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
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, former Administrator of the U.S. Small Business Administration under President George W. Bush; chair of the Latino Coalition. (Copyright © 2015 Ringo Chiu. All Rights Reserved.)
Hector Barreto is the Chairman of The Latino Coalition and the former U.S. Small Business Administrator.
Cited: Fox Business News
By: Hector Barreto
Hispanic-owned small businesses are the fastest growing segment of small businesses in the United States; in fact, the purchasing power of Latinos will soon surpass $1.3 trillion. As more and more Latinos achieve upward economic mobility, it’s important that opportunities for small business ownership continue to be encouraged.
Thanks to direct selling — the original, face-to-face way of getting goods and services into the hands of consumers — more than 20 million Americans have an opportunity to build a small business or larger, entrepreneurial venture. It isn’t surprising that a full fifth (nearly 20%) of people involved in direct selling are Hispanic-Americans.
Recently, a well-financed group of direct selling opponents, which many news stories say is being backed financially by billionaire short seller Bill Ackman — suggested that direct selling legislation in the United States House of Representatives would harm Latino small business owners. Direct selling is an economic engine for millions of individuals and working families within my community, who — with plenty of initiative and energy — stand to benefit by joining the growing ranks of Latino small business owners. It is important to set the record straight.
H.R. 5230 — The Anti-Pyramid Promotional Scheme Act of 2016 — is bi-partisan legislation supported by more than 15 members of Congress that would protect Latinos and all Americans from the financial risk associated with a direct selling small business by clearly defining in federal statute the difference between a legitimate small business and a fraud. The famous men’s retailer, entrepreneur and philanthropist Sy Syms once preached in his television commercials that “an educated consumer is our best customer.” That is precisely what this legislation hopes to achieve and why Hispanic leaders, in particular, need to support it. By knowing what constitutes pyramid scheme fraud, it will be easier for consumers to steer clear and for law enforcement to prosecute.
None of the legislation’s central provisions — that a pyramid scheme exists when compensation is based primarily on the act of recruitment (as opposed to retail sales) and that personal use, or being able to purchase products at a discount, is a legitimate business practice in direct selling — are new or outlandish. In fact, 49 states already have laws on the books banning pyramid schemes, numerous court decisions have used the same definition of a scheme that H.R. 5230 seeks to enact at the federal level and more than a third of the states have anti-pyramid statutes in force that protect personal use.
While this sensible, pro-consumer legislation is an important step forward when it comes to safeguarding Latinos and all Americans from financial risk, it is also worth remembering that direct selling, by its nature, involves substantially less risk than other entrepreneurial business efforts. First, it is attractive because of the low start-up costs — often only $100 or less — as opposed to the thousands or even millions associated with franchises or other types of small businesses. Second, the industry put into place years ago a rule that mandates all members of the Direct Selling Association buy back unused inventory at no less than 90% of the original purchase price.
Like so many other American families from all kinds of backgrounds, the key to my own family’s upward mobility was business ownership – a course that is still unparalleled in its ability to raise the income level and quality of life for all Americans. Let’s support H.R. 5230, sensible pro-consumer legislation that would build on the direct selling industry’s heritage of education and responsible self-regulation by helping Latinos and all Americans enjoy additional safeguards without compromising the direct selling model that has done so much for so many.
Cited: The Hill
By Hector Baretto
America needs more job creation, which by definition means it needs entrepreneurs. Meanwhile, the rising generation is living with mom and dad.
When the Pew Research Center recently announced that living-with-their-parents is the most popular living arrangement for 18-34 year olds for the first time in 130 years, reactions ranged from concern to eye rolling. But the societal and economic ramifications of this phenomenon are quite serious.
For example: To maintain economic strength and stability, the American economy needs a healthy percentage of each generation to do something bold, independent and important: Leverage their accumulated assets (usually home equity), embrace productive risk and become business owners.
Can we expect that enough basement-dwelling millennials will become entrepreneurs?
The American economy needs a healthy percentage of each generation to do something bold, independent and important: Leverage their accumulated assets (usually home equity), embrace productive risk and become business owners.
Think of the headwinds they face, beginning with student debt – a key driver of the living-at-home phenomenon:
Higher education and student loan expert Mark Kantrowitz says this year’s college graduates will have an average student loan debt of over $37,000 – the highest ever. This staggering level of debt sets up a financial domino effect that puts the American Dream of home ownership further out of reach and, in turn, the even-bigger dream of business ownership on ice.
The decline and disappearance of small, community banks create another headwind for would-be entrepreneurs, as these institutions have been the traditional lending source for small business.
The complexity of Dodd-Frank rules are often cited as a cause for small bank closures – one of many examples illustrating the fact that Millennials live in an economic and business environment made hostile by their own government.
Another example: Since the ironically named Affordable Care Act has taken effect, the cost of health insurance for the self-employed and small-business owners has increased, in many cases dramatically. According to the National Federation of Independent Business, 63 percent of small-business owners experienced premium increases between mid-2014 and mid-2015. The result, among other things, is a powerful dis-incentive for entrepreneurship and job creation.
More evidence of a hostile environment can be found in punishing tax and regulatory policies – particularly at the federal level – which continue to send a message that our government may care about jobs, but it doesn’t care (and/or understand) about job creators. The Department of Labor’s recent overtime rule provided a particularly clear look into the mindset of regulators: This single rule, with its astronomical salary threshold, is onerous enough to rob some small firms of any profit at all. If you are unable to profit, there is little point in starting – or staying in – a business.
The final headwind of note is one without a clear source of blame: Our culture. Millennials have grown up in a culture that is increasingly risk-averse. We see it in everything from helicopter parenting to the extremely cautious savings-and-investment behavior that has followed the financial crisis.
The millennial generation dreams big, sure. They have an easy time imagining themselves as the next tech mogul because so many tech ventures are low-risk. Mark Zuckerburg didn’t need good credit, equity in his home or a business loan to start Facebook. He just needed a laptop … something his parents had already bought for him.
But who will be willing to take the risk needed to start a small manufacturing facility? A restaurant? A construction business? Who is dreaming of the kind of small business that requires the less exciting, traditional combination of collateral and skill, vision and guts? The kind that creates so many, necessary jobs?
For entrepreneurship to bloom, we need the millennial generation to be even more bold than their entrepreneurial forebears. They must embrace productive risk, move out of the basement, pay off their student loans on an aggressive schedule, and change their government to one that understands and appreciates the fact that job creation requires an environment favorable to small, new businesses.
It’s a tall order, but this generation will also have terrific health and longevity on their side, not to mention the gifts of technology and a tolerant society that does not judge them on anything other than their merits.
If they are to become entrepreneurs and reverse the dangerous trend line of shrinking business dynamism in America, millennials will have to leverage their considerable gifts to break through daunting economic and situational barriers. If they can do it – and I hope and believe they can – they will save the American economy and change the world.
Hector Barreto, served as Small Business Administration Administrator under President George W. Bush. He is the author of "The Engine of America," which provides motivation and inspiration through the stories and ideas of business leaders across the nation.
Source: Fox News
What an interesting time to be Hispanic in the U.S. While I certainly believe that the best is yet to come for Latinos in this country, I’m candidly not always sure whether we are living in the best of times, or the worst of times, for people with names like mine.
On the one hand, we can be proud to hail from the same group as Salma Hayek, Sonia Sotomayor, Oscar de la Renta, Gabriel Garcia Marquez, Sammy Sosa, Oscar Muñoz, Oscar de la Hoya, Marco Rubio and so many more whose names are synonymous with success in the world of art, government, business, sports and more.
Being a Latino also means being part of the demographic group that everyone is talking about, watching and marketing to. And no wonder. We are economically powerful, and that power is growing. There are more than four million Hispanic-owned businesses in America, with more than $660 billion in combined annual revenue. Latinos are expected to contribute over $1.7 trillion to the U.S. economy, overall, by 2020. Our purchasing power alone is around $1.5 billion.
And of course, every candidate for office is hoping to attract a critical percentage of our votes. This provides an outstanding opportunity for Latinos to be more vocal about what matters to us (hint: it’s not immigration so much as it is the economy, education and health care).
On the other hand, the issue of illegal immigration, heated up by election-year rhetoric, has caused our community to be maligned. A survey by the Latino Donor Collaborative recently found that most non-Hispanic, white Americans with a moderate view of the Latino community do not believe that Latinos share their American values. This research also found a perception that nearly half of us are undocumented immigrants (in spite of the fact that only 16 percent of us are, according to the Pew Research Center).
While misguided perceptions like this can be painful, some realities are far more so:
According to the U.S. Senate Joint Economic Committee, almost 30 percent of Latino children live in a food-insecure household, and the median income of Hispanic households is $42,500 – about $18,000 less than the median income of non-Hispanic white households. We are twice as likely to live in poverty as non-Latino white Americans and lag behind non-Latino white in education, income and wealth.
The one unambiguous beacon of hope among all of this information is Hispanic American’s entrepreneurial streak. I’m especially proud of the fact that Hispanic-owned businesses are growing at 15 times the national growth rate, and that Hispanics are 1.5 times more likely than the general population to become entrepreneurs. That’s a big deal for Latinos and for all Americans, because our nation is in dire need of more business creation, with business dynamism in a state of dangerous decline since 2008.
The propensity to start and grow a business may, in some cases, be related to Latino’s immigrant roots. For example, small-business ownership has always been a way of life in my family. My father, an immigrant from Mexico, started his American Dream in jobs that included janitor, but, like many immigrants, business ownership was always his goal. It became the vehicle through which he improved his own life, the lives of his family, and of the people he employed.
Having watched my father start and run businesses made me more likely to eventually do so myself. And I hope I am passing this entrepreneurial example on to my children.
Regardless of the “why” behind Latino’s inclination toward entrepreneurship, all who want the best for our community would do well to celebrate, foster and encourage it.
At a meeting here in Washington, D.C. this week, members of The Latino Coalition will gather to talk about the opportunities and challenges of business ownership. Members of Congress will have an opportunity to hear, first hand, what is on the mind of leading members of the Latino business community.
Elected officials can expect to be inspired by our success, but also to hear our unvarnished perspective on the environment our government is creating.
Entrepreneurs today are discouraged by a government that doesn’t appear to understand us. Thanks to high individual taxes rates and health care costs, and a never-ending flow of one-size-fits-all regulations, the small-business community (Hispanic or otherwise) view Washington, D.C as an opponent, not an advocate.
Income and poverty statistics can be turned around by the power of business ownership – my father’s story proves that fact. Improving the environment for small business is essential if we are to turn the Latino community into an unambiguous American success story. The best American leaders will know and speak to this truth. In turn, they will be rewarded with far more than Latino votes – they will actually play a role in Latinos, and America’s, economic recovery and future success.
Barreto is the Chairman of The Latino Coalition and the former U.S. Small Business Administrator.
The Candidates’ Missing Economic Message
Focusing on small businesses could be a big vote-getter, with Hispanics especially.
March 10, 2016
The economic engine of America is still its 27 million small businesses. Why aren’t any of the presidential candidates tapping into the powerful message of economic opportunity that small business offers?
For candidates struggling to attract Hispanic votes, small business could be a particularly effective and optimistic subject. It would also be a reprieve from the often divisive rhetoric about immigration-an issue that, right now, isn’t even breaking into the top five issues of importance to Hispanic voters.
According to a Univision poll, more than half of Hispanic voters consider the economy and jobs as the No. 1 issue of importance. A Jan. 8 Bureau of Labor Statistics report said the unemployment rate among Hispanics is higher than the national average, at 6.3%. One in four Hispanics have been without work for 27 weeks or more.
wsj articlePhoto: Getty Images/ Ikon Images
Like most Americans, Hispanics understand and appreciate the economic opportunity that small business offers, both to entrepreneurs themselves and to their employees. Small businesses traditionally create two-thirds of the net new jobs in this country, an important fact for any group of voters who are worried about jobs.
All this is missing from the presidential race. Why aren’t candidates competing to be the best small business advocate? And why aren’t any of them addressing the disturbing fact that fewer people want to start businesses than ever before?
Business startups in this country used to outpace business closures by about 100,000 businesses a year. Starting in 2008 the opposite became true: The number of businesses opening each year plummeted, and business closures now outpace business openings.
No one has proven the cause of this decline. But business owners I have talked to repeatedly raised one issue: The government is failing to create an environment where entrepreneurs want to take a risk.
When I served in government, we believed that it was not our responsibility to create businesses and jobs, but instead to create an environment to foster entrepreneurship. As Ronald Reagan used to quip, the only difference between a small business and a big business was, essentially, government’s role: If government would get out of the way, a small business could become a big business.
Too little attention has been paid this presidential year to the crucial role that new businesses play in getting the economy, and the number of new jobs, to grow faster.
This missing small business message is especially puzzling to many Hispanic Americans who have watched immigrant parents realize their American dreams through business ownership. Being an entrepreneur-in a country where entrepreneurs have opportunities unlike any other-meant that my Mexican immigrant father, Hector V. Barreto Sr., was able to rise from being a farmworker, railroad worker and meatpacking-plant worker, to running multiple businesses, founding the U.S. Hispanic Chamber of Commerce and advising presidents Ronald Reagan and George H.W. Bush.
My father’s story is inspiring, but not unique. The opportunity to start, own and run one’s own business-and thus to liberate and define yourself-has inspired generations of new Americans to come to the U.S. and make a better life for themselves and their families. Yet politicians today spend more time with big business leaders than with small business owners like my father.
My message to all presidential candidates: Listen to small business. Listen to entrepreneurs, and to those in economically challenged populations who hope to become business owners. They’ll be listening to you, and they’ll be deciding whether you earn their vote.
– Mr. Barreto is Chairman of The Latino Coalition and was Administrator of the Small Business Administration, 2001-2008.
Cited From: The Wall Street Journal
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