Now that the midterm elections are officially in the rearview mirror and the dust has settled, there’s a lot to unpack for small business. There were plenty of ups and downs this election cycle.
Write-in votes, runoffs, voter roll purges, and historic turnout on both sides. With California finally certifying their last ballots, we can now move onto the next chapter: what happens now?
The Democrats gained several seats in the House, retaking their majority status there, and picked up a few governorships, too. But a few Senate seats flipped red, as well. The landscape of America’s identity is changing, and there are many new facets to what it means to be a part of this country.
But, what do all of these changes in the social and economic fabric mean for small business? Well, that’s an interesting question. There’s a lot to like, but a few things to groan at, too. I’ll do my best to lay everything out for you to make your own assumptions on how it’ll affect your business.
What will this Congress’ policy look like (AKA The Big Picture Stuff)?
The Democratic side of Congress will be progressively minded. A younger, more diverse group has won seats, and they’re focused on changing the status quo. With the Democrats taking power in the House, this severs Republican control and will require a lot more conversations instead of pushing bills through with little pushback.
While there will be a lot of gridlock, there are bright spots, and many pieces of legislation have bipartisan support.
One possibility for legislation to pass is a bipartisan retirement package, which makes it easier for small business owners to offer retirement plans to their employees that won’t break the bank. Congress has already moved on this issue.
The biggest objective, one the Democrats have dreamt about since the early 2000s, is the infrastructure bill. Given the state of the country’s crumbling roads, bridges, and streets that need repair from coast to coast, the left really wants this. If both parties can find common ground on funding this issue, and work with the President to realize it, the bill could put a lot of Americans to work, but also energize many small businesses with long-term projects equalling up to $1 trillion dollars.
Tinkering with another healthcare bill is something the Republicans would like, and McConnell is quoted as saying he’d consider working with the Democrats to improve, not repeal the Affordable Care Act. This would bode well for small medical practices, along with mom and pop pharmacies, considering one of the central tenants of the revision would be a bipartisan plan to lower prescription drug prices. Realistically, though, the issue is probably a stalemate until the next big election swing.
So, what does this all mean for small business owners?
Well, it’s kind of hard to put an exact point on it. One of the biggest takeaways of the midterm results is that one-third of Congress was up for election, and that equates to significant consequences for federal, as well as local, policy.
County, city, and state legislators were all on the ballot, and for a lot of states, things have changed. Some of the rules will change for the better and the worse, but ultimately, small business owners want to know if zoning codes will change, if there will be sin taxes, or if there will be more attempts at taxing soft drinks to help pay for parks. Statewide, there are a few changes in the laws to pay attention to.
When it comes to small businesses, the focus is simple: What’s going on with the economy? What regulations are being put in place or rolled back? How can I generate cash flow?
As of right now, the economy is booming. Small businesses don’t want any kind of change. That doesn’t mean small business owners wouldn’t want any improvements or modifications; they want this party to keep going.
The Republican-held Congress passed a tax bill in 2017, and while some have benefitted from the cuts, some individuals and small businesses haven’t seen the results of those yet, and it’s uncertain if they will. When Democrats take control, the natural inclination is to wonder if taxes will rise to bolster social programs, but as of right now, all signs are pointing to no changes in policy on the federal level — maybe. (Read on for more about that.)
Will the minimum wage increase?
One of the topics that’s bound to come up between parties is the minimum wage. The newly elected members of the House have already scheduled a hearing entitled, “Mandating a $15 Minimum Wage: Consequences for Workers and Small Businesses.”
Because the issue is divided across party lines, the issue could get tied up in party politics, but there’s hope for low wage workers – both Arkansas and Missouri, two red states both voted to raise their minimum wages by 2021 in Arkansas and 2023 in Missouri, respectively. If you’re in a state that’s talked about raising minimum wage recently, you might want to start crunching numbers to plan and prepare down the line.
Let’s get back to the tax cut. Will there be any changes to the 2017 bill?
Before the midterms, President Trump promised a middle-class tax cut (not exactly what happened) but both sides could come together on it in the future. The President has said on more than one occasion that the cut is one of his top priorities, but getting the Democrats to work with him on that will be nothing short of a challenge.
The 2018 tax bill included large cuts for corporations, and now Democrats are poised to oppose any kind of cuts to the wealthy going forward. But, the President has said he’s open to working with House Speaker Nancy Pelosi to cut middle-class taxes, even if it means raising the corporate tax rate, which is set at 21%.
“I would absolutely pursue something even if that means some adjustment to make it possible,” Trump said at a press conference. Although he didn’t say precisely what he’d be willing to bargain with, it’s a nice idea.
Democrats will adhere to a strict pay-as-you-go stance on new measures to avoid adding to any national debt. Trump could find small fixes that he could still claim as a tax cut, which might include raising tax-free contribution levels for retirement plans or supplementing health savings accounts, both moves that have bipartisan support.
What about tariffs and trade?
The US-China trade wars have been dominating the news cycle – when the cycle isn’t rolling with new stories like the customers served on a McDonald’s sign, has a lot of businesses, both big and small standing at attention.
Back in September, China announced $60B in retaliatory tariffs following declared U.S. intentions to attach tariffs to $200B of goods. On the US side, the list of targeted goods included vehicles, tech, medical, industrial machinery, aircraft, and textiles. China targeted U.S. products such as food, beverages, cars, and natural gas.
Small businesses have to keep in mind the ripple effect: while steel or cars might be impacted, consider the side businesses that are included alongside those vehicles, like interiors or paint, for example.
The average small business owner has a fundamental set of concerns, they’re not interested in the US and China battling over steel, but instead, they’re interested in how these conversations and sound clips will affect them in the long run.
Small business owners should be wary of rising costs thanks to these tariffs, possibly evaluating new sources or their pricing.
Think about it, a small business has a few critical concerns:
– Can I get access to capital?
– Will this impede my acquisition of new business?
– Can I get access to new contacts?
– Can I operate in the black?
While these matters seem uncertain right now, there’s hope that Congress will step in to work with the president on new import and export laws to help stabilize the situation. My prediction is that it happens, and we come to a mutually beneficial agreement.
What about small businesses’ relationships with big banks?
This split of power between the houses likely signifies that little will change for banks. The House will push for regulation, while the Senate won’t let anything close hit the ground.
One thing to keep in mind is that Rep. Maxine Waters (D-CA) will likely ascend as the next chair of the House Financial Services Committee, come January. Rep. Waters is a vocal advocate for consumer protection and supports a crackdown on big banks.
Rep. Waters has sat on this committee since 1991 and is a ranking member on five of the panel’s subcommittees. When asked about her current position on regulations regarding small business, she said:
“I am committed to ensuring that hard working Americans and our nation’s small businesses have opportunities to thrive, expanding and supporting affordable housing opportunities for our nation’s families, making sure that the safeguards are in place to prevent another financial crisis, protecting consumers and investors from bad actors and conducting appropriate oversight of the Administration and the regulatory agencies under the Committee’s jurisdiction.”
She continued, “I have always maintained an open-door policy, to hear the priorities and concerns of all stakeholders, including representatives of the financial services industry, as well as advocates,” she added. “I look forward to continuing to work with Members on both sides of the aisle on sensible solutions to benefit hardworking Americans and strengthen our nation’s economy.”
While it sounds like Rep. Waters has a lot to aim for as the ranking member on the committee, it’s likely that no new legislation will pass unless both sides agree it’s a slam dunk for America.
There’s good news out of the House Committee on Small Business.
Reps. Doug Collins (R-GA) and Tom Marino (R-PA) introduced the bipartisan H.R. 7190, the Small Business Reorganization Act in the House to improve the bankruptcy system for small businesses. The bill, cosponsored by U.S. Rep. David Cicilline (D-RI), would amend Chapter 11 bankruptcies. A similar bill was introduced by U.S. Sen. Chuck Grassley (R-IA) and cosponsored by U.S. Sen. Sheldon Whitehouse (D-RI) in the Senate.
“Small businesses are some of the best innovators in our local economies, and this bill would bring much-needed improvements to the bankruptcy code so that owner-operated businesses can recover from financial hardship and continue creating jobs,” said Rep. Collins.
Rep. Marino added, “By reducing unnecessary procedural burdens, enhancing oversight, and increasing the debtors’ ability to negotiate, we will ensure quick and successful reorganization and provide small business the ability to restructure in a way that meets their needs.”
Considering the original laws and codes were written for large companies, the reinvention of Chapter 11 would dramatically change how small businesses are affected by bankruptcy. This legislation would reduce the red tape around bankruptcy. Key provisions would increase small business debtors’ ability to negotiate reorganization while retaining business control and reducing procedural burdens and costs.
So, what’s my big prediction?
If there’s any significant takeaway in regards to small business, it’s that they’re resilient. There’s a significant wave of optimism right now. Small business confidence is high, and the markets are reflecting that.
Right now, there are fantastic things happening to both Wall Street and Main Street, alike. With the new Congress taking session in January, it’s likely that one of two scenarios will take place: the houses work with President Trump to push forward legislation that helps the country soar to new heights or (probably a little more predictable) a lame duck session that will remain gridlocked thanks to partisan politics.
If that’s the case, don’t sweat it. Buyer sentiment is high, and new businesses are opening up every day. Going into 2019 and a new Congress, I’d say a whole lot of no news is good news for small business.
Bay Area co-living startup strands hundreds of renters at dire time
(BUSINESS NEWS) They’re blaming COVID for failing as a co-living space, but it looks like trouble was well established even before now.
Over the last few years, “co-living” startups have become increasingly common in tech-rich cities like San Francisco. These companies lease large houses, then rent individual bedrooms for as much as $2,000 per month in hopes of attracting the young professionals who make up the tech industry. Many offer food, cleaning services, group activities, and hotel-quality accommodations to do so.
But the true value in co-living companies lies in their role as a third party: Smoothing over relations, providing hassle free income to homeowners and improved accountability to tenants… in theory, anyway. The reality has proved the opposite can just as easily be true.
In a September company email, Bay Area co-living startup HubHaus released a statement that claimed they were “unable to pay October rent” on their leased properties. Hubhaus also claimed to have “no funds available to pay any amounts that may be owed landlords, tenants, trade creditors, or contractors.”
This left hundreds of SF Bay Area renters scrambling to arrange shelter with little notice, with the start of a second major COVID-19 outbreak on the horizon.
HubHaus exhibited plenty of red flags leading up to this revelation. Employees complained of insufficient or late payment. The company stopped paying utilities during the spring, and they quietly discontinued cleaning services while tenants continued to pay for them.
Businesses like HubHaus charge prices that could rent a private home in most of the rest of the country, in exchange for a room in a house of 10 or more people. PodShare is a similar example: Another Bay Area-based co-living startup, whose offerings include “$1,200 bunk beds” in a shared, hostel-like environment.
As a former Bay Area resident, it’s hard not to be angry about these stories. But they have been the unfortunate reality since long before the pandemic. Many urbanites across the country cannot afford to opt out of a shared living situation, and these business models only exacerbate the race to the bottom of city living standards.
HubHaus capitalized on this situation and took advantage of their tenants, who were simply looking for an affordable place to live in a market where that’s increasingly hard to find.
They’ve tried to place the blame for their failure on COVID-19 — but all signs seem to indicate that they had it coming.
Las Vegas’ largest dispensary gets massive Infinity Wall expansion
(BUSINESS NEWS) Las Vegas’s largest dispensary is getting a big, expensive makeover, thriving while other brick-and-mortar shops are struggling.
Have you ever heard of an Infinity Wall? If I were you, I’d check it out right now because it’s utterly mesmerizing.
An 80-foot version of this wall is just one of the new features that Planet 13 (or The Company) announced it will be implementing in Las Vegas’ largest dispensary, The SuperStore, this past Monday. In addition to the futuristic entertainment feature (I honestly can’t get over that thing), they will be doubling the sales floor and expanding the dispensary to ~23,000 sq. ft. For reference, the entire Planet 13 SuperStore complex is 112,000 sq.ft.
Why expand an already massive dispensary during a pandemic, when most brick and mortar stores are suffering? Well, according to Larry Scheffler, Co-CEO of Planet 13, The Superstore is actually thriving beyond belief.
“We are achieving record sales even with Las Vegas at ~50% tourist occupancy. As Las Vegas returns to normal and this industry continues to grow, we anticipate that this will be first of many expansions we will undertake to keep up with demand.”
The expansion adds 40 points of sale to uphold the outstanding customer service reputation Planet 13 has. If you do have to wait, you have a state-of-the-art entertainment system to enjoy. It’s win-win for any and all visitors.
The CapEx cost of the expansion between is $1.5 – $2.5 million. The project is expected come to completion by the end of Q1 2021.
Las Vegas has become a sort of cannabis mecca. After all, it’s home to MJBizCon, the industry’s largest networking event attended by thousands from around the world. And the popularity and overall acceptance makes it an easy choice for any cannabis aficionados. The SuperStore, like most things in Las Vegas, is huge, glamorous, and caters to tourists.
I have no doubt that when the city bounces back from the pandemic, this new-and-improved dispensary will be a must-visit destination.
The future of work from home will be a hybrid, says Google CEO
(BUSINESS NEWS) Google is looking to adapt a more flexible, long-term hybrid work model for their employees, which includes partially working from home and partially being on-site.
Google, the world’s largest search engine company (yes I know they do other things), is positing that the corporate office will look completely different post-COVID-19.
In September Google’s CEO, Sundar Pichai said that the organization was making changes to its offices that would better support employees in the future. This includes “reconfiguring” office spaces to accommodate “on-sites”, days when employees who regularly work from home will come into the workplace. The move comes after Google was one of the first major tech companies to announce that employees could possibly work from home through next summer.
“I see the future as definitely being more flexible,” Pichai said during a video interview for Time 100, “We firmly believe that in-person, being together, having that sense of community, is super important for whenever you have to solve hard problems, you have to create something new,” he said. “So we don’t see that changing, so we don’t think the future is just 100% remote or something.”
It was reported that Google’s decision to work remotely into mid-2021 was originally in part to help employees whose children might be learning remotely during the coronavirus pandemic. Pichai said that several factors went into the decision, stating that improving productivity was a major concern.
“Early on as this started, I realized it was going to be a period of tremendous uncertainty, so we wanted to lean in and give certainty where we could,” Pichai said. “The reason we made the decision to do work from home until mid of next year is we realized people were trying hard to plan… and it was affecting productivity.”
Pichai also mentioned that the decision would help the firm embrace the reality that remote working wasn’t going anywhere once things returned to normal. A recent survey at Google found that 62% of employees felt they only need to be in the office on occasion, while 20% felt they didn’t need to be in the office whatsoever. While the work from home trend had already been growing over the past several years, the pandemic accelerated that movement greatly.
With housing costs surging in the San Francisco area, where Google headquarters resides, many employees have been forced to move outside of the city to afford a mortgage. This caused many to commute long hours into the office, something Pichai realized was a problem.
“It’s always made me wonder, when I see people commuting two hours and away from their families and friends, on a Friday, you realize they can’t have plans,” Pichai said. “So I think we can do better.”
It’s too early to tell whether or not Pichai’s vision of a “hybrid model” will be adopted by other companies when the pandemic ends. One thing is for certain though—work will never be what is pre-COVID-19.
Business News2 weeks ago
Brutally honest list of reasons you didn’t get the job interview or job offer
Business Entrepreneur2 days ago
How to effectively share negative thoughts with your business partner
Business Entrepreneur2 weeks ago
6 simple self-care tips to keep any busy entrepreneur sane
Social Media2 weeks ago
This LinkedIn graphic shows you where your profile is lacking
Business News1 week ago
5 factors driving the reshoring movement in America
Business Entrepreneur2 weeks ago
Delivery startup goPuff is fast becoming the next tech giant
Business News6 days ago
The future of work from home will be a hybrid, says Google CEO
Business Entrepreneur1 week ago
The success of your business could be tied to your succession plan