The current presidential campaign has refocused our nation's attention on the economy. Both candidates have different ideas of how to best ignite the American economy and how to tackle issues like the deficit and the unemployment rate. And while Barack Obama and Mitt Romney disagree on many courses of action, they share a common ground in their belief in the opportunity of small business.
In the second presidential debate alone, "small business" was mentioned a total of 21 times and another 23 times in the first debate. As an important engine of the American economy, both candidates described small businesses as a crucial source of new jobs. However despite the wealth of opportunity in entrepreneurism, both for the economy and individuals, creation of new business ventures are severely lacking. Entrepreneurs with good ideas, creative minds and business savvy are faced with an environment that deters the execution of business ideas.
The problem? An overwhelming fear over access to capital fueled by the difficulty of obtaining start-up funds and a general nervousness to willingly assume debt. This looming fear has dissuaded those who contemplate the small business route, and in the end, this only ends up hurting our economy as a whole.
If the presidential candidates want to address the "small business problem," they need to start tackling the issue of capital. Policies must be put in place that eliminate the fear over access to capital, and encourage bright minds to take calculated risks that could end up reaping exponential rewards.
The first step to tackling this problem is addressing the current conversation around debt. As a result of the economic downturn, debt has been chastised as not only a prominent cause, but a symbol of fiscal irresponsibility. This rhetoric, while holding some truth, fails to characterize the important role debt plays in simple economics. Borrowing capital is a common economic practice - we see this in both the private and public sectors in the form of bonds.
It plays an equally important role in the creation of small businesses. It is common practice that one needs to spend money in order to make money. Debt, therefore, is a necessity for any business venture. The problem is not debt, but rather responsible debt. Debt is a double-edged sword and can be a problem if not managed responsibly which is what happened in the recent recession. As leaders, our politicians must be setting the tone for this conversation and honestly addressing debt for both its positives and negatives.
Secondly, we must address loan access in this country. As a franchisor, I continually see that access to capital for our franchise owners has been very difficult. Getting a business loan is near impossible, and many potential franchise owners don't have the extra capital on-hand to front start-up costs on their own. This is concerning because franchises have a much higher rate of success than non-franchise startups. The evaluative process of loans and investments should be based on the viability and track record of the business plan and the person behind it.
It's important to note also, that entrepreneurship is not for everyone. Not everyone can stomach the roller coaster ride of entrepreneurship which carries significant emotional ups and downs as the business struggles to gain profitability. There is much less of a secure path these days than in the past, which makes starting a business either on a shoe string, with private investment money, or even with a bank loan, much more viable of an option these days.
Regardless of what steps are taken to help small businesses get started, nothing is guaranteed: small business failure is common. But this economic climate has shown that nothing is certain, either. If politicians want to foster economic growth and boost the small business community, there needs to be a change in dialogue. In this era of renewed interest in entrepreneurship, our nation's leader must present American's with the opportunity [re]capture a stake in "the American dream"--that is, for Americans to control their own destinies and have a chance at real success.
Nick Friedman is co-founder and president of College Hunks Hauling Junk, the largest and fastest growing US-Based Junk Removal and Moving Franchise Opportunity. He was named Top 30 Entrepreneurs in America Under 30 by INC Magazine, Top 35 Entrepreneurs Under 35 by Bisnow.com, and is co-author of the Amazon best-selling book, "Effortless Entrepreneur." http://nickfriedman.com/