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lite.cnn.com - on gopher - inofficial
ARTICLE VIEW:
‘Just pure uncertainty.’ Small businesses are hopeful and fearful
ahead of Trump’s second term
By Alicia Wallace, CNN
Updated:
4:07 PM EST, Fri November 15, 2024
Source: CNN
Family-run furniture and barware maker Barrel-Art has now been through
three US presidential elections. While business before the 2024 race
felt similar to 2016 and 2020, this year has also brought more
unpredictability.
Sales petered out in the months ahead of Election Day as businesses and
shoppers paused their purchases while waiting for an outcome. Sales for
their handcrafted products, made from whiskey and wine barrels, bounced
back as soon as the race was called.
However, the post-election environment is hitting different this time
around for many small business owners, such as Barrel-Art’s Michael
Prieto, and leaving them wondering what comes next.
While President-elect Donald Trump will be a , his campaign trail and
ambitious, sweeping policy proposals , said John Arensmeyer, founder
and chief executive of Small Business Majority, a center-left business
advocacy group.
“I think business owners don’t know how much of what they’ve
heard from the president-elect on the campaign is real, how much is
going to actually happen and how much he can do,” Arensmeyer said.
For business owners who already were unsettled about the economy or its
direction prior to the election, navigating the months and years ahead
could be even more precarious, he added.
“It’s just pure uncertainty,” he said.
For Barrel-Art’s Prieto, his biggest question mark is or trade
restrictions could ripple through his US-based suppliers and make
materials harder to obtain or more costly.
“I want to be optimistic, but I’m skeptical as well on some of the
proposed policies,” he said.
Running leaner, hoping for cheaper money
In the months leading up to the election, Prieto was taking a
wait-and-see approach. He didn’t want to send Barrel-Art down two
different scenarios.
A week after the election, Prieto said he was very hopeful that his
small, family-owned business could benefit from any “Made in
America” pushes from the new administration as well as a more
favorable lending environment.
Barrel-Art is running a lot leaner staffing-wise than Prieto would want
it to be, which means longer hours for him. High inflation has squeezed
the business, driving up costs while driving down customers’
disposable incomes.
“It’s started getting more and more difficult because of
inflation,” he said. “We are a discretionary product, we’re not a
necessity. So if people don’t have the disposable income, our
products are going to fall to the wayside.”
Barrel-Art also is heading into the busy Christmas season carrying
bigger credit card debt because of the combination of slower sales due
to the election and the business still trying to recover from a
destructive fire a year ago, he said.
Prieto said he’d love to see the return of some small business
lending products similar to the Economic Injury Disaster Loans that
were made available during the pandemic.
“We’ve had to borrow more than we normally would have, so it would
have been nice if we had access to cheaper money,” he said.
Trying to get ahead of tariffs
Small Business Majority has yet to conduct a full post-election survey
of businesses, but in the days since the election was decided,
Arensmeyer and colleagues have heard some similar themes from its
network of 80,000 small businesses.
The biggest areas of concerns were tariffs and the potential impacts to
supply chain and costs; stricter immigration policies, including mass
deportations, which could affect food and labor supply; whether
Affordable Care Act subsidies will be left to die on the vine in 2025;
and whether federal contracts will no longer favor women- and
minority-owned businesses, he said.
Small business owners, by their nature, are optimistic, he said.
However, some have already started loading up on inventory from China
or holding off on making new hires until things get clearer.
Man & Machine, which makes waterproof keyboards and computer mice
primarily for the medical field, is ramping up imports and cramming in
a year’s worth of production in four to five months to try to avoid
the brunt of any price hikes.
“If I wait, I’ve lost,” said Clifton Broumand, founder and CEO of
the Maryland-based company. “If I don’t have enough inventory in
place, I’m going to pay a 20% tax, and people will not buy my
product.”
Seeking support for a support system
Some small business owners, like daycare owner Janna Rodriguez, are
pushing harder on the advocacy front. She said the country’s child
care infrastructure desperately needs help from the federal government.
Some of those specific recommendations include establishing an
enrollment-based versus an attendance-based payment system, greater
public-private collaborations, professional development for educators,
a comprehensive benefits system, a tiered reimbursement system and
infrastructure grants.
Rodriguez has been an early childhood educator for 11 years. Six years
ago, she opened the Innovative Daycare Corp., a home-based child care
business that serves primarily low-income and minority families in the
Freeport, New York, area.
Although her business plays — allowing parents to be fuller
participants in the labor force — it also faces challenges similar to
others in the industry, she said, noting her daycare is “stretched
and under-resourced.”
And if federal funding were to be cut, she fears she’d have to let go
of one of her three full-time staff members, which would put the center
out of compliance and force a smaller capacity, she said. At a time
when the daycare industry already has had to cut back on meals and hold
off on hiring part-time staff, Rodriguez fears she’d not be that
lifeline for families in need.
“You can’t put profits over children,” she said.
You ‘deal with the hand you’re dealt’
On the Monday before Election Day, JD Opel opened ICON Hair Studio in
downtown Evansville, Indiana.
“There’s the pit in your stomach, that ‘Oh God, what’s going to
happen?’ They’re both so different,” he said of the two
presidential candidates.
He and his customers were surprised by the results of the election, but
the 20-year hair industry veteran said he’s taking a simple approach:
“It’s like poker,” Opel said. “You deal with the hand you’re
dealt, and you just roll with it, and play as much as you can so that
you can still win … even though I don’t agree with a lot of
(Trump’s) policies or the way he thinks, he’s still my president,
and I have to trust and believe and hope that he’s going to help me
out just as much as everyone else.”
Some of Opel’s biggest concerns are around the extent of tariffs and
what that could mean for his hair products and supplies that come from
overseas. Additionally, if those tariff-related costs were to be passed
on to households — as economists have warned — Opel said he’s
worried that his customers’ finances will take a hit.
“I’ve always said it’s a recession-proof business; I lived
through 2008 and that whole crisis then,” he said of the Great
Recession. “And we actually saw growth in our industry, because we
wanted to feel good. But what if we aren’t really that
recession-proof? What if we aren’t going to survive tariffs and all
these hikes on the cost of goods?”
“But, hopefully, fingers crossed, we are that recession-proof
industry and business that people still want to come feel good and
don’t care if they’re going to spend money.”
Pressing the pedal on expansion
While Opel, Prieto and others expressed hope that small businesses like
theirs could benefit from any expansion of tax cuts, another business
owner jumped right into expansion mode after Trump was declared victor.
Jeff Wood’s Coldwater Capital is a real estate development business
with projects ranging from small multi-family properties to
self-storage properties and express car washes.
“In 2018, we started developing these car washes, primarily in
Florida, Georgia and Utah and we’ve expanded into Pennsylvania and
Maryland,” Wood said. “And one of the things that really put fuel
on that fire for us was the Trump tax cuts.”
One of the provisions within the 2017 Tax Cuts and Jobs Act was
hyper-depreciation benefits for businesses such as car washes, he said.
The tax benefits excited some investors, who backed the expansion of
the facilities, which now total 35 across five states.
“Through those 35 car washes, we typically have about 10 people on
payroll for each of those, so it’s been about 350 people we’ve been
able to employ,” he said.
But during the past 18 months, growth plans stalled in the high
interest rate environment and investor concerns that the tax deductions
could burn off if certain TCJA provisions were to expire next year.
“If a typical car wash costs us $6 million to build, with interest
rates going as high as they have, it’s been difficult to make the
numbers work,” he said.
That investor sentiment changed after Trump was elected, he said,
adding that he put two new sites under contract in the days after the
election.
Fears of being silenced
The impending Trump administration could have a significant effect on a
Los Angeles-based talent agency and, its owner fears, a chilling effect
on human rights.
Reel Management, which got its start in 2004, represents hundreds of
actors in the reality and unscripted television space, booking
appearances through a variety of events, including social media
promotions, in-person appearances and corporate and college
initiatives.
The drag queens from ‘RuPaul’s Drag Race’ are “probably our
number-one booked event across the college market,” said Marc
Marcuse, Reel Management’s founder and owner. “They love a good
drag show, it enhances diversity, and it’s just fun.”
Through these events, the hope is to build community, understanding,
“plant the seeds to make generational change,” he said.
But those appearances and deep discussions around race, gender,
identity and sexual orientation have dropped off in recent years, he
said, noting movements by Republican-led states, such as Florida, to
try and prohibit .
With Trump headed to the White House and a Republican-controlled
Congress, Marcuse fears those efforts could easily spread.
“Hate is difficult; hate, when it impacts your bottom line is even
more so,” he said. “Nobody wants to wander the world feeling like
they’re a pariah and then lose their income on top of it. It’s a
double gut punch.”
He added: “I’m a cisgendered, straight, white male who’s
middle-aged … this is not me fighting for my own interests, this is
me seeing this is a struggle and a concern of the civil rights movement
of our time, and I believe in being on the right side of history, being
kind and understanding and working with others to elevate the tide for
everybody.”
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