It’s National Small Business Week, so let’s look at what America can do to actually help its small businesses thrive, not just give lip service to how small businesses are the “backbone of America,” “small businesses are what makes America great,” yada, yada, yada. Enough talk, let’s see some action.
I’ve followed small business closely for three decades and I’ve come up with a list of policies and programs that would make a real difference in improving the health of the small business sector and the lives and bank accounts of small business owners.
Here are a few things on my list. I’ve got more suggestions than can fit in this column – so to see my full list, please go to www.planningshop.com/blog — or follow me at www.facebook.com/meetRhonda.
Reform online ‘platform’ accountability and transparency
To survive, many small businesses must do business through online platform companies, such as small retailers on Amazon, restaurants through services such as DoorDash, GrubHub, Postmates, or other platforms that have dominance in their field. These services often take onerous commissions (30%-55%) and impose large and constantly increasing fees. They also often require that small businesses not sell their goods or services for less anywhere else. Typically, the platform “owns” the customers, meaning the small business can’t market to their own customers in the future. Let’s get all this out in the open so unfair practices and onerous fees can be seen for what they are.
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Bring back income averaging
Many small businesses have significantly different income from one year to the next – they might get one huge client one year and only small clients in other years. Years ago, businesses could income average over a five-year period. I’d reinstate that policy for companies with less than one-three million dollars in revenue.
Lower shipping costs for small businesses
The cost of shipping has gone through the roof, especially and disproportionally for small businesses. These high shipping costs are one significant reason small businesses have trouble competing with huge online retailers. The U.S. Postal Service should come up with an aggressive program to reduce costs for small businesses – even if it involves subsidies for small shippers. Private shippers, like UPS and FedEx, should examine how they can create a more level playing field for small companies.
Create another legal employment category between ’employee’ and ‘independent contractor’
The government’s definition of “independent contractor” has not kept up with changing business practices. Many gig workers realistically fall somewhere between the current classifications and end up denied meaningful worker protections. Many professional and trade “independent contractors” deserve to have more benefits available to them as well.
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Subsidize childcare and provide free pre-kindergarten
The lack of affordable childcare is a huge problem for small businesses on many levels. Small businesses often lose – or can’t attract – critical workers because high child care costs make it impractical for many people to be in the workforce. Many people can’t afford to start a business because they can’t afford quality childcare. Child care is a small business issue.
Change bankruptcy laws to provide more protection to small creditors
When a big corporation goes bankrupt, all the companies they owe money to stand in the same long line hoping to get paid one day. Large creditors, who have the most ability to wait out payment and get lawyers to protect their interest, often get in the front of the line. Let’s come up with a way that the interests of small creditors can be addressed quickly and first in bankruptcy proceedings.
A tax credit for hiring your first employee
It’s tough to go from one-person self-employed to becoming a company with employees. But if we want to help small businesses grow, we need to encourage successful one-person businesses to get over that financial, technical and psychological hump. Let’s provide a one-time tax credit when you hire your first W2 employee.
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Create a ‘new entrepreneur’ program
Owning a small business is one significant way to enter the middle class and create personal wealth. Yet, often those in rural, lower-income and people of color communities lack the resources, knowledge, finances and role models of entrepreneurship. Let’s create a national initiative to change that.
More support for small farmers
Small farmers are often overlooked by the U.S. Department of Agriculture, which is particularly attuned to the needs of large American farm exporters. Let’s create programs to help small farmers sell direct, provide a pipeline of next-generation farmers, transition to organic, have more and more easily accessible slaughterhouses and in general, put the needs of small farmers first.
Prohibit platforms from competing with their sellers
A restaurant delivery platform should not be able to run their own restaurants competing with small restaurants on their platform. An online retailer, like Amazon, should not be allowed to make their own products to compete with sellers. If you run a marketplace, you should not be able to also sell the same goods as the sellers in that marketplace. Period.
Stronger anti-trust laws
One of the reasons these platforms have so much power is due to lax anti-trust enforcement. Before the 1970’s, anti-trust laws were used to break up companies with too much market power. After that, the courts mostly looked only at whether acquisitions increased or lowered prices for consumers. The result? Too much power in the hands of too few companies. New companies have a harder time competing. Big corporations, like platforms, can and do, impose onerous terms and fees on small businesses.
Support independent alternatives to Amazon
Help small business communities create their own selling and marketing platforms to promote local companies and restaurants by providing government financial and technical assistance.
Require search engines to have actual businesses or products appear first
Right now, search engines can – and typically do – place advertisements from competitors before results from an actual business or product, even when the searcher has entered the name of that business. That means that a small business often needs to pay a search engine to appear first when someone is looking for them. That’s just wrong.
Require paid ‘express lanes’ to allow small tradespeople to drive free
I’m absolutely livid when I see the proliferation of paid express lanes on American freeways. I always think: “Some investment banker is passing all the traffic while a plumber is sitting in worse traffic.” If we’re going to allow the rich to bypass traffic, at least insure that small tradespeople – plumbers, painters, contractors, gardeners – get a free pass. They’re the ones actually losing money while sitting in traffic.