Business Considerations in a Post-Election Economy

NOV
17
2016
NOV 17, 2016

by Kenny Polcari, CFO Integral Board Group

Ok…now that it is over and the ballots have been cast, what does a Trump Presidency mean for small business and small business owners? Like him or not, the country will now have to get used to the idea that The Trump Organization will be at the helm. How will this affect you?

The prognostications of a market crash have yet to ring true. While global markets came under undue stress on election night, Asian markets falling at one point 7% - limit down – were the first to react to the news. Was this the correction that was predicted? Were global investors expressing such disdain for the American choice that they were voting with their feet and fleeing the equity markets?

That was short lived. In fact, it was only a few hours of nail biting drama. Once he made his victory speech and appeared more conciliatory, the markets stabilized and a minor rally ensued. Europeans were the next to react, and while investors in Europe were skeptical, they were not marching in unison for the doors at all. By the time US markets were set to open on Wednesday morning, the futures markets were not signaling disaster at all. While the day began with some weakness, investors did not abandon stocks at all. In fact, once the markets realized that maybe, just maybe, there is a silver lining to this upset – sellers backed off and the buyers went rushing in – and by week’s end, had taken the market to near new highs. In fact, the Dow did close the week at a new high while the S&P hovers just below. Are investors betting on less regulation and more pro-growth fiscal stimulative policies to get this economy into escape velocity?

[Escape velocity in physics means to generate enough speed to break away from the gravitational pull of the earth, while in economics it means generating enough economic growth to escape a recession and return the country to a more normal economic growth rate – for us that would be in the 3% - 4% range consistently.]

So, what does it mean for you?

Health Insurance: Now while Trump has promised to do away with Obamacare, the jury is still out. Is the whole program getting scrapped or will parts of it survive while other parts remain? Again, it is too early to tell, but if you have more than 50 employees and are now forced into providing health insurance, any repeal of this law may be seen as a welcome relief, while the counter argument is that if the very existence of the ACA has been helpful to your business because individuals can now buy health insurance directly from the exchanges, then a complete repeal of this law could end up creating a massive headache for you.

Minimum wage concerns?: Trump does support a minimum wage of $10/hr and there is pressure on the country to go even higher. Republicans as a whole do not support raising the minimum wage, but this could be a battle that rages on. Remember though, this very basic increase in cost structure will cause new technological innovation that threatens the very jobs that the minimum wage is trying to protect.

Expect your business and personal taxes to go down…and that is not a bad thing at all. He has promised a simplified tax code on both sides – business & personal, and that alone should help to stimulate and create growth for all types of businesses large and small. Government programs? Well some of those may be pared back and that is not a bad thing at all, UNLESS your small business is dependent on federal government contracts – then you will need to start reconsidering the ‘balance of power’ of your client list.

Does your workforce depend on a lot of H-1B visa workers?: H-1B visas are ‘non-immigrant’ visas provided under the Immigration and Nationality Act – and it allows US employers to employ graduate level workers in occupations that require theoretical or technical expertise in a range of industries including IT, Finance, Engineering, Medicine and more. If so, a Trump Presidency may cause you some heartache as he has promised to “end forever the use of H1-B visa’s.”

Trade?: Do you manufacture abroad? Whether in Mexico, China or India, we can expect that that may become a bit more difficult or costly for your small business. So maybe it is time to reconsider how the U.S. can help you here. There are sure to be ‘enterprise zones’ in parts of the country where they have been previously hammered. These parts of the country have been devastated by job losses gone to other countries, so maybe Trump will implement incentives to bring those jobs back to the states by creating tax advantaged enterprise zones to restore American competitiveness. We have already seen how this works. Take Detroit – it is in the middle of a renaissance as the state and the federal government have helped to create opportunities for new industry to take root and reestablish competitiveness. Austin, Texas is another city that while not devastated by job losses, it continues to re-invent itself and is consistently rated the #1 city in America for ‘live, work and play’. 

These are just some of the early thoughts on what the Trump Presidency means to businesses large and small. With a solid business strategy that also offers contingency, as well as a savvy board, these challenges can become smooth sailing.

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Kenny Polcari is a Board Member of Integral Board Group  (IBG), a Board Service Provider (BSP) specializing in performance-based, board advisory services for small to mid-market companies in all verticals. Benefits of a Board as a Service (BaaS) include a single entity, accountable as a team, providing cohesive governance and is specifically tied to a company’s performance. IBG improves business performance by providing seasoned advice in the areas that every business will face during all phases of its growth cycles.  http://www.integralbg.com