Written on Wednesday, October 3, 2012 by David L. Goetsch
I recently helped a small business develop a strategic plan. Inevitably, the conversation among participants got around to President Obama’s infamous statement: “You didn’t build it…” The people in the conference room with me had all risked everything by mortgaging their homes to raise the money to start the business in question. Then they had sweated bullets just staving off bankruptcy during the critical first three years of operation. The strategic plan we were developing was intended to keep this business alive during the on-going economic downturn and help take it to the next level.
Readers can easily imagine what the entrepreneurs gathered around the conference table with me that day thought of President Obama’s absurd statement. Each person in the room had an opinion and expressed it with conviction. But the CEO of the company spoke for everyone present when he said: “We built this business—now President Obama is trying to tear it down.” One thing was clear. If President Obama is relying on the small business vote, he is fooling himself. Small business entrepreneurs look at Barack Obama as a major impediment to their success.
I asked the CEO for specifics concerning how Obama was trying to tear down his business. This was not idle curiosity on my part. I needed to know the specifics because they would become the “threats” component in the SWOT analysis we would complete as part of the strategic planning process. In due course we would identify the company’s strengths, weaknesses, opportunities, and threats—conduct a SWOT analysis—and use this information to inform the planning process. In answer to my question, the CEO wrote three things on a flipchart: tax uncertainty, red tape, and soft sales trends. The CEO clearly blamed President Obama for all three of these factors.
The CEO was right to be concerned about tax uncertainty. According to Amy Payne of the Heritage Foundation: “Small businesses are under enormous threats from looming tax hikes. The tax hike, however, is just a portion of the Taxmageddon crisis scheduled to hit the country on January 1. The Congressional Budget Office has left little doubt that unless Congress and the President prevent Taxmegeddon, the country is headed toward a fresh recession next year.” Another recession would be the worst thing that could happen to the business executives in that conference room with me. In fact, we would have to consider the potential impact of another recession during the strategic planning process.
The CEO was also right to be concerned about what he called “red tape.” Unnecessary government regulations represent a real threat to all businesses—small, mid-sized, large, and mega-sized. In their report “Red Tape Rising,” James Gattuso and Diane Katz of the Heritage Foundation state: “During the first three years of the Obama administration, 106 new major federal regulations added more than $46 million per year in costs to Americans. Hundreds more regulations are winding through the rulemaking pipeline as a consequence of the Dodd-Frank financial regulation law, the Patient Protection and Affordable Care Act (Obamacare), and the Environmental Protection agency’s global warming crusade, threatening to further weaken an anemic economy and job creation.”
If the threat of higher taxes and burdensome regulations were not enough, the CEO and his executives were also struggling with soft sales. According to the CEO, “If the recession is really over, somebody needs to tell our customers.” Taxes and regulations increase the cost of doing business, a cost that must be passed on to consumers in the form of higher prices. Higher prices will typically cause a dip in sales volume in even the best of times, but in quasi-recessionary times having to increase prices represents the worst case scenario for businesses—particularly those with products or services that are discretionary. With Taxmageddon threatening to create a new recession, businesses face a situation in which their prices will be higher at a time when the income of consumers will be lower. In this situation, the soft sales associated with an anemic recovery can quickly turn into no sales.
Clearly, we had our work cut out for us in developing a strategic plan to save this small business. But as the discussion swirled around me, I could not escape the sinking feeling that it would take more than a strategic plan to overcome a president who is determined to tear down businesses.