February 3, 2023
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Dubroff: Small business recovery should be part of the POTUS visit to the region

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When Joe Biden arrives on the Central Coast during his expected tour of storm damage, the unspoken issue won’t be the missing documents found at his former office and current residence in Delaware.

Those questions will likely get plenty of airtime.

But the unspoken questions will be what has happened to the small business haven that used to be one of California’s greatest assets – particularly for people without college degrees.

These days, it is inflation that is eating away at small businesses, reducing opportunities for growth and putting the squeeze on owners up and down the Central Coast. For some, it is higher transportation costs, for others the increased cost of money and for others raw materials or business services. We don’t typically have the luxury of being able to raise prices – something enjoyed by Apple, Disney, Ralphs, and other corporate giants with near-monopoly pricing power.

The storms that battered the region this month left a mixed picture of the damage. Many smaller communities like Morro Bay in San Luis Obispo County suffered serious damage that could take weeks or longer to clean up. Others suffered the loss of power or reduced traffic due to closed roads.

In Ventura County, where no disaster emergency has been declared, and elsewhere, the heavy rain created a bonanza for farmers, communities and businesses that will benefit from replenished groundwater and reservoirs.

But the fact remains that the past generation of state leadership has made it infinitely harder for small business owners without degrees in business administration or HR management to operate successfully in the Golden State.

In most locations up and down the Central Coast, installing a new coffee roaster or building out a restaurant is a costly process, involving months of delays and permits that come grudgingly, as though the entrepreneurial enthusiasm of being your own boss is something to be penalized, not celebrated.

Overtime rules make it practically impossible for talented line workers who have management potential to be promoted to exempt, salaried positions. They also make it much harder for employers to offer flexible schedules to employees that involve fewer days with longer hours.

Mandatory retirement programs are a really good thing for employees but they don’t come with offsets for the hours that it takes to manage and track the programs. And frankly, the non-deductible, mandatory state-operated savings plan that is the default for employers who don’t offer a 401(k)-type plan is woefully inadequate, given the tax penalty and the possibility that returns will never keep up with inflation.

Technology keeps encroaching on the services industry, pushing health insurance applications, worker’s compensation audits and other tasks back onto the plate of the business owner, instead of being handled by a trusted advisor. That adds hidden costs to the burden of being the business owner who must run multiple dashboards instead of thinking of the next big idea to drive revenue.

President Biden is fond of talking about the working-class family that “just needs a little breathing room” to adapt to a changing economy. Many small businesses also need that breathing room to make the transition during a time when the economy is shifting to a lower gear – if not a recession.

To be fair, small businesses got a ton of relief during the pandemic – forgivable loans and tax credits kept millions of people employed during a really difficult time. And the administration’s efforts to curb monopolistic mergers likely will spur more innovation and entrepreneurship in the years ahead.

At the end of the day, most small business owners don’t want more help from the government if it means more paperwork and less freedom to operate. When we talk about breathing room we’re talking about less intrusion into our entrepreneurial efforts and, perhaps, the ability to get some of the tax and other benefits afforded to larger firms.

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