Dashboard: The State of Small Business, 2023

[Music] welcome to another 21 hats dashboard I'm Lauren felin and I'm here with John arensmeyer who is founder and CEO of small business majority and advocacy group for businesses and entrepreneurs welcome back John thank you Lauren thank you for having me always a pleasure uh John you've started and built businesses yourself you run your advocacy group you you have a lot of contact with business owners uh through the group I I'm eager to hear after a fairly turbulent few years we've been through would you assess the state of small business right now you know I would say surprisingly pretty good I mean there's certainly challenges um some of the supply chain challenges have gotten uh better um inflation of course is still an issue although looking a little bit more optimistic I would say yes it's no it's definitely more optimistic than it was you know small business owners are are resilient um they've had to make some adjustments um and um you know inflation is not really anything they can do anything about um work Workforce issues continue to be a challenge uh and finding finding um particularly in certain industries finding uh people uh and being able to keep them has that's probably the single biggest challenge that we're hearing I know you're not an economist but do you have a sense of where your members think the economy is headed are they preparing for a recession uh what are they more optimistic than that what what do you think their Outlook is you know I think we we tend to hear this whenever there's a crisis and you know they tend to be cautiously optimistic coming out of um a situation like this um some of that's just the nature of of being an entrepreneur uh but um they're you know they're they're they're concerned but they're they're excited also about the future many of them have made changes in the way they do business and the way they use technology and so um again I would say while there are no doubt challenges ahead um they're they're cautiously optimistic I would also say though that those who are smaller uh and those who are um in more under resource communities continue to have greater challenges that of course was the case before the pandemic um so you know we still need to be very cognizant of the fact that the um opportunities uh for small business tend to still be uneven but overall I would say it's more optimistic than you would think do you have have a sense of how they're dealing with the workforce issue that you referred to I mean you know this is such an unusual time in that we keep hearing that there is this potential for a a recession and yet people a lot of people have never really caught up in their hiring they're not never gotten fully staffed um at at this point in time it's it's I think challenging for some people to figure out do do you hire now or not with the potential for the economy to turn do you have a sense for how your folks are thinking about that well I think they are uh um they feel the challenge and they are um you know there's a couple issues that keep coming up um kind of under the category of Workforce uh one is Child Care Child Care has become a bigger and bigger issue particularly during in coming out of the pandemic and for us uh childcare we look at it two ways uh small businesses need access to child care for them for the owners and for the employees but most child care providers are small businesses most run by women most many run by women of color and immigrants so this is a true small business Challenge and the fact that the um while there was some good legislation coming out of Congress last year it did not include anything to do with child care that continues to be a problem I said the second Sub isue in this and this again fix affects more Industries than certain industries more than others is immigration um the the the whole context of the Border crisis has not only has it um prevented um undocumented people from coming in um but it's also really put a damper on legal immigration which has become a huge challenge for many small businesses um certain industries and not just and I'm not just talking super skilled high-tech Industries Hospitality construction um you know rely on undocumented labor and that's become a real Challenge and then the third thing that we're focusing on right now um is really taking a look at um encouraging businesses to hire um people with h with prior criminal records um Second Chance hiring and getting rid of some um you know passing Clean Slate laws in states that get rid of some of the uh prohibitions on that um so you know businesses are really looking for any way that they can reach and and and recruit um a variety of of workers and so there are things that we can do um but uh yeah they're they're definitely feeling the pinch the immigration thing is is so frustrating I mean my understanding is that a lot of people don't realize it but we L would have had a labor shortage even absent the pandemic and all that's happened just given the uh the immigration situation and and birth rates and all that um do you have any um sense that there's Hope on the immigration front do you see any movement there boy it's a tough issue and it's and what's interesting is that this is an area where large and small businesses agree um we don't agree with the Chamber of Commerce on everything but we definitely agree with them on on solving the immigration crisis and so you have a pretty unified um business Community out there wanting a fix uh to the problem obviously wanting to increase uh legal immigration but also wanting to get a comprehensive solution so that those who are here and undocumented can come out of the shadows and participate in our economy and so um it's it's very frustrating that that is um being overridden by um uh you know unnecessary fears uh and you know the the way to manage the immigration system is to do it responsibly you know you have secured borders but you you have a A system that allows immigration immigrants to come in um and and then of course not it seems so obvious it's just painful to to keep thinking well and the dreamers I mean there's no I mean there's there's widespread support for um for U resolving that problem and and you know removing any barriers for people who've been there practically their entire lives so it's it's really you ask me if I see Hope on the one hand you see all the forces array toward getting a solution on the other hand you look at the political environment and which is very toxic and um you begin to wonder are there other issues you expect to spend your time uh advocating for as the year progresses yeah absolutely I mean we continue to be focused on Capital and making sure that cap we can expand uh you know the opportunities for Capital to get to um people in the most smallest businesses and those in the most underresourced communities particularly bipac owned businesses women owned businesses rural businesses what are you trying to do there well uh you know the the um American Rescue plan uh provided $10 billion in support for the small state small business credit initiative and that money is now flowing to the states and to the native tribes and uh we're working closely with um all involved to make sure that that money is being directed uh to business businesses who need it the most um half of out of that 10 billion half a billion of that is designated specifically for technical assistance which the most underresourced businesses really need so we're really excited about that um the SBA is taking steps to that's done state by state right right I mean the the well the program the program is is National um but I mean the money is coming from National but yes it's being impl by the states and the native tribes you're you're correct so somebody listening to this who's interested in trying to figure out whether they might qualify for it yes well they they need to um check with their state if they want to contact us we we can help them figure out who who they should be dealing with in the state the state entities are um working with um Mission driven lenders uh and technical assistance providers to to to get the money out there so um yes it is going to come through the states I should add this was a program that was originally started under the Obama Administration coming out of the Great Recession and it was quite successful so um you there's a there's a history of this working and um um you know in addition to that the SBA small business administration is U trying to expand U their lending opportunities through the community Advantage Program micr lending program and U they've now um issued a rule to loosen up the um small business lending Corporation moratorium and allow more types of businesses to offer uh excuse me lenders to offer 7A loans um and uh we have work cautiously supporting that making sure that there are guard rails to guard against um unscrupulous lenders becoming part of that let me ask you about another issue um you mentioned that you sometimes disagree with the Chamber of Commerce I think this might be one of them um the uh Biden Administration is looking to ban non-compete agreements uh I understand that the chamber has threatened to sue uh if that goes through I believe you have a different take on that is that right we do we we we not see not only do we not see the value and non-competes we see it as as a tremendous impediment to entrepreneurship and to starting businesses um I ran my business for years in California and then ran and then I started small business majority in California California bands non competes last time I checked there wasn't a lack of business initiative in California so um basically there's no reason for it um you know legitimate most of the arguments John tend to focus on what it does for employees there's a belief that it increase wages for employees because it prevents competition but it sounds like you're arguing it's good for businesses too look we obviously agree with those arguments as it relates to employees but our focus and our contribution to the debate is to say this is an impediment to entrepreneurship and look there's nothing a legitimate um uh non-disclosure agreement confidentiality agreement that's not abused that's fine you don't want people stealing Trade Secrets or client lists but telling somebody they can't go into the same field that you are uh when when we now have a surge in business development we have a surge in people wanting to be independent do their own thing it is absolutely antithetical to the American dream of of being an entrepreneur so yes we absolutely uh would like to see this uh a national ban and we're U going to be um uh commenting on the F FTC uh proposed Rule and we're going to be providing uh small business owners who can speak to that and and perspective small business owners on another front uh speaking of California it looks like California is going to try something creative with regulation and the fast food industry creating councils and kind of removing regulation from politicians and giving it to uh a an industry council with with representation from from labor and from uh owners uh what do you think of that well we've actually been um involved in in this debate in these discussions and our particular focus is to um is to represent the interests of franchisees because a lot of people don't realize is that there are many um franchise agreements between franchisors and franchisees that are one-sided and franchisees are often forced into um doing things or cutting costs to satisfy a a franchise or agreement that is not not healthy for their business now I don't I'm not here to say that franchisee is a perfect employer or that to excuse um anti-employment practice by franchisees but we want to make the case as this gets implemented that um that the franchisees interests are not necessarily the same as the franchisors and that they have a voice at the table in this debate as this law gets rolled out interesting I did not understand that perspective um at all um I guess a lot will be determined by the representation on these councils correct and the councils will have franchise order and franchisees in them and we want to make sure there's an adequate voice for franchisees um as I said look I mean we're not endorsing um you know inappropriate Labor practice if that's coming from the franchisee they that needs to change but a lot of times they are they're under the gun because of their um one-sided relationships with franchise or and again different franchises are have different track r here so um it's not I don't want to be a broad brush uh one you know one size fits all but um there are too many cases of of franchisees who by the way are scared to speak up um scared to speak up about what they might be feeling in their relationship with the franchise ORS because the franchise ORS have a tremendous amount of power over them and the franchise ORS by and large I understand are very much opposed to this correct right right and this of course this law speciic specifically food fast food but it could it could be it could be applied beyond that I mean this law doesn't but at some point you could look at this beyond that if it worked it it could certainly spread no I mean Absolut you know if there's a if there is a um a system where people are sitting down and having a conversation and figuring things out and everybody all the stakeholders have um you know the their points of view out there I think that that's very healthy um and uh you know we want to make sure that the um the franchises are in that position let me ask you about this I I think there there seems to be a move that we haven't seen in quite a while in the direction of unionization unions are uh I think H are more popular among the public than they've been for quite some time uh you see stuff happening with Amazon with Starbucks do you see that as a small business issue you know I I've been asked that question a number of times just in the last week because as you as you say there is this move we have not heard anything from our network from our small business owners on this and it's prompted me to think that we may want to do a little a little digging and questioning because we're constantly doing surveys and talking to them but no we have not heard this and we have generally um viewed um you know unionization issues as not necessarily small business issues that said we've often aligned with unions on um many issues uh relating to healthcare and benefits um but uh we we are you know we haven't seen this as a particular um issue for small business at the moment at 21 hats my hope is often that um we can kind of find a way to bring people together over business issues and Entrepreneurship yeah it's kind of what you were saying before that there are a lot of things that we agree about and you know immigration being being an example uh that you cited um there are times when when I get pretty optimistic that we are Crossing Lines and bringing people together and finding places where we agree there are times when I get less optimistic I'm I sort of suspect that you do the same thing with your organization and I wonder how you think about that well look I'm without trying to get too partisan or political I mean there there was a time when many of these debates were legitimate policy debates we've even touched on some of them we've touched on differences we might have with larger business organizations on issues and you know those debates can be healthy and quite frankly any long-term Solution that's going to continue for us to have a an Innovative economy uh is going to require bipartisanship but I have to say that it's hard when you look out there at at the Republican Party um they just don't seem to have their that does not seem to be a focus um you know there was a time when it was a focus and you could legitimately disagree and have a debate um and that's healthy it does not seem to be a focus I mean investigating Hunter Biden or passing quote unquote anti-woke laws in states which I noticed a couple of Governors that was the first thing they did taking office a few weeks ago that does not contribute to building a sustainable healthy economy for all and so um yeah I'm I am concerned I'm concerned that the debate has shifted I would like to see all aspects of the business Community come together to at least say look you know that stuff has no place in American politics we're happy to have healthy debates about policy but um it needs to be relevant to trying to build the kind of economy we want to some extent I hear you agreeing with the Chamber of Commerce again um the head of the chamber Suzanne Clark gave a a talk uh last week in which uh she pointed the great government she didn't specifically point at the Republican party uh the way you just did I don't think although she has had a her battles with Kevin McCarthy uh but she just said business is fed up with government um and needs to be able to um have a certain amount of predictability and certainty in the way things the government uh behaves toward business would you agree with that well she's she's correct that business of all sizes is frustrated with government um you know some of the Sol some of the solutions that the chamber's proposing we agree with as I said like immigration uh and certain aspects of Workforce training and that sort of thing but um you know it isn't sometimes I find that the saying that they're frustrating with government then means government should not have any regulations or should eliminate all taxes and again I'm not I'm not trying to be know this that may sound a bit extreme but um and and that's not the problem the problem is that we need a government that's actually working to address real issues for um entrepreneurs and small businesses and I think I think both parties can do a better job of doing that but I think that and again you know I really hesitate to get part because we absolutely think that long term there needs to be a robust two-party system to get anything done and have a meaningful change in this country so we it's it's sad that we see one of the parties just going off the deep end but um so I would agree with that perspective up to a point and we probably disagree on some of the solutions but I would like to see responsible business organizations who are also horrified at some of the extremism out there come together and say come on let's at least get this back on track let's at least get this uh at a level where we're having a healthy policy debate and not dealing with extraneous uh uh incendiary issues I I think we should point out you you do have your issues from time to time with the Democratic party as well I think the uh the the contractor laws uh is one area where you may have disagreed with them is that right we um we submitted a comment to the proposed Department of Labor um changeing the rules and we of course endorse the concept of making sure that people aren't um inappropriately classified um obviously janitors dishwashers you know should not be independent contractors um but um we are concerned that um the rule doesn't take into account the fact that you've had this surge in business formation you've had this surge of people who want to be their own boss want to do their own thing the gig economy yeah well I mean we I think the term gig economy is a little narrow and it's a little pejorative too it's really um people wanting to do their own thing and our our Focus has been yes we want to encourage that we want to make sure those folks have access to Capital access to um benefits that allow them to create quality jobs for themselves and employees being able to work operate on a Level Playing Field when whether it comes to taxes or or unfair competition practices so um you know we we look at it a little differently um we don't assume it's better to be an employee we assume you should look at what the relationship is and then make sure that if you AR independent contractor that you have access um you that that you're not there's not an impediment we we basically said some of what's in the proposed rule is okay we we have our biggest concern with some of the standards they've imposed whether it's a indefinite or continuous relationship because there are many independent contractors who had longtime relationships with clients they don't want to be um they're adequately paid they don't want to be employees and the second is whether their work is integral to uh the uh the contractor or's business um and of yes sometimes you you hire somebody to do something that and they do the same sort of work you do it could be a freelance right for a newspaper um and so um you know I think they've gone a little too far in and and they've made it a little unclear now and and and I think they need to understand that there are many millions of very legitimate um and healthy relationships between independent contractors and and their and and their and the people Contracting them although companies's Contracting them and let's not let's not go too far uh the other way so we we have a bit of a Nuance view of it um and yes we would you know we probably don't agree wholeheartedly with those who were saying we absolutely need to to go as far as the rule goes one frustration I often hear from business owners is they have the sense that their voices are not being heard in in all of this do you have any advice for business owners who would like to do more to make sure that entrepreneurs and business owners are represented in these conversations well they should get involved with uh organizations and other businesses who are addressing these issues isues obviously that's something that's what we do and they can reach out at small buus majority.org and get in contact with us we're National Organization we have um team members across the country um and we uh would love to hear from them and we would love to to help them or put them guide them in in the direction would help we have relationships with about 1500 Partners out there who provide various um services to um small businesses particularly those in underresourced communities and uh we would we would love to help and we've um we've got uh we've got an organization that kind of rolls up a lot of the um a lot of those smaller business organizations into alliance for um resilient small business economy and so we're you know we act as a hub to to gather small business voices and to take action and to provide them with education resources that's what we bring to the table and we would urge them whether it's us or somebody else to to to to find out who else is active on these in these issues and community and get involved with them did I miss anything John anything you'd like to highlight no I think you've uh you've covered that uh we didn't talk a lot about the well we talk about the non-compete agreements but there are other aspects to what we call so Level Playing Field price discrimination uh some of the issues of self- preferencing with high-tech um happy to chat about those at another time but um you know again it's all about um we want to make sure we have policies where there is a Level Playing Field that's all small businesses are looking for and can compete fairly it's funny we had a similar conversation to this one last January and I went back and looked at what we talked about and a couple of the issues uh we talked about where one was whether anything more was going to happen with the restaurant revitalization act and and I don't think anything did and we talked about the likelihood of uh action being taken to help businesses uh who were not being given the opportunity to compete fairly on platforms owned by big tech companies uh looking at that it kind of be I wasn't sure whether to think you nothing ever changes or wow it's amazing well the FTC under the the new leader Lena Khan has really taken a more um sort of I guess you aggressive um view on a lot of these issues that are not All Tech focused uh the non-compete issue the price discrimination issue goes far beyond tech there were a number of bills in this uh in Congress uh dealing with more antitrust type issues around Tech unfortunately those did not um get voted on and we were not happy about that um senator kobar Amy kobar has been a huge proponent of that and by the way these bills were bip parnis the big self- referencing bill was a it was her and Senator Grassley so um this is actually an area where you have bipartisan support and so um yeah we not as much was done as we would like we're very happy that the FTC is taking a more a um affirmative role here um and we'd like to see you know if you can find an area that's bipartisan like that let's let's run with it John arens is founder and CEO of small business majority thanks for taking the time John thank you Lauren happy to chat really appreciate it uh we'll look back on this next year I suspect and see how far we got have a great week everyone [Music]