October 2008
Taking a Poll
What's on the mind of small business owners

By Annemarie Donnelly

Jeff McKinney, co-owner of Jeff's Garage in Fairport Harbor, worries taxes will affect his ability to do business. His concerns and thos of other local business owners are similar to fears nationwide. Other hot-button issues include the economy, national security, health care and the war in Iraq. Photo by Marc Golub

As the November elections approach, the topic of politics and the presidential, state and local candidates is daily fodder for the office water cooler as well as the carpool. Whether it’s an election year or not, political party agendas are always packed with issues vital to business owners – one of America’s largest voting blocks.

According to the National Federation of Independent Business (NFIB), the economy continues to rank as the most important issue for small-business owners during this presidential election year. Forty-three percent of owners nationwide believe that the economy is the No. 1 issue for this year’s candidates. Other top issues that ranked a distant second include: national security (11 percent), health care (10 percent) and the war in Iraq (10 percent).

Most small business owners in Lake County interviewed mirrored the concerns of their colleagues across the country. Top priorities named include several hot-button issues:

• Not surprisingly, taxes - including estate taxes, sales taxes and personal taxes for the wealthy

• Controlling the skyrocketing cost of health coverage and finding ways of making it more affordable to small businesses

• Reducing mandated, regulatory burdens on small businesses, such as healthcare policies and mandated sick leave

One of the most common concerns for local business owners has already been resolved, with the ballot drop of Issue 4, the mandated paid sick leave proposal, which would have required businesses of 25 employees or more to guarantee an extra seven days a year paid sick leave. On Sept. 4, the Service Employees International Union (SEIU) decided to pull the issue from the ballot after heavy pressure from business owners and chambers of commerce statewide.

“I hate any kind of unfunded government mandate, such as universal health care or the mandated sick leave policy,” says Eric Barbe, owner and president of Euclid Precision Grinding in Willoughby. “Although for me, the healthcare policy could be a double-edged sword that would actually require some of my competitors to increase their standards in order meets mine,” he says, explaining that his company provides health care to employees. “But the more the government meddles, typically, the worse it gets.”

Jeff McKinney, co-owner of Jeff’s Garage and Fairport Harbor councilman, echoes those thoughts.

“I am very happy as a business owner and a member of council that they did away with the mandated sick leave policy,” he says. “This would have made Ohio much less competitive, as well as hurt municipalities, which are already facing tough budget constraints.”

But McKinney says taxes are the No. 1 issue that concerns him at every level of government. In his case, the installation of an estate tax could potentially force him to close his doors.

“I am the second generation operating this business,” he says. “My parents are retired, but are still technically owners of the business. If they would instate the death tax, I could have to pay 50 percent of the value of the business -- not pocket change.”

With the business, property and building, McKinney estimates his costs could be as much as a half million dollars.

In Barbe’s opinion, however, national politics has little or no influence on long-term marketplace economics, with taxes being the No. 1 important exception.

“Long term, I don’t think the government has a lot of effect on the economy except for taxes and special favors,” he says.

Other business owners would be affected by a mandated health care program. According to national statistics, nearly 3 out of 4 small-business owners, 72 percent, do not offer health care to their employees. In addition, 70 percent of owners say finding affordable health care for themselves and their employees is very or somewhat difficult. Lake County small-business owners face a similar reality.

McKinney believes such a policy could impact his business with negative affects for employees. With 10 employees, he has already been forced to suspend the half-policy costs his company used to pay for employees.

“We still have it available to employees but don’t contribute to it,” he says. “The costs were too astronomical. If we are forced to provide the insurance, the money to pay for it will have to come from somewhere. It’s the employees that will be hurt through downsizing, or by leavings posts unfulfilled.”

Fuel and the economy

Although consumers are gradually losing their sticker-shock at seeing $4 gas prices at the pump, rising fuel costs remain closely tied to an already slumping economy. Most companies are feeling the pinch in fuel costs, no matter what product or service they offer.

“The price of gas is huge for us, because as a mobile shredding company, we are out on the road,” says Barbara Adoryan, co-owner of ABC Mobile Shredding in Eastlake.

Luckily, says Adoryan, most customers are willing to be flexible and coordinate schedules that can keep the company making visits when they are near other customers.

“We are doing everything we can to work with our customers one-on-one, so we can provide the best prices for them,” she says.

Julio Pelsmajer, owner of Draperies by Springcrest in Willoughby, believes addressing alternative fuels is one of the most important ways to improve the economy and the economic climate over the long term.

“We’re being held hostage to oil producing nations,” he says. “The moment we change that, all their power will disappear. We need to empower research firms. Regardless of how much oil we drill from within, we still cannot control the cost of oil because so much comes from overseas. And we need to know that it may take 10 years to come up with green alternative resources.”

Dave Verbic, owner of Accurate Metal in Mentor,   says while higher oil costs can decrease some short-term business, it can also create business elsewhere.

“When the cost of fuel goes up, it increases business for anything that has to do with drilling, so you can’t be sure if it’s a good or a bad thing,” he says. “Plus, it’s slowing people down from wasting oil, as we’re the most wasteful country in the world.”

A lowered gas cost would simply lead Americans back to the bad habits of the past, Verbic says.

“If our economy works on a dollar and sense rationality, when it costs more to waste it than to stop wasting it, everyone will jump on the bandwagon and try to find alternative fuels and methods.”

Still, Adoryan believes that while controlling gas prices is important, job creation is more vital yet.

“We really need to stimulate jobs in the Ohio area,” she says. “Anytime new business comes into the area we all benefit – it will help us all to grow.”

Stopping the brain drain

From tax incentives or abatements, to reducing taxes and worker’s compensation rates, many local businesspeople feel that Ohio is not providing the best climate for potential businesses. The result? Reduced jobs, population and manpower.

“Between the Ohio tax rate and worker’s compensation rate, which continues to climb even for those in good standing, it really comes down to the mismanagement of funds from the government,” McKinney says. “We really need to ask ourselves, ‘Is a government program really the best program?’ It would be nice to privatize worker’s compensation and make it more competitive.”

Others are concerned about the educated young people and skilled workers who continue to leave the region.

“Obviously they keep talking about the brain drain, and the fact that people don’t want to work in Ohio. But it seems like Ohio is anti-job,” McKinney said. “They say they want to bring jobs into the area, but do things that make it tough to do business. To be perfectly honest, if I hadn’t been in the family business, chances are I’d be in some other part of the country.”

Harry Allen, owner of Great Lakes Power in Mentor and chairman of the Lake County Port Authority,   has been a longtime proponent of improving the area in order to draw increased business, population and tourism.

“It’s a common denominator for everyone; we have a commitment to manufacturing in the state of Ohio, so we want to continue to get an educated workforce. That’s No. 1,” Allen says. “But I think competitively priced resources from gas to water would be a huge means to bringing in new business. We should be able to get some type of industry incentives from our major providers to work with us to provide a competitive environment here.”

With all of the communities in the state vying for state dollars, Allen says Lake County has not done a good job of letting the state know the potential in Northeast Ohio.

“We have to let people know you can get a real bang for the buck here for the state of Ohio,” he says. “We need to attract smart people, and get people attracted to an area with one of the greater assets you can have. If we define a lifestyle around a lake, we have so much to offer.”

Too much legislation

One theme resonated among local businesspeople, a belief that there is simply too much legislation that can keep businesses from being successful.

Eric Barbe sums it up best.

“It’s not so much specific issues anymore,” he says. “It’s more and more the whole role of government, and the fact that there’s way too much of it. And neither party seems to want to do anything about it.”

Perhaps the results on Election Day will provide some indications as to what’s coming next in the form of government policies. Or, perhaps not.h

Annemarie Donnelly is a Mentor freelance writer.