The small-business owner is the new best friend of Presidential candidates. At nearly every campaign stop, President George W. Bush and Senator John Kerry pay homage to America's beacons of prosperity in turbulent economic times. During a May 7 visit to Prairie du Chien, Wis., Bush heard from Prairie Industries owner Jim Hutchison, who started a packaging business with seven people in 1994. The company now employs 300. "The guy had a dream," Bush said. "The key is for policy to encourage those dreams to go on."
But whose policies? As the campaign gets into full swing, Bush and Kerry both claim to have small business high on their agendas. As well they should: Nearly half of Americans work for a small company. With entrepreneurs responsible for creating more than two of three new jobs and generating half the nation's gross domestic product, no economic plan is complete without addressing their issues.
Bush and Kerry share the over-arching pro-business goals of increasing jobs and stoking the economy. And with venturecapital investments still at low levels, many small companies with lots of activity in research and development, high tech, or other capital-intensive sectors would welcome more involvement from Washington.
Entrepreneurs should make out well, says Heidi Jacobus, chairman of Cybernet Systems, a 50-employee robotics developer in Ann Arbor, Mich. Jacobus doesn't know who she'll vote for in November. But, she says, "small-business issues are very often nonpartisan issues." Which means that, in theory at least, they should get significant attention from both parties.
Health care is the best example. Both candidates have made small-business owners' highest concern a priority. On other issues, each candidate can claim small-business credentials. Kerry has 19 years' experience on the Senate's Small Business & Entrepreneurship Committee and can point to a record of rescuing aid programs, such as the Manufacturing Extension Partnership, from the budget ax. He has protected others, such as the Small Business Innovation Research Program, from cutbacks. Bush has made good on promises to get Big Government off entrepreneurs' backs by rolling back regulations and reducing paperwork. But his Administration has also reduced or tried to cut funds for many Small Business Administration loan and aid programs.
Government contracting is another hot issue. In 2003, Bush followed through on his promise to set aside more federal work for small business. The percentage of government contracts awarded to small companies hit a record high of 25.4% in 2003, or $62.7 billion, according to the SBA. Kerry has promised to bring that up to 30%, but entrepreneurs remain wary. Last year 89% of the Defense Dept.'s expenditures on research, development and testing went to the 100 largest defense contractors, and more than half went to the top five. Tech execs at small companies say they don't get a fair shot at government work because the feds look to big companies for sophisticated contracts while steering basic work such as warehousing to small businesses. "I'd like to see a magnifying glass taken to that 25%," Jacobus says. "It looks really good, but it's sure not the area I'm in."
The ideal vote-getter, it seems, would be a mix of both candidates. "Small businesses really do want a minimum amount of regulatory impact," says Terry Bibbens, a Republican Kerry supporter and high-tech business consultant in Irvine, Calif. "But that doesn't mean that they don't want fair treatment in accessing capital, being able to provide benefits, and equal access to federal procurement."
Still, it's health care that seems to matter most. Horizon Screen Printing in Cape Girardeau, Mo., doubled the deductibles paid by its 25 employees last year and upped co-payments. Even so, the company's health-care costs grew 9%, on top of a 25% spike the year before. Owner Glenn Reeves worries that he'll lose his trained staff -- accountants and graphic artists in particular -- to a Procter & Gamble plant up the road that, thanks to its size, offers a more generous health plan. "We can't compete with a Procter & Gamble," says Reeves, a staunch Republican.
Jacobus agrees: "We're so desperate, anything would help," she says. Sounds like a political opportunity if ever there was one.
By Lorraine Woellert