Small business plays a crucial role in the ecosystem of any modernized economy. In the US alone, it is estimated that 99% of businesses are considered small businesses and these entities power economic activity in business to business and consumer to business marketplaces. 2024 was a robust year for small businesses with 20 million business applications filed which set new records from previous fiscal years. Even with leaps in small business creation, optimism among small business owners has waned over the last few years with ongoing challenges and economic uncertainty fuelling the negative outlook. A recent change in governments in the United States has reversed the negative mood trend and sparked intense optimism as small business owners are hopeful the incoming Trump Administration can help spark business growth with the Republican Party’s pro-business agenda.
President Biden’s Administration and Small Business
In the final days of his administration, President Biden announced record small business applications which is definitely good news for the sector but the mood of owners and entrepreneurs alike paints a different picture of how The White House is viewed. President Biden oversaw some policies that some would consider anti-small business. Earlier in 2024, the FTC approved a ban on non-compete agreements which for small businesses innovators, is a death knell when it comes to protecting proprietary company information (FOX Business News). President Biden is letting certain tax cuts from the previous administration expire which may lead to more tax burdens for smaller businesses. But it’s not just policy that small business owners have issues with. Biden has come out publicly as a ‘small business champion’ but recent fact checking by The Hill has shown that President Biden’s policies and actions have actually hampered small business growth and created extra bureaucracy for the sector.
The Real Donald Trump
The National Federation of Independent Business (NFIB) recently reported that their Small Business Optimism Index rocketed up 8 points to a 2 ½ year high of 101.7 in November soon after the US Presidential election which Donald Trump won. Mr. Trump is a polarizing figure in many respects but when it comes to business, his name is synonymous with success and achievement which independent business people can highly relate to. The Republican Party has always mandated less government regulation and a more pro-business stance that resonated strongly with entrepreneurs and business owners, positively impacting the overall mood. Small business owners are taking that optimism to the bank as the survey revealed that businesses that have plans to hire more workers rose 3%. Trump and the Republican Party’s branding hits the mark with a bullseye but Trump’s economic successes in his previous administration are still under debate. It remains to be seen if Trump’s actions will actually help small businesses but heading into the new year with a positive mindset is a powerful tool for entrepreneurs and owners.
Lingering Challenges for Small Business
Even with Trump’s freight train style of politics, there are stark realities that small business owners still face heading into 2025. The labor market for small business, especially in entry level positions, is not expected to improve with more workers seeking higher pay, flexible scheduling and other benefits not usually supplied in starter type positions. This poses challenges for small businesses that rely on unskilled labor or are customer facing, negatively impacting potential revenue generation and business productivity. Inflation is still a nagging problem for small businesses as operational costs continue to rise in the face of questionable global economics. Trump’s continued tariff threats will have a devastating effect on small business costs and could stifle further growth and innovation. Trump’s hyperbole may pull at the heart strings but 2025 will define the direction for small businesses under his administration.
The Bottom Line
Most businesses in the United States are considered small businesses and that holds true over most of the world. There is no denying the important role small businesses play in the overall economic picture but as of late, optimism has been waning as small business owners and managers face challenges in hiring, operational costs and inflationary pressures. In spite of unfriendly government policies, a record amount of small businesses were created in the US last year but the real mood of small business owners has flipped considerably since the election of Donald Trump and the Republican Party. Fresh optimism among small business owners has spurred hiring and investment but is the hype real? Mr. Trump’s name is closely associated with business and whether or not his policies will actually help small businesses is yet to be seen but in terms of branding. Donald Trump hits the mark right on target.
