast um first of all nobody really knows what is going to happen What Trump is going to do but U we've done we've done some research um of our Network U since the election and this is a issue we focused on and um businesses say 54% say that they're concerned for their own businesses or their own supply chain 41% very concerned and when they talk about the economy in general 76% are concerned and 64% are very concerned about what's going to happen with tariffs look most small businesses either sell foreign made Goods or they make products that require foreign made parts and this could upend their business they they they already have been dealing with inflation they don't have a lot of opportunity to raise costs anymore and they're they're concerned and we started hearing about this anecdotally right after the election and now we've done this research and uh you know we're we're very concerned about where this is going to go and unfortunately the way the system's structured not a lot we can do the president does have this quote unquote emergency power to implement tariffs um so um you know we're hoping we can make the case that this is going to be really harmful to small businesses but uh we're going to have to see I'm a little surprised by the numbers that you gave uh given the the size of the businesses that you're uh surveying I wouldn't have thought that as many of those businesses as you've indicated uh actually expect a direct impact on their own business were you surprised by that too um not really I mean the real reality of our global economy is that small businesses um sell a lot of products that are made abroad or at least parts of them are made abroad and those who are manufacturing or or putting products together used for unmade um parts and supplies so uh we're not um you know now look it was about half that were concerned um for their own business or their own supply chain but when they look around at the overall economy they're they're even more concerned so no we weren't I mean we weren't really that uh surprised by the numbers of course you know the the thing in this issue um is that Donald Trump has been saying all along that it's the foreign governments who actually pay these tariffs uh as opposed to the people who import the the goods do you think he really believes that what do you make of that I don't know what he believes I mean it comes out in the in the cost in the end uh it's not it's uh if you're if if if you're having to pay if someone along the way is having to pay a tariff to um to the government then uh that has got gets reflected in the price and ultimately by being reflected in the price it's paid for by the consumer and small businesses are selling to Consumers uh they're going to have to reflect those costs in their price all right um take me to another issue how about immigration how's that look into your group well again I mean look we've had a a situation for years where we we've needed desperately to have a rational solution to this we were big supporters of the bill that passed the Senate uh 12 years ago um that would have really um normalized the situation brought you know brought um sort of allowed immigrants in this country to get the back of the line and become citizens and allow them to keep working in in jobs uh that they were doing and that didn't happen and the situation has um gotten out of control but now we still have a situation where immigrants are a huge part of the Workforce uh the small business Workforce and immigrants continue to start small businesses at twice the rate of of uh uh usbn citizens so again we we we asked in our most recent um Network survey we asked about this issue and um 57 excuse me 37% of um businesses were concerned about their own businesses or their suppliers and you think about that you may run a restaurant and you may have a certain number of um of immigrants working for you and that creates uncertainty but then you also are dependent upon a food supply which we know is very connected to um you know it really relies on on an immigrant Workforce so um and then construction Hospitality so uh we see this um across a lot of Industries out of that 37% 27% were very concerned and then again when they thought about how this is impacting the economy as a whole six 59% were concerned and 58% were very concerned so we are um this has become it's and it's it's it's fear and and really at this point I mean you're talking about you know even more so than tariffs you're talking about dramatic things that could happen if a business gets raid and a large part of their Workforce is is removed that's an immediate hit on the business um and right now we're hearing stories about U businesses about people not coming to work um they're scared to come to work uh in fact um I believe you featured this story um in last week's uh 21 hats on Friday as well uh so in fact um uh this is this has become a huge issue you know you mentioned with tariffs that there's really not a lot to be done the president has this power and can exercise it as he wishes with immigration is there any guidance that you're able to offer to businesses that are um living in fear that this is going to have an impact on them well in both cases for the reason we said on terce but also in Immigration the executive branch has a lot of power quite frankly we don't seem to have a congress that's willing to um take the lead on this issue uh so you're left with a president who can do what he wants and I'm sure he believes that this is what he should do but you know we're going to see the impact of this and you know you hate to say this but if it's a terrible impact is he going to change is he going to listen I don't know I mean we are doing everything we can to make the case that this is not going to benefit business not going to benefit small business and look we need we need we need a rational system but the reality is you've got people here who are working they are doing jobs essential jobs and I don't just mean h D1 is U we certainly need those people to make sure we don't have restrictions on people to come in and do you know more more high high level jobs but this is across the entire Workforce and I mean nobody can deny this fact if you look at our Workforce it is there are huge portions of it that are um that are include um immigrants and this is by the way this is not news this has always been the case this is how our economy has always grown it's how we have have had such a dominant economy over the years is we have um in integrated immigrants into our economic system and so uh you know this should not be a surprise to anybody and uh I think you know people need to realize that there are huge and to put aside the personal um horror of mass deportations um what we're talking about and where we can contribute to the conversation is the economic um problems going to create I think one thing that sometimes gets lost in this discuss is that we're not when we're talking even if we're talking about undocumented immigrants we're not necessarily talking about people who've just arrived in the past few months or even the past few years there are people who've been here for decades in some cases and you know kind of kind of did what they were told to do you know they may maybe maybe not in all cases maybe they were able to get a job by falsifying documents but the businesses that employed them did what they were supposed to do and uh you know even with the verify if there was a a mismatch the government often told the businesses don't take any action uh because we've known all along that the economy has needed uh these workers in in in order to function so we're we're talking about in many cases people who've been here a long time and the they're not necessarily just doing you know entry-level positions or working in agriculture many of them are highly skilled and have families and roots and businesses that rely on them greatly um is there anything you can suggest for a business that is concerned about that well we're obviously not recommending that people don't follow the law but you have an economic reality that businesses as you say many of these people have been here for a long time and they're not and yeah you're right they're not just doing um the most menial jobs they're doing many cases they've risen to levels of management and they're huge contributors to our economy they pay taxes they contribute to Social Security in many cases with no assurance that they're ever going to see the benefit of that some Assurance they won't see the benefit right so uh and they can't get health insurance within our system which then puts pressure on local hospitals and emergency rooms so it's a completely inefficient system and you know yes you if you have an E look first of all the reason many of them have come is an economic reality of their own situations that they're fleeing but then the need is here um they're coming to work and so yes you've got the folks that have been here for a while but also many of the new arrivals um you know a lot of u a lot of uh coverage of the fact that uh these folks needed um you know that they were they were dependent upon government um support but they wanted to work the government wouldn't have to provide that level of support look there's a lot of aspects of this housing housing's become incredibly expensive um and so um you know we need we need a comprehensive solution um but you know the average business you know can't create that entire solution so while we're certainly not recommending that anybody break the law if you have a really powerful economic need it's going to play itself out in the way that has here and it you know why it hasn't been a wakeup call to say okay maybe we don't we don't like the fact that the people who are undocumented here fine let's fix the problem Congress tried to do that I'm going to give the Senate credit a bipartisan group of senators came together and put together uh passed a bill in uh 2013 and um we and more recently as well yes well exactly they passed exactly uh they were it was all said to be passed I it wasn't quite the the uh the comprehensive solution that the the bill um last decade was but it was it was a start it was it was the next step and it was politics that upended it so you know you've got this conflict between people using this this issue for um to divide and to score points as opposed to the most of the business people in this country large and small who want to just run their business and they need a strong Workforce and we would love nothing more more than to have that Workforce here legally um have not not be breaking the law not put business owners in a tough situation um and not create fear uh not have a situation um that we've been reading about that business owners uh the employees are just staying home now because they're scared interestingly uh next week there will be a confirmation hearing I believe is scheduled for Wednesday for the uh Trump administration's nominee to take over the SBA any thoughts on that well we certainly wish her well um there's been a lot of lot of developments in the last year in the SBA that we hope she continues um we you know it's a little hard to tell you know what her priorities are going to be she doesn't really have what I would call a small business background the businesses she's been involved with or more um you know high-end Finance um she did I will say when she was in the Senate everybody knows she was um an appointed interim senator for a while she did support some bills that were that were good um there was a bill that would have provided additional funding to the cdfi fund to support the economic revitalization of small businesses and local communities it was a bill that would have incentivized long-term investments in underserved communities by codifying the minority business um development um uh agency uh a bill she supported that would have created a new Equity based program within the SBA um to uh that would incentivize um investment in minority and other underresourced areas so she actually does have um a track record of of supporting some of this and we hope that she takes that and and takes that that that work that she did um on that legislation and actually um you tries to do something with it when she comes into the SBA so we're you know I I've talked about some of the issues we have with the with the Trump Administration but we are ready to work with her and we are um you know happy that she's had some you know demonstrated some interest and small business issues so um you know I presume she's going to get confirmed and we'll we'll we stand ready to work with her you mentioned her support for some uh initiatives in which you used a couple of words that are becoming uh kind of red flag words um minority and um equity and diversity um the the Trump Administration obviously has gone after eii uh in terms of the way the federal government operates but also in businesses that contract with it there's been a lot reported about how big companies are reacting to this do you think this is going to have an impact on uh your businesses well specifically as it relates to the SBA they've got programs that focus on under resource businesses and yes in some cases they are um designated for communities that have been traditionally underresourced um byac and communities women entrepreneurs veteran entrepreneurs quite frankly are also on that list um as does the minority business development agency U look all we can say is those programs are effective uh we we have we've done some research into this and we found that small business owners feel they benefit from these programs um we work with a whole host of of Partners of business partners um and Community Partners across the country and we welcome the opportunity to work with a partner who's in a particular Community if that partner self defines as focused on a certain demographic but they know that demographic and they can be helpful connecting us with business owners in that demographic and helping us to connect them with resources we're all for it we're we will work with anybody out there who is connected to business owners who need help and need assistance and um you know we're we would obviously prefer that this not be a political you know football that we uh that we we have these programs in place and uh you know we support any program with rural businesses veteran businesses any any program that's going to Target a community that has not gotten the benefits of uh the sort of traditional majority communities in this country um we support so I you know we haven't heard um you know certainly on the access to Capital side of things with the SBA we haven't heard um you know anything is is being directly challenged um our response would be don't don't um don't go after after an attacker program that's working tell me about uh how you feel about Tik Tock um Tik Tok obviously has been used successfully by a lot of very small businesses uh is this something of concern to uh the businesses in your network absolutely as you just said we have a lot of businesses in our Network and particularly the smaller businesses who use it they use it successfully we obviously don't you know have intimate knowledge of the National Security issues and obviously we would you know we're not in we don't we don't want our um our uh network members uh businesses to their data to be uh used in in ways that in appropriate but I will say that if Tik Tok goes away tomorrow that that is going to create huge problems for a lot of small businesses and again just like with some of these other many of these other issues let's figure out a solution that isn't going to have a dramatic um upheaval on on the small business community so uh I think it was actually a good thing to um to to hold on shutting it down and um yeah the effort if there if they our legitimate National Security concerns let's figure out a solution because just taking it away is is going to harm a lot of very small businesses do you have any sense of How likely that is to happen I I I don't have we we don't have sort of inside information there I mean I I would I would like to think again something that has practical value for large numbers of of businesses that um there would be an impetus to figure out a solution that isn't going to to harm them so I I I guess I'm I'm cautiously optimistic well that's kind of the last thing I wanted to ask you about John um we we've talked about a lot of issues here that are concerning there's a lot of uncertainty but there's there's also the surveys I see uh suggest there's a lot of optimism uh among small business business owners uh who are greeting this Administration and the changes uh W with a a lot of Hope are you we haven't really talked about that are you seeing that side of this too well let me start by saying that um there's been increased optimism coming out of the pandemic look I've said this many times small businesses are naturally optimistic you wouldn't do this you know had a small business you wouldn't do this crazy stuff if you weren't optimistic I mean the time and the heartache and the lessons you learn the hard way so um you know so that's the starting point uh you have a you have a a group of of people who are naturally optimistic they are still predominantly optimistic um again the survey we did 58% remain optimistic uh and only 22% pessimistic so that's encouraging um before the election we ask the same question 64% so slightly more we optimistic and about the same we're pessimistic and in the summer we had like a even higher 75% optimistic 11% pessimistic so yes they are they continue to be optimistic but for a lot of the reasons that we have just talked about the uncertainty some of these issues that have popped up that didn't exist before on tariffs and immigration I think it's um the optimism is a little bit under threat and what I can say is that what's going to maintain and increase the optimism is government behaving in a rational way that looks at practical issues you know I wrote an oped piece the other day it said you know why are we talking about Greenland let's talk about what small businesses and other players in our economic system need and that is what is going to maintain and increase the optimism and you know this may involve bipartisan Solutions it will involve people coming together and saying this is the that needs to be fixed um and not you know playing political games so I I think if the games go on and the uncertainty goes on you're going to see the optimism weighing and uh we don't we don't want to see that happen so I'm I'm again may be difficult right now but I am cautiously optimistic that at some point you know people will come together and figure out how government can play a constructive role and people can feel a little more um um you know sort of comfortable with the um with the government's role that's playing in our economic system well I for one am optimistic that this is going to be a very interesting year for business owners and that you and I will have plenty to talk about uh whenever you come back this year I think that that is a certainty Lauren there's going to be plenty to talk about so happy to thanks for having me and happy to as always to come back and chat with you um periodically John arensmeier is founder and CEO of small business majority thanks for taking the time John I always appreciate it have a great week everybody [Music]