The Political Pull: How Political Decisions Can Affect Your Finances

Despite the fact newly emerging entrepreneurs of small businesses think of themselves as exerting independence, at some point they must come to realize that the financial success of their small business is subject to the political environment of their intended operation and that their aspiring efforts for financial success are greatly affected by political decisions. In addition to self-preparedness, business savvy and being equipped with a well developed business plan, pursuing small business dreams of acquiring financial success entails determining whether political decisions will support or end those dreams. Newly engendered small business aims trying to balance the demands of time needed for product branding and establishing a growing customer base, while maintaining adherence to required financial and regulatory compliance, can be overwhelming.

The Political Pull: How Political Decisions Can Affect Your Finances.

Political decisions affect the operational and financial running of small businesses. A 2009 report by the Presidential Council of Economic Advisors stated that the big business industries pay 18% less for insurance policies for an employee than a small business. Unless there are political decisions aimed to correct this difference, the finances of small businesses will likely be more affected by a greater cost for health care and other benefits. Other obstacles facing the financial status of small businesses include: those political decisions controlling interest rate policies that can decrease money value; political decisions affecting economic programs that result in poor sales; political decisions of monetary policies affecting interest rates; political decisions for employee benefit legality and authority requirements contributing to the cost of labor; political decisions affecting the obligations to government regulations regarding certifications, permits and licensing; political decisions favoring the growth of big business competitors; political decisions on education, training support and funding that influence the quality of labor; political decisions on taxes, regulation reforms, rights of property, immigration, social and educational funding and those political decisions affecting the financial practices and decisions of small businesses in hiring employees, their capital spending, increasing inventory and decisions to apply for credit.

The 2010 political decision to allocate to small businesses a 100%, one year, short-term deduction for capital expenses is highly favorable for small businesses interested in reinvesting in their business. This political decision can encourage stimulation of the economy and reduce the ‘revolving door’ effect of perpetual unemployment, as well as strengthen consumer demand. Small businesses need to continue their awareness of political decisions concerning proposals directed to increasing small businesses through invested tax credits, deductions for capital expenses and promotion incentives that could lead to creating increased small businesses. Political decisions based on policies intended for good purposes sometimes fail to meet their objectives.

For instance, if the government decides to increase lending to small businesses but neglects to see demand for loans is down despite sufficient credit allowance but because there is a lack of customers, small businesses are reluctant to apply for the loans. 

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