President Trump’s selection of Linda McMahon as the head of the Small Business Administration (SBA) is good news for entrepreneurs. She knows what it means to be a successful entrepreneur, taking her company, World Wrestling Entertainment (WWE), from a 13-person operation to a publicly traded operation with more than 800 employees and a market value of about $1.5 billion during a 30-year period.
Ms. McMahon and Mr. Trump know that small businesses are the engine that drives our nation’s economy. In 2010 there were 27.9 million small, independent businesses with fewer than 500 employees. These companies represent 99.7 percent of U.S. employer firms and are owned by women, minorities, veterans, young people and senior citizens, among others. On the downside, according to the SBA, only half of these new establishments survive five years or more, and only a third last 10 years or more.
As a successful entrepreneur who has started four small businesses and sold one to a Fortune 100 company, I know the challenges facing small businesses and what the SBA needs to do moving forward. I offer the following recommendations to Ms. McMahon:
• Encourage small businesses to bootstrap start-up costs. Too many entrepreneurs borrow heavily and then face losing ownership because they don’t have a clear idea on how they plan to generate revenue or make a profit. The SBA can help by expanding their training and support systems around capital, cost and control.
• Establish a nationwide accelerator program like Y-Combinator. Consider establishing parameters for investing growth capital in exchange for a moderate equity stake with the focus on job creation.
• Instigate and plan a White House Small Business Summit that includes a comprehensive tool kit for new business formation and recognition for achievement, profitability and sustainability. It will send a signal that the Trump administration is serious about supporting small business.
• Amend the tax code. The tax rate on S corporations, for example, is around 26 percent. This is too high. The Trump administration has already indicated that it will lower taxes on businesses.
• Roll back anti-business regulations and make sure any new regulations are small-business friendly.
• Find a viable alternative to Obamacare that will help small businesses offer quality health care to their employees.
• Emphasize how small businesses can develop a realistic budget and operate within it. Many small businesses fail because they don’t keep a stranglehold on salaries and operating expenses.
• Increase small businesses’ share of federal government procurement. In 2011, 21.7 percent of federal government small-business-eligible purchases went to small business. We need to increase this number and level the playing field, making it easier for small businesses, particularly women- or minority-owned businesses to compete for government contracts.
I am confident that Ms. McMahon will do a great job at the SBA. But small businesses need to reach out to her office and let her know what challenges they face and how she can help them. It is imperative for the growth of our nation’s economy that small businesses thrive.
• Ed “Skip” McLaughlin is the author of “The Purpose is Profit: The Truth About Starting and Building Your Own Business” (Greenleaf Book Group Press, 2016).