Donald Trump has set a blistering pace during his first two weeks in office, making good on many of the promises that led to his Electoral College victory in November. Entrepreneurs and business owners are now turning their attention to the impact a Trump administration will have on small businesses and the economy in general.
It's obviously still early, but Trump's initial cabinet appointments offer important insights about the new administration's priorities and the changes that may lie ahead for small businesses.
The Small Business Sector Has High Expectations
Small businesses entered the new year riding a wave of good news. The BizBuySell Q4 2016 Insight report highlighted the strength of the small business economy as well as the vitality of the current business-for-sale marketplace:
- Closed Deals - 7,842 transactions closed in 2016 - the highest volume of closed deals since 2007, and an 8.6% increase over 2015.
- Median Revenue - The median revenue of businesses that were sold in 2016 increased 5.2 percent to $472,798 from a year ago
- Median Cash Flow - Small business cash flow also improved in 2016. The median cash flow for sold businesses rose from $102,000 in 2015 to $107,551 in 2016.
The changing political landscape also provided a source of encouragement as the year wound to a close. In the same report, 31 percent of business brokers cited President-elect Trump's policy agenda as the primary reason for expected improvement in 2017. Almost two-thirds of brokers (60%) also reported a belief that the Trump administration's policies will drive more buyers to the business-for-sale marketplace.
Prior to the election, BizBuySell surveyed more than 2,000 small business buyers and sellers. Across the board, buyers and sellers said they would feel more optimistic under a Trump presidency than a Clinton presidency. In fact, 54 percent of buyers and 57 percent of sellers believed Trump would most improve the small business environment. The top political issues small business buyers and sellers listed in order of importance included tax reform, health care, economic policies, and jobs.
Key Cabinet Picks That Will Impact Small Businesses
We're just two weeks into the Trump administration and we've already seen several initiatives that will affect the business community. From an executive order requiring federal agencies to identify two regulations that can be eliminated for every new regulation issued to directives targeting Dodd-Frank and the immigration of workers from select countries, the new administration is wasting no time in attempting to reshape the business landscape.
However, some of the most telling indicators are Trump's cabinet appointments in agencies that directly impact small businesses.
- Linda McMahon, Small Business Administration.
Linda McMahon is not a traditional pick to head the SBA. As the co-founder and former CEO of the World Wrestling Entertainment, Inc. (WWE), McMahon's C-suite background in a massive entertainment conglomerate would seem to place her at odds with the needs of small business owners.
But McMahon's proponents argue that her business experience qualifies her for the job. The WWE wasn't always a $650+ million corporation. In the early days, McMahon and her husband ran lean and were forced to make many of the same difficult choices that small business owners face every day.
Many of McMahon's policy positions have also bolstered her credibility in the small business community. In recent weeks, she has stated her commitment to explore faster small business disaster relief, improve lending opportunities and reduce the regulatory burden on small businesses - a stance reinforced by Trump's recent moves to reduce federal regulations.
- Andy Puzder, Department of Labor.
On the surface, Trump's appointee for labor secretary, Andy Puzder, doesn't look like an ideal advocate for small businesses. The CEO of CKE Restaurant Holdings, Inc., Puzder built his reputation leading a multi-billion dollar enterprise, not a small business.
However, CKE is the corporate parent of some of the nation's largest franchise restaurants, including Carl's Jr. and Hardees. His supporters argue that Puzder's franchise experience uniquely qualifies him to lead the Department of Labor, given the fact that the franchise sector consistently outpaces the general economy in job growth.
Another reason why small businesses are generally favorable toward Puzder leading the DOL is that he's intimately familiar with Obama-era labor regulations opposed by many small businesses. As labor secretary, Puzder will likely work to rework policies related to overtime pay, the Affordable Care Act and other hot-button topics for small employers.
- Tom Price, Health and Human Services.
Historically, presidential appointments to Health and Human Services have not been a top priority for small business owners. But that changed with the passage of the Affordable Care Act and many small business owners are eager for an HHS secretary willing to tackle Obamacare. It appears that Tom Price may be the person for the job.
Known as a budget hawk in Congress, Price is a medical doctor and an outspoken opponent of the Affordable Care Act. In fact, critics point out that Price wants to dismantle even more of the Affordable Care Act than Trump, including the elimination of the requirement for insurers to cover pre-existing conditions - a provision that Trump has previously vowed to leave intact.
Of course, repealing the Affordable Care Act is the easy part. The more difficult challenge will be to find an Obamacare alternative that is an improvement on the current system. If "repeal and replace" isn't handled properly, small business owners could be forced to live with an even less attractive healthcare framework.
Although many small business owners see the appointments of McMahon, Puzder and Price as positive signs, the big wild card is how much influence these cabinet members will have in the Trump administration.
We have already seen that Trump has no qualms about making major policy decisions with little or no counsel from his cabinet. If this trend continues, small business owners may be in for a bumpy ride.