Transcript of Creating Policy Changes to Benefit Small Businesses
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John Jantsch: Hello and welcome to another episode of the Duct Tape Marketing Podcast. This is John Jantsch and my guest today is Karen Kerrigan. She is the president and CEO of the Small Business & Entrepreneurship Council. She also chairs the newly formed Small Business Round Table, a coalition of leading small business and entrepreneurship organizations. So Karen, thanks for joining me.
Karen Kerrigan: Oh, it’s great to be here. John, thank you for having me.
John Jantsch: And I assume you’re in chilly Washington DC today.
Karen Kerrigan: That’s right. Today it’s chilly. We’ve had no consistent temperature, sort of like the policy environment and economy in general. But we’re having a pretty good day today, pouring rain. But anyway, it’s busy though for sure.
John Jantsch: Are the cherry blossoms starting to peak out yet?
Karen Kerrigan: They’re starting to come out a little early, John, we’ve got… Actually at my home right outside of Washington in Northern Virginia, my front tree cherry blossom, they’re actually starting to bloom a little bit. So I think we could have an early year. We’ve had those before where actually the cherry blossoms came out and then we had a little snow on top of them. But they’re getting there. You can see the buds. And so the national park service, I’m sure it’s hard at work coming up with the exact date of those peak blooms so the tourists can all start coming in.
John Jantsch: So let’s start with describing kind of the primary charge of the SBE Council.
Karen Kerrigan: Sure. You bet John. So we, SBE Council, we are an advocacy, training, and research organization dedicated to promoting entrepreneurship and protecting small business. We’ve been doing this for 25 years now and we have more than a hundred thousand members and small business supporters across the country and really do work on the policy and economic environment that’s going to help strengthen startup activity and small business growth.
Karen Kerrigan: So a lot is focused on policy both at the federal as well as at the state level. And we do a lot of international stuff as well. And then we work with partners, whether they are other associations or corporate partners or government on a variety of educational initiatives as well. But we’re here to support small businesses, to give them an environment in a climate where they can compete and grow and also encourage individuals to pursue the path of entrepreneurship. And obviously having a good economy most of the time, I mean obviously there’s been great businesses that started during depressions, but just having the good policy pieces in place and the ecosystem in place really does encourage people to take that risk of starting a business and there’s a lot of policy things that we’re working on that involve that.
John Jantsch: Well, so that is, I’m thinking through as a listener here, that sounds great at the global level and I know that I benefit from all of that as a business owner, but what do you tell that local business owner, entrepreneur that says, okay, well what’s in that for me? Like how does that directly benefit me?
Karen Kerrigan: Well, I guess you could drill it down to specific policies, right? So if you look at, for example, the latest Square/Gallup Survey that came out a couple of weeks ago and it asks small business owners what their biggest concerns are. It was what we hear a lot taxes, regulation, healthcare, tariffs, things like that. So on a very personal level with small business owners looking at their pain points, like, a complex tax system or higher taxes or affordable health coverage or a regulatory environment that might be too burdensome. We just work on the many pieces of that to push through reforms, to push through legislation, to push through regulatory changes that are going to lessen the burdens directly on small businesses. Whether that’d be the tax or the regulatory burden and do things that are going to create generally a better environment, business environment, so that consumers are spending, businesses are investing.
Karen Kerrigan: So it involves a lot of things because there’s a lot of different government agencies in Washington, whether it’s the Department of Labor or the EPA, the IRS. Look at… We do so much with the Federal Communications Commission because access to broadband is still a big concern and quality broadband for many business owners and entrepreneurs. And we think that’s really critical that everyone have good access to broadband. So they have the opportunity to start businesses or even quality broadband so they can take advantage of all the new tools in the platform based economy to help them better grow their businesses and compete their businesses. So it involves just, if someone thinks about their business and what their pain points are and maybe how government gets in the way, or maybe makes those things a little bit more burdensome and painful. We’re working on all those pieces to improve or to lift those burdens. So does that answer your question a little bit more? I know we could dig down into deeper issues like healthcare or anything else.
John Jantsch: I want to go there for one moment. Because that’s certainly the topic that… I mean you watched all of the political conversation, it seems like forever, it’s not just now. Healthcare gets batted around by every side as the big issue. And I think it’s probably one of the biggest questions for certainly employers in the small business space. Where do you see the future of that? Because it feels, when you listen to people talk about healthcare and in this country it feels a little bit unstable.
Karen Kerrigan: It does, because it’s almost like you have, well the government’s going to run it or it’s not, you know? It’s Medicare for all or… Well it is a little bit unstable but as we’ve worked on this issue for the past three or four years, even with the Obama administration as we have on a number of issues, making some good headway on a range of things. We do see light at the end of the tunnel. Some of the initiatives that we’ve worked on which has come to fruition include things like allowing for association health plans or for businesses to pool as part of an association or altogether where they can leverage their numbers to negotiate for more choices and more affordable prices in healthcare. And so we’re beginning to see more and more association health plans come to life.
Karen Kerrigan: I saw for example, the National Association of Manufacturers just started a big association health plan. You’ve got the restaurateurs who are starting them, you have many state based associations who are beginning to start these association health plan. So we help push that regulatory change forward over the last couple of years. But then once it gets enacted, John, these things, there’s lag time, right? And until like the regulation becomes final and then sort of the market responds to that. So that’s one area where we do see some improvement where there was some extra taxes as part of the affordable healthcare act. Some people call it Obamacare. We had a really good success last year where we’re able to, as part of the year end package that passed both Houses of Congress and signed by the president. We’re able to repeal the health insurance tax, which was a tax on insurance companies, but really it directly hits small businesses.
Karen Kerrigan: It was targeted towards small group market and so that’s been lifted and we should see some relief for small business owners over the next year or so. A lot of little things like that that are taking place. Short term plans, which are not for everyone, but we believe that transitional plans in the marketplace. If you’re currently work for a business, either a big business or another business and want to start your own business and you want to have some type of health coverage, making these short term limited duration plans, these transition plans a little bit more practical really helps that person to take a risk and say, look, I’ve got something, I’m ready to jump out in the marketplace. Because actually not having healthcare is a big reason why a lot of people don’t start businesses. But it could, as you know John, you’re right.
Karen Kerrigan: I mean, like you said, it looks like we’re a little bit of turmoil. It depends on the election and what happens in 2020 because most of the candidates, the democratic candidates, have some form of Medicare for all or something like that, or Medicare for some, as I call it. And that will mean more government control of the health care. And from our perspective that is served in many instances to drive costs higher. But there have been some gains made, there’s more to come. There’s definitely more that needs to be done. But there’s a host of things that have been done that were just, the market really has to start embracing these and there’ll be more access to this type of plans by small businesses once we see the associated health plans go full board.
Karen Kerrigan: But the other piece of that, John, I don’t need to belabor this, but is that some of the States are actually suing the government on association health plans for example, and saying, well, the Trump administration exceeded its statutory boundaries. It doesn’t have the right to do this. So when there is a lawsuit involved, that sort of stops some of these things from actually reaching the market. But your observation is absolutely correct in terms of there is turmoil. And I think we’ll continue to see that if we do have some big election changes in 2020.
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John Jantsch: So move on. Let’s move on to another topic.
Karen Kerrigan: Yeah.
John Jantsch: We as a society, country, move more and more to knowledge and digital workers, one of the real challenges I’m seeing with a lot of businesses that still need skilled labor, they’re really having trouble finding it. The remodeling contractor is having trouble finding carpenters because people aren’t going to school to be carpenters anymore. How would you suggest, I mean, I assume we’re still going to need remodeling contractors for a while. What are you hearing or what initiatives are you working on really to try to kind of keep those types of industries and those types of training programs afloat?
Karen Kerrigan: You’re right. John, we hear this from every single one of our members and when I travel the country, their biggest challenge or their pain point is, I talked about taxes, regulation, healthcare, but that was more involved with like sort of on the government side. But in terms of the operation of their business it’s their number one issue. It’s finding and keeping the employees that they need to operate their businesses. And many of them are missing out on growth opportunities because they just can’t find the people, the skilled employees or even the employees to work in their businesses. And that’s across all industries. It’s one of these issues, I think, that really is… there are no short term solutions to it. But I think a lot of what the Congress on a bipartisan basis has done to work together along with the administration. I think are really making a difference or will make a difference and have in terms of expanding and modernizing a lot of the apprenticeship programs to include more high tech to include more of the workers that are going to be needed to build out 5G, the 5G infrastructure in this country.
Karen Kerrigan: We anticipate 120,000 more workers are going to be needed, skilled workers, to build out 5G which is incredibly important to small business and to our competitiveness to have that next generation of mobile networks. The other pieces is modernizing some of the laws. For example involving grants, Pell grants and student loans is student loans have primarily been given to students who are going to four year universities. Well why can’t we change that where students can use those type of resources or those funds to do some type of training program, apprentices training program to pursue the training that they need to go into a skills trade. I think the big piece also is it’s culturally it’s just the value of all work. And that starts a lot as I meet with small business owners throughout the country and we’re in some of these small towns a lot is, well gee, the parents are saying, well you have to go to college or you don’t need… you shouldn’t be working in this manufacturing plant, it’s harbor.
Karen Kerrigan: It’s like they’re, in terms of this type of work, I mean it’s good paying work. It’s sort of like what the child’s passion is or what they want to do. The parents, what they want the kids to do shouldn’t replace that. So I think it’s really this whole value of all type of work in this country and look at the wages are getting there. I mean they’re becoming very competitive for all this type of work. And then of course immigration. We’re big supporters, we’re a pro-immigration organization. We do believe that there does need to be immigration reform as some of the programs, the H1B visas and all of that. But we also support increased immigration into the country because if you’re going to have a growing economy and if we’re going to have increased jobs, we need more people to come into the country who can fill those jobs. So we’re fully supportive of that and we continue to push more immigration as a solution to our workforce shortages.
John Jantsch: Are there any policies or regulations that you’re working on right now that are kind of hot for you because you feel like they’re really holding small businesses back?
Karen Kerrigan: Well, yeah, there’s a number of them I think on the… Well, one big piece that we work on in terms of encouraging entrepreneurship and supporting small businesses to scale is access to capital. And it’s one of our core issues that we’ve been working on. We, unfortunately there was a huge bill jobs act 3.0 that passed the house in the last Congress. Only four people voted against it. And it was a package of about 30 bills that would improve a lot of the securities laws to make them more modern and it would improve capital markets, capital formation and that didn’t go anywhere in the Senate unfortunately. So we’re working from scratch and we are building support both at the FCC and also in both houses on making some more improvement to debt inequity based crowd funding because we led the charge on making debt inequity based crowdfunding legal.
Karen Kerrigan: It took four years John, to get those regulations implemented. It was crazy, but now we’re starting to see some legs and some momentum around crowd funding, about 2000 startups or small businesses have used title three crowd funding, which is allowing ordinary investors to invest in the businesses that they believe in on regulated platforms. And this is a good thing, but it’s still a little bit too regulatory, still looks too costly. We want to increase the amount of money that can be raised from one million to 10 million because the average seed round for a startup is about 2.5 million. So that is something we’re working on in terms of taking this proven model, there’s been no fraud and saying, gee, we’ve got to make this better and we need to make it better for more businesses and more practical for more businesses to use.
Karen Kerrigan: So that’s both a regulatory and a legislative thing. We also are working on with the National Labor Relations Board on what’s called the Joint Employer Rule, which sort of makes a very restrictive around the definition of an employee and whether they’re an independent contractor and the relationship between the franchise and the franchisee and it’s really hurting entrepreneurship and new franchise development and basically lot of compliance burden involved with that. So the NLRB, the National Labor Relations Board should be coming out with a new rule on that. And we’re working on that. And then there’s a lot of regulatory things the Trump administration is doing and that’s where the action is going to be, John, because we do see this stalemate between the House and the Senate this year and there are some regulatory improvements that the administration is working on in terms of the National Environmental Policy Act that would modernize that and make it easier for projects to be improved.
Karen Kerrigan: This is really important to building out our nation’s infrastructure and getting some of these stalled infrastructure projects going. That’s a big initiative of ours. And we’re also working on, well there’s a whole host of things that I would encourage people to visit sbecouncil.org to sort of take a look at our agenda. But we’re also very much involved with getting… we’re moving barriers to 5G deployment so that we can get this next generation of mobile networks up and going. So we have faster speeds, more wireless service choices, more affordable speeds. It’s going to be really transformative for small businesses and entrepreneurs to have 5G to allow them to use augmented reality and virtual reality. To have customers to be able to actually try on clothes in the comfort of their own home or actually engaged with their products and services so that they can make that sale right away.
Karen Kerrigan: So that is another thing that we think, gee, we can work on without sort of having this partisan divide between the House and the Senate where there’s actually bipartisan support to move forward. And then trade is another thing. There’s going to be agreements with the UK and India and the EU and John, it’s mostly small businesses that are engaged in global markets and more access they have to global markets and the barriers get taken down. Then they could grow more, invest more and instead of to do what they do best for our economy. So that’s just a little snapshot I’m going on and on like a Washington person would do on the floor of the House or the Senate. My apologies.
John Jantsch: Well that’s all right. We covered a lot of ground there. So Karen, we have run out of time. Tell people where they can find out more about the SBE Council.
Karen Kerrigan: Yes. You bet, John. So, SBEcouncil.org and you can follow us on Twitter @SBEcouncil, LinkedIn SBEcouncil, the same thing for Facebook as well, SBE Council. Please follow us on our website SBE Council. You could sign up our E news for free to keep you updated on all the things that we’re working on that impact your business, small business and entrepreneurship in general.
John Jantsch: Awesome. Well thanks Karen for stopping by and hopefully we’ll see ya next time I’m in Washington.
Karen Kerrigan: You bet, John. Hope to see you as well.
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