When the stock market rallies or plunges, it is often based on human emotion – the optimistic or pessimistic sentiment of the people in business and finance. The recent market “Trump bump” is the latest example of how the business community’s emotional reaction to political news makes an important economic difference. This psychological component is equally powerful in the other half of the economy – the small-business sector. What will Donald Trump’s presidency mean to the half that creates two-thirds of our net new jobs? Signs point to a likely small business rally, and that’s big economic news.
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President-elect Trump’s pick to lead the U.S. Small Business Administration is the latest, and perhaps greatest, sign of what’s to come on the small-business front under the new president. Professional wrestling executive Linda McMahon is the real deal – someone who knows both what it is like to struggle to make ends meet while starting and building a family business, and what it is like to grow a business into a true American dream of tremendous success.
Even though her business success story is exceptional (small businesses typically don’t grow as large or become publicly traded companies), America’s small-business owners will see themselves in McMahon, and that’s important. She’s a risk taker and a patriot, and so are they. They’ll be grateful to know that someone who “gets” them is serving at the highest level of government, because entrepreneurs have felt dismissed by eight years of leadership in Washington, D.C. that didn’t seem to understand, or care, about them. They are hungry for leadership that understands their unique contributions, and their unique challenges.
McMahon’s extraordinary entrepreneurial success is also highly relevant to the job she will do as SBA administrator. She will relate to the smallest business, but has the experience of running a large organization and knows what it means to deliver a return on investment – in this case, to the American taxpayers. SBA is an agency with the capacity to excel at taxpayer ROI. When I was SBA administrator, the agency created an SBA Hall of Fame that included companies like Intel, FedEx and Apple – companies that received some form of SBA assistance (in the form of a loan, training or access to contracts) when they were young and small, and went on to become global change-agents and household names. Just one of those companies, today, contributes more federal income tax than the total budget of the SBA.
McMahon and Trump, together, will have the ability to help revive American small business through actual government assistance (SBA loans, training and federal contract opportunities), but also through something that is even more important: building entrepreneurial confidence.
Messages from Washington have the power to move small-business sentiment just as they do the stock market. A president and executive team can show small-business owners that they are a priority by enacting: tax reform for individuals (which is how small-business owners file their taxes); real regulatory reform (less is more!); trade deals that help the 97 percent of businesses engaging in trade that are small; and reducing the cost of health insurance through repealing and replacing Obamacare.
Creating an environment that is conducive to doing business will make small business feel good. And that matters. In fact, it is essential to producing the Trump administration’s goal of four percent economic growth.
President-elect Trump is a natural born cheerleader, which is exactly what small business needs in Washington, D.C. This is an economic sector that has been in decline, but one that has the ability to fuel the American economy like nothing else. Trump and McMahon can and should provide the emotional support the small-business sector, just like its big-business counterparts, inherently needs and deserves.
Hector Barreto is the Chairman of The Latino Coalition and the former U.S. Small Business Administrator.