COMMENTARY: Small businesses built this economy; time to return the favor

America’s small businesses are the overlooked backbone of the U.S. economy. They employ nearly half the workforce, generate 44 percent of gross domestic product and are responsible for two-thirds of new private-sector jobs. They are our country’s innovators, job creators and often the first to show signs of recovery.

Or distress.

Small businesses operate at a structural disadvantage. While the Big Beautiful Bill and the massive regulatory unraveling are making excellent and promising inroads, it could all be undone in a future administration.

Most parts of the U.S. economy share the same challenges: the rising cost of doing business, workforce shortages, regulatory complexity and unpredictable tax policy. These are persistent structural problems, and they threaten the long-term vitality that keeps the economy afloat.

Despite these obstacles, small businesses remain resilient. They adapt. They support one another. In an informal survey of a hundred small-business owners, four out of five said they actively support other small businesses in their community. Three-quarters rely on trade associations to navigate ever-changing regulatory requirements. These are not just business owners; they are civic pillars.

For the United States to sustain 3 percent annual economic growth, to remain healthy and vibrant (something we haven’t consistently achieved in decades), small businesses must be at the front of the line. The road forward for small businesses includes a two-pronged strategy: one led by entrepreneurs and one that demands smart, reliable policymaking.

First, small businesses must continue to be allies for one another. The more entrepreneurs share resources, information and influence, the better positioned they’ll be to navigate today’s challenges. Small businesses must strengthen engagement with industry trade associations, mentor the next generation of workers and participate actively in local governance.

Trade associations are critical force multipliers. They advocate, inform and engage in workforce development. If industry groups coordinate scalable vocational programs, scholarships and youth training initiatives, they could help close the labor gap that many businesses identify as their urgent constraint.

Another critical area of engagement is with policymakers. Many small-business owners rely on trade associations to do the heavy lifting in Washington. However, relationships matter. Local leaders who have relationships with elected officials understand that providing policy feedback, more grounded in reality, makes a difference. Hosting legislators for site visits or testifying at a local hearing is a strategic investment.

Most important, small-business owners must continue investing in their communities. From sponsoring school teams to offering scholarships, the ripple effect of local engagement is real. We call it the magnifier effect: When small businesses lift their communities, the return is exponential.

Second, policymakers of both parties must meet small businesses halfway by creating a fair, stable and predictable economic environment.

Tax uncertainty is problematic — the federal tax code changes too often, which is not conducive to long-term planning. Entrepreneurs seek predictable tax policies.

“As business people, when you don’t really know what’s coming up, it’s hard to make plans,” said Andy Ellard, the owner of Manda Machine in Dallas. “And to know what’s happening ahead of time is way better than not, so you’re not having to scramble.”

Uncertainty can adversely affect decision-making. Small-business owners want clarity with tax policy.

A sensible tax structure should incentivize reinvestment and hiring. It should provide consistent bonus depreciation and reward long-term growth. Above all, it should be reliable enough to plan around well beyond the next election cycle.

The regulatory picture is bleak. Too many businesses face a tangled mess of federal, state and local rules. Larger firms can afford compliance departments. Small companies cannot.

Worse still is the expanding role of local governments in regulating industries they neither understand nor oversee comprehensively. Federal and state laws should pre-empt local ordinances in most cases. A national commitment to regulatory preemption would be a game-changer.

Robert Meyers, president, chief commercial officer and managing member of Republic Business Credit, describes the concern: “I have to have a different employee manual in each state that has different rules. And it’s not like there are just 10 labor laws. There’s a five-hundred-page manifesto in some states. Uncertainty adds costs.”

For small businesses, those costs can be crushing.

The Small Business Administration must continue to defend small businesses against unreasonable regulations through its Office of Advocacy. At the same time, the SBA should make capital available for proven, established, small secured finance and equipment lenders to provide small business loans. It must stop undermining small-business lenders by providing small-business loans. The SBA has neither the expertise nor the competence to compete with experienced lenders who have skin in the game. Nor should they.

None of these changes requires reinventing the wheel. What they do require is the political will to create a level playing field. Small businesses aren’t asking for favors. They’re just asking for fairness and predictability. They built this economy.

It’s time for policy decisions to be made with a clear understanding of and appreciation for small businesses.

Daniel A. Varroney is the author of “Rethinking Economic Growth: What Small Business Needs to Help the US Economy Achieve Consistent Growth.” He wrote this for InsideSources.com.