Which presidential candidate is best for small business?

As a leading voice for the small business sector, one of the factors I track and report on is public policy. In my advocacy role, I vociferously support those issues that benefit small business and pugnaciously oppose those that don’t, regardless of political party origin.

Before every presidential race since 2000, I’ve reconciled the policies of the two major party candidates with the top concerns that keep small business owners up at night. Here are those comparisons for the five small business issues that currently find their way to the top of every survey.

“We need more business”
Admittedly, this is the default lament of almost every small business. But in the past seven years, business leaders have reported that the greatest factor in their investment/risk-taking/hiring calculus has been an unprecedented high level of uncertainty. When asked about the source, the answer is invariably anti-business policies and rhetoric from Washington. Uncertainty manufacturing examples include, but are not limited to: direct expensing limits under Section 179 of the tax code; the Obamacare roll-out roller coaster; policies skewed in favor of unions; and now, the upcoming DOL overtime exemption rules.

Hillary Clinton 2008 might have been better for the economy than Barack Obama, but not Hillary 2016. She’s been pulled too far to the left - read: anti-business - to do anything that would promote business risk-taking.

In almost every way, Donald Trump will likely be more to the left than a true-blue fiscal conservative. But he does have an advantage regarding the economy in that he knows what it takes to create a job. Clinton doesn’t.

With their Big Lobbies, Big Business will do okay in the economy regardless of who is president, because crony capitalism will thrive under either Trump or Clinton. The problem for small businesses is we’re not organized and we’re no one’s crony.

On the economy, I’ve got to go with the one who’s made a payroll.

“Our taxes are too high”
Essentially by definition, the most troubling hit to the precious working capital of a profitable small business is taxes. Hillary Clinton’s vow to raise taxes will hurt small businesses. Donald Trump said he plans to reduce taxes. I don’t know if either one will be successful in their pledge, but I have to go with the one whose plan includes a downward arrow. Some say tax cuts will increase the deficit. But that belies the fact that the U.S. government does not have a revenue problem - it has a spending problem.

“Health care costs are prohibitive”
As I and many others predicted, Obamacare has become a nightmare for small businesses, and by extension, their employees. In a recent online poll I took of small business owners, two-thirds reported that under Obamacare their health care insurance expense has gone up significantly, if not prohibitively, as have the deductible level for employees. And the new enrollment period is bringing new pain.

Clinton thinks Obamacare didn’t go far enough, while Trump has pledged to “repeal and replace.” I don’t know if Donald can deliver a health care cost silver bullet, but we do know that Obamacare isn’t the answer, or what Hillary has in mind.

“Stop the regulatory assault”
According to the Competitive Enterprise Institute, regulatory compliance - aka stealth tax - is beginning to take more off the bottom line of small businesses than their income tax bill. One perfect example is the new DOL overtime exemption rules, which in addition to increasing payroll without increasing productivity, will become a work schedule, record-keeping nightmare for millions of small businesses.

Again, I’m going to have to put my faith in correcting this with the person who knows what’s involved in making and administering a payroll.

“We need more qualified employees”
You may be surprised to learn that in many surveys, this is the number one concern of small businesses. In fact, economists have reported on my radio program that there are millions of good-paying jobs going unfilled due to a lack of qualified candidates. Sadly, in the past 20 years, I haven’t heard any president, or candidate, address this problem, including Trump and Clinton. It doesn’t say much about a government that won’t help small employers find qualified workers, while actively putting regulations between them and the employees they have. But I have to give a slight nod to Trump, because he has actually conducted business in the current human resources environment.

Finally
I know of no other election where both presidential candidates of the two major parties are as deficient in exemplifying the best America has to offer. One of the markers of a true leader is someone followers want to look up to. Who in either party can truly say they could look up to either candidate? Another leadership trait, especially in a president, is someone whom we believe we can trust. Essentially by definition, neither a pathological liar nor a pathological narcissist fits the profile of a trusted person.

In 1831, Alexis de Tocqueville said of the American political system: “In a democracy, the people get the government they deserve.” Whatever we did to deserve this, please join me in asking for forgiveness. Because I’m truly sorry. How about you?

#GODHELPUS

Write this on a rock … America has bigger problems than who will be the next president. But on balance, I think Donald Trump will be the best one for small businesses.

The wonderful world of small business niches

One of the things Sears Roebuck is famous for is their Craftsmen tools, especially their mechanical socket wrenches. Once, while buying one of these, I was confronted with the options of “Good,” “Better,” and “Best,” a strategy for which Sears is also famous. Asking about the difference, I was told that the Best model had more notches, or teeth, inside the mechanism, allowing for finer adjustments when tightening a bolt or nut.

For the past 30 years, the marketplace has increasingly become like that “Best” socket wrench: every year, it acquires more notches, except in the marketplace, notches are called niches (I prefer “nitch,” but some say “neesh” – tomato, tomahto). And just as more notches in a mechanical wrench allow for finer adjustments, niches create finer and more elegant ways to serve customers, which they like – a lot.

Webster (and Wikipedia) defines a niche as, “a place or position perfectly suited for the person or thing in it.” If ever a concept was perfectly suited for something, it is the niche and small business. Indeed, as one small business owner creates a new niche, another is creating a niche within a niche. It’s a beautiful thing.

Rebecca Boenigk is the president of Neutral Posture, Inc., a Texas company she and her mother founded in 1989. This small business manufactures REALLY comfortable and ergonomically correct office chairs. As a guest on my radio program, she told me they attribute their success to filling a niche: Their chairs aren’t for everyone, just those who are willing to pay a little more for a chair that promotes the best posture at work. Many small business fortunes have been made with the Neutral Posture model of being the best-in-niche, rather than trying to conquer the world.

The mother of niches is what Adam Smith called “the division of labor,” which today often manifests as outsourcing. Outsourcing is when individuals and businesses spend more time focusing on their core competencies and contract for the other stuff. For example, there are more professional lawn businesses today because folks are increasingly realizing they can earn more by sticking to their professional knitting, than it costs to hire their grass cut.

And across the marketplace, it’s become an article of faith that the best way to stay on track is by outsourcing non-core tasks to a contractor – often operating in a niche – whose core competency is that task. I’ve long said that the best thing that ever happened to small business – after the personal computer – is outsourcing, because it manufactures niches, which are pretty much the domain of small business.

As niches have increased in number, so have entrepreneurial opportunities, resulting in the most dramatic expansion of the small business sector in history. It’s difficult to say which one is the egg and which is the chicken: Have entrepreneurs taken advantage of niche opportunities presented to them, or have they carved out niches while pushing the envelope of an industry? The answer is not either/or, it’s both/and.

In the future, there won’t be more mass marketing, mass media or mass distribution, but there will be more niches – lots of new niches. Even niches of niches. And that’s good news, because more niches means a healthier small business sector, which I happen to believe is good for the world.

Write this on a rock … Most small businesses will find more success by creating and serving niches.

New DOL overtime rules: One good outcome and seven bad ones

Do you have employees who are on salary? Do those employees ever work more than 40 hours in a week, for whatever reason? If the answer is yes to these questions, your world is about to get more complicated and probably more expensive.

Please stay with me. I need to get into the weeds, but just for a minute.

The current Department of Labor (DOL) overtime exemption threshold for “white collar” employees is anyone with a salary of at least $23,666 annually, or $455 per week. Exempt means the employer is not required to pay overtime if and when this class of employee works over 40 hours per week. This threshold applies to all businesses, regardless of size or number of employees.

Here’s the news: The DOL has announced that as of December 1, 2016, that overtime exemption threshold will essentially double, to $47,476 annually, or $913 per week. So anyone currently receiving a salary of less than this new amount will soon convert to non-exempt status, and must be paid overtime when they work more than 40 hours a week.

The reason I’m concerned about this change is because of the size of the increase. I feared this new threshold is going to catch and hurt a lot of unaware small businesses in its net. So I took this concern to my small business audience in our online poll recently and asked if they knew about the new overtime exemption changes. Alas, with less than three months before taking effect, my concerns were justified: Almost three-fourths of our respondents said they either didn’t know about the change or how it would impact them, or they knew about it and it was going to be detrimental to them. The rest, just over a fourth, said they either had determined the change would not affect them or they were prepared.

Here’s the good outcome: You might be surprised to hear me say that I think a new threshold is not unfair. In 2016, a weekly salary of $455 is too low to be expected to work overtime without additional compensation, unless it comes with a leveraged compensation factor that allows them to earn more if they work more.

But while an increase in the overtime exemption threshold is not unreasonable, doubling the threshold all at once is. And like so many government creations, the devil’s in the details. And this devil will create more problems for both employees and employers than it will solve. For example:

1. Increased recordkeeping burden: Because the doubling of the overtime exemption threshold will significantly increase the number of salaried non-exempt employees in Main Street jobs, small businesses will be burdened disproportionately with additional time and attendance record-keeping.

2. Increased payroll expense: For small businesses in a lower cost-of-living area, an immediate doubling of the exemption threshold will create an employee re-classification burden that by definition will result in increased payroll expense, perhaps prohibitively.

3. Flexibility becomes expensive: If an employer requests of a non-exempt salaried employee to work over one week and take off those hours the next, or that employee makes the same request of the employer, under the new rules, that goodwill gesture will cost the employer overtime for the week with the extra hours. A good deed should not be punished.

4. Employee hours cut: Businesses in certain industries will respond by splitting a previous 50 hour/week job into two 25 hour/week jobs in order to prevent their payroll from increasing, hurting the original employee.

5. Bad news for managers: I’m already aware of companies that will react to the new threshold by laying off some managers while increasing the responsibility of a smaller number of exempt managers, without increasing their compensation.

6. A morale downer: Being put “on salary” has been considered a professional accomplishment by generations of employees. But HR professionals tell me they’re recommending converting any employees with salaries remaining below the new threshold to hourly status. There are millions of Main Street employees whose weekly income falls between $455 and $913.

7. More lawsuits: Because of the steps some businesses will have to take to prevent these new government-imposed costs from getting out of hand, experts I’ve talked with are predicting an increase in Fair Labor Standards Act lawsuits.

When the federal government does things like doubling the overtime exemption threshold in one fell swoop, it hurts Main Street businesses disproportionately. In this case, it will create a new administrative burden, increase payroll expense without adding a penny of new productivity, and possibly hurt morale.

For four years, polls show small businesses reporting that the mandates of Obamacare disproportionately hurt them. Within a year, small businesses will regard the new DOL overtime exemption threshold increase as the little brother of Obamacare. Another example of the ham-fisted regulatory overreach of the federal government that hurts the job creators and suppresses the economy.

Write this on a rock … Buckle up, small businesses. If you like your current payroll structure, you won’t be able to keep it.

Can you sell your leadership product?

What is a leader? A mentor once told me a leader is someone who can find others who will follow him (or her).

But as we all know, followers can be high-maintenance folks, requiring constant tending to whatever it is that attracts them; most of the time “it” is something intangible. Napoleon is reputed to have said, “A soldier will fight long and hard for a bit of colored ribbon.” Intangible.

Leadership, like beauty, is in the eye of the beholder. So we asked our radio and online audience which of five characteristics is THE most important to being a successful leader. Two of the leadership traits we offered, courage and perseverance, got the lowest ranking, each in single digits.  The highest ranking went to “ability to communicate,” with about 40% choosing this one, followed by “ethical behavior,” chosen by almost one-third of respondents,  and “vision” selected by a little more than one out of four.

At first, I was surprised that courage and perseverance didn’t rank higher, because it’s my belief that both of these are defining traits of a successful leader. But surprise turned to clarity when I realized that our poll had revealed what we all know but don’t always remember: There are two faces of a leader. One is the face leaders see when looking in a mirror, and the other is the one followers see. When seeking the definition of a leader, we have to be clear about which point-of-view is being sought: leadership traits we seek in ourselves or those that attract followers.

The face in the mirror knows courage and perseverance are definitely among the imperatives for leadership success. But to followers, these are merely raw materials used to manufacture the product they demand of leaders - that intangible “bit of colored ribbon” delivered by communicating a vision that is executed based on mutually held values.

Turns out, being a leader is a lot like being a business owner. To be successful in business, it’s not enough to offer quality products you’re proud of - customers drop the gavel on that judgment. Similarly, it’s not enough for leaders just to please the mirror - followers are the customers of your leadership product.

In order to get others to follow you, both faces of leadership must be in evidence. Nurture those traits that success requires of you personally, like courage, perseverance, faith, commitment, etc., while simultaneously delivering what followers expect: ethics, communication, vision and performance.

Write this on a rock … Are you finding followers for your “bit of colored ribbon?”

When trust is a best practice, profit margins increase

Few contemporary prophecies have stood the test of time better than this one by John Naisbitt, from his 1982 watershed book, Megatrends: “The more high-tech, the more high-touch.” I call that, “Naisbitt’s Razor.”

The reason for Naisbitt’s accuracy is simple: High tech, by definition, means digital. But you and I are not the least bit digital; we’re 100% analog. And our analog nature manifests as a desire to connect with - or as Naisbitt says, “touch” - other humans. So the value of touch increases proportionally with the increase in the velocity of our lives.

Digital is fast; analog is not. We may transport ourselves virtually at the speed of digital, but once there, we touch -eye, ear, hand - at the speed of analog. So how do we reconcile the fact that as high-tech consumers who desire and eagerly adopt each new generation of digital, we’re still, and will always be, analog beings? One word: trust.

Nothing is more capable of accelerating with high-tech while simultaneously governing down to high-touch than trust. Naisbitt didn’t directly address the concept of trust in his book. But I interviewed him twice on my radio program and I think he wouldn’t mind if I expanded his razor to: The more high-tech we have, the more imperative trust becomes.

In another of my favorite books, Built On Trust, by co-author and frequent guest on my radio program, Arky Ciancutti, M.D., I found this: “We are a society in search of trust. The less we find it, the more precious it becomes.” For millennia, customers did business with the same businesses because they wanted to deal with the same people. We trusted the people first and the company second. In an era where erosion of the high touch of trust is often lamented by customers and employees, there are still places where it not only exists, but was actually born. Where, in contrast to the rest of the contemporary marketplace, trust is still found in abundance. Those places are almost all on Main Street in the form of small businesses.

With trust now more precious than ever, build the foundation of your small business’s culture on it. And when you can deliver on trust as your North Star, you’ve earned the right to go to market with it. Here’s an example:  Reveal the combined industry tenures of your leadership team (101 years), or the average tenure of your staff (18 years). When prospects see those numbers, they hear T-R-U-S-T.

In one interview on my show, Arky said, “An organization in which people earn one another’s trust, and commands trust from customers, has an advantage.” Since contemplating that, I’ve maintained that being devoted to trust is not only the right thing to do, it’s a business best practice. Let me explain.

As the velocity of the digital marketplace increases, our business has to move faster, and our stakeholders - employees, vendors, etc. - have to keep up. As one of my vendors, if I can trust you to keep up, that’s a relevance value worth more to me than the competitive price of a low-bidder I don’t know. You just converted trust into higher margins.

In the greater marketplace, where devotion to trust is no longer ubiquitous, small businesses have been handed a rare gift. And all they have to do to claim it is create and leverage the relevance advantage Arky means when he says, “The advantage trust gives your organization is there for the taking, waiting to be harvested. It’s not even low-hanging fruit. It’s lying on the ground.”

You may have heard me say that the Price War is over and small business lost. Well, the Trust War is on, and small business is winning.

Write this on a rock … To claim that victory you must operate at the speed of trust.

Arnold Palmer was in reality what he appeared to be

Golf legend, Arnold Palmer, is dead. No ordinary man: He was called “The King,” he had an army, and he was beloved by all.

Twenty-five hundred years ago, Socrates said the greatest way to live your life is to be in reality what you appear to be. That was Arnold Palmer. The charismatic person you saw on television - the impish smile, the twinkle in his eye, how he treated people - wasn’t a persona. That was the real Arnold.

Arnold and I weren’t BFF (best friends forever), but over almost a quarter century we had many different interactions: helping him as a driving range volunteer at a pro golf tournament; interviewing him more than once while broadcasting my radio program from his Bay Hill Golf Club in Orlando; as a member of the National Advisory Council of his beloved hospital; and he provided the foreword for my second book. Whenever I was around him I thought of Socrates, because Arnold Palmer truly was in reality what he appeared to be.

Someone else warned that you never want to meet your heroes, lest you come away disappointed. If you were a member of Arnie’s Army, once you had the privilege to meet him, any subsequent reappraising was to increase your emotional investment in him. People idolized Arnold because his golf game and personality were both blue collar: straight up and unpretentious.

When asked to briefly compare himself to Arnold, longtime friend and frequent nemesis on the tour, Jack Nicklaus, said, “I love golf. Arnold loves people.” Clearly, no one loved golf more than Arnold Palmer. But seeing how he interacted with others, all the way down to a member of the gallery he was in front of for seconds, anyone could see how much Arnold loved people. Jack is known to never autograph a golf ball. Arnold signed whatever you handed him, and he always told young pros, “Sign your name so people can read it,” as he always did.

The only thing about Arnold that saddened me was something many people didn’t know: For probably the last third of his life, he had significant hearing loss, even with hearing aids. When you saw Arnold deliver his patented thumbs up response with those massive hands, that was his way of coping with the fact that he heard someone addressing him, but didn’t hear what was said. It was troubling to me that someone might think he was being arrogant or dismissive by not answering, when nothing could be further from the truth. For the most notoriously approachable living legend on the planet, who truly couldn’t get enough of people, his hearing loss was the cruelest disability.

Everyone wanted a piece of Arnold and he never disappointed. A couple of years ago, my wife and I were in attendance at a dinner celebration prior to the Insperity Invitational that Arnold had promised to attend. Even though he was obviously struggling with back pain, he fulfilled his promise. As people came by his table during the evening, old friends and not-yet-friends, with great difficulty Arnold stood up to shake the hand of every one. Years before, in one of our interviews, Arnold quoted his father, Deacon, about that: “Son, whatever you do in your life, turn the table over and treat others like you want to be treated when you’re on the other side.” Treating people like they mattered ran very deep in Arnold Palmer, sometimes even at his own physical expense, whether you were a big deal or a bus boy.

The Orlando hospitals that bore his and his first wife, Winnie’s names, were extremely important to him. Once while Arnold joined several of us for a tour of the Arnold Palmer Hospital for Children, a doctor was describing the new and expensive, life-saving device of which they were so proud. Literally in the middle of that demonstration, I heard Arnold say, “Isn’t it great that it doesn’t smell like a hospital in here?” That detail was important to him, because he believed the antiseptic smell of medical facilities was frightening to children who were already under stress. By the way, one of Arnold’s edicts for the hospital was that no one would ever be turned away because they can’t afford the care. Arnold wasn’t just a golf legend, he was a human legend.

The story is legend of successful golf pros who failed trying to replicate their on-course success in business. That wasn’t Arnold’s story. He made a good living playing golf, but he became rich in the marketplace. In one interview I asked him for a success tip for business owners and he said, “Be trustworthy, be frank and straight-up.” I’m calling that Palmer’s Business Razor.

As “The man who saved golf,” and “The man who reinvented professional golf,” every touring pro in the modern era should thank Arnold Palmer, because they stand on his shoulders. And everyone who values sportsmanship, good manners, kindness, graciousness, humility, and class should thank Arnold Palmer. More than anyone else, Arnold not only demonstrated those values whether he won or lost, but you were inspired by him to demonstrate them yourself, if for no other reason than you wouldn’t dare risk disappointing him.

Clearly, Arnold Palmer lived a charmed life, but he also charmed our lives. For seven decades, wherever Arnold traveled around the globe, the world wanted a piece of him. I never met anyone who had so much to give, and who wanted so much to give it. The truly great human beings have one thing in common: They stand for something greater than themselves. During one of our interviews Arnold told me, “The reason I started traveling internationally was to promote golf as an agent to help make nations to be more friendly.”

The King is dead. Long live the King’s legacy.




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