Small Business optimism is plummeting after months of being targeted – the backbone of our economy needs help

Small Business optimism is plummeting after months of being targeted – the backbone of our economy needs help

Entrepreneurs are optimists by nature. You would have to be to take on all of the challenges that come with running a small business.

In addition to the usual challenges that go with finding and pleasing customers, managing employees, contractors and/or vendors, bookkeeping and other paperwork, and competing with companies with significantly more resources, small businesses have to manage an ever-growing litany of government-imposed rules and regulations. Only an optimist risks their capital, time and effort to pursue that kind of life and opportunity.

Yet, the NFIB, the small business advocacy organization that publishes a monthly small business optimism index, found that for the month ending January 2021, small business optimism had plummeted.

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Their findings included that, “Owners expecting better business conditions over the next six months declined seven points to a net negative 23%, the lowest level since November 2013. The net percent of owners expecting better business conditions has fallen 55 points over the past four months.”

It’s impossible for stimulus to help grow small businesses when you mandate that they stay closed or otherwise disadvantage them.

How could it not? Even the biggest optimists can only see the glass as half-full for so long. It has been nearly 11 months since small businesses have been targeted, both directly and indirectly, for government-mandated business closures or reduction in operating capacity.

Their businesses have suffered, while many of their larger competitors never shut down for a single day. They have never received appropriate compensation for the violation of their rights and property. In fact, some of those who have defied mandates have found themselves fined or in jail.

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These government-mandated actions have had real consequences. Alignable’s February Rent Poll found that 38% of small businesses couldn’t pay rent for the month; that number increased to 58% for minority-owned small businesses. Businesses across a variety of industries are closing by the thousands- permanently.

“Stimulus,” as it was ridiculously called, made its way into the stock and housing markets. Personal savings have increased $1.4 trillion since pre-pandemic, and the personal savings rate was just shy of 14% by last year’s end.

Seven tech stocks gained $3.4 trillion in value in 2020 -- in part from the Fed's intervention into the market, in part from the stimulus going into the markets directly and in part from the stimulus being spent with these large companies who were the ones allowed to remain open for business.

It’s impossible for stimulus to help grow small businesses when you mandate that they stay closed or otherwise disadvantage them.

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Now, the big-government politicians want to take these small businesses who are already on the ropes and deliver a knock-out punch. From proposals from raising the minimum wage at the federal level to more than twice the current level to passing the anti-gig and independent contractor bill, the PROAct, in the House, it is clear that the government has no desire to help the entrepreneurs that make up half the economy and represent the American Dream.

If things don’t change and the government doesn’t get out of the way, they will finally crush the backbone of the economy. That doesn’t breed much optimism.

Carol Roth is the creator of the Future File legacy planning system, “recovering” investment banker and host of “The Roth Effect” podcast.