Biden is taking the wrong approach to small businesses, and many may fail

As inflation rises, small businesses feel the financial crunch

Some small businesses are feeling the financial crunch as inflation rates surge to record highs. One furniture maker in North Carolina says manufacturing materials are much more expensive now than they were a year ago.

As is well documented, small business is the engine driving America’s economy today. It’s the mom-and-pop shops, the burger joints and bars, local professional services and millions of storefronts that we depend on for job creation and for a robust economy.

Unfortunately, just about everything the Biden administration and the leadership in Washington does, from lockdowns to mandates to stoking runaway inflation, seems to destroy the pursuit of the American Dream for small businesses and American entrepreneurs. Remember: all big businesses started out as small businesses, and a negative mindset about small business among political leaders is detrimental to the formation, growth, and survival of small businesses.

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We built Papa John’s into one of the largest pizza companies in the world. Thanks to Reaganomics in the mid-1980s, which supported the small business mindset with tax cuts and regulatory reforms, we had a fighting chance to build our company starting from the broom closet of my dad’s tavern. Unfortunately, if I were trying to start the company today, it would stand very little chance in the anti-business environment cultivated by the Biden administration. In reality, Papa John’s is a large company made up of small business franchisees. 

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Despite the challenges of the lockdowns that started two years ago with the pandemic, Americans have been starting new businesses at a rapid pace over the past few years. With the headwinds these businesses are facing from the policies of this administration and Congress, I’m very concerned that this surge of new businesses will turn into a cascade of business failures because of hostile government policies.

I were trying to start the company today, it would stand very little chance in the anti-business environment cultivated by the Biden administration.

Bidenomics, characterized by out-of-control inflation, artificial labor shortages, over-regulation, and a hostility to entrepreneurialism, is making it virtually impossible for small business owners to succeed. It’s hard enough to get a new business off the ground without the heel of Big Government on your neck. Trying to get helpful policies from the federal government is as difficult as it ever has been.

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Inflation just hit 7.9% on a year-over-year basis, the third month in a row that inflation has set a new 40-year high, and commodities are predicted to go even higher. This is devastating for small businesses, especially those that are just getting started. The last thing you want to do when you’re trying to attract new customers is raise your prices, but small business owners in this economy are being squeezed.

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Small business closing during COVID-19 pandemic. | iStock

The cost of labor and raw materials is going up constantly. Some businesses might have been able to trim their margins to avoid price hikes when inflation first started accelerating, but at this point that’s no longer an option. Wholesale inflation – which affects the prices that businesses pay for raw materials – just hit 10%, the highest level on record.

Unfortunately, the Biden administration isn’t even trying to solve the inflation problem. For months, top White House officials insisted that inflation was just a "transitory phenomenon" brought about by the COVID-19 pandemic. Long after it became apparent that inflation was a much more serious and stubborn problem than the administration initially wanted to acknowledge, the president continued pushing Congress to pass trillions of dollars in new spending. Meanwhile, the government keeps printing money like it’s 2009, injecting trillions of dollars into an economy that’s already overheated and further devaluing the dollar, which goes hand in hand with inflation.

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In fact, one of the main reasons for our current economic crisis is that the Biden administration shoveled money into the economy with an unnecessary round of pandemic "relief" that was more about securing political credit than economic prudence and in fact only about 30% of infrastructure stimulus went to infrastructure. It was mainly a political smokescreen to advance the entitlement welfare agenda of the Biden administration. Trillions of dollars in additional stimulus did nothing but fuel inflation and give workers an incentive to stay home instead of reenter the workforce. It was a double whammy for businesses that were trying to get back on their feet after a year of government-imposed lockdowns.

Small business resort to raising prices to offset skyrocketing inflation

House budget committee ranking member Jason Smith discusses Biden pushing spending agenda despite sky-high inflation and worker shortages on ‘Fox Business Tonight.’

Biden also loves red tape – to the detriment of any businessperson’s success. Although it usually takes years to implement new regulations, Biden made it a top priority to roll back the Trump administration’s efforts to shield business owners from regulatory overreach, and he cut off the Keystone pipeline, driving up energy costs on day one of his administration. Biden revoked a Trump-era executive order mandating the elimination of old regulations for every new one enacted and ended the practice of publishing regulatory guidance online to make it easier for businesses to navigate the labyrinth of federal rules. You can’t carve rotten wood, and you can’t start a successful business when you’re buried under a mountain of red tape.

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We should be building small business entrepreneurs up, not tearing them down. When it comes to small businesses and the millions of American workers they employ, however, the Biden administration is taking exactly the wrong approach. It’s no wonder that only 33% of small business owners approve of the way Biden is handling his job as president, while 67% disapprove.

We should be building small business entrepreneurs up, not tearing them down.

The consequences of these policies will be reverberating through our economy for years to come, because there’s no way to make up for a lost opportunity. The engine of our economy is sputtering, and American workers are struggling. The small businesses that are dying – and those that will never be started – because of this administration’s damaging policies represent millions of jobs lost and dreams destroyed.

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It's never too late, of course, for the profligate spending to stop, inflation to be tamed with the right policies, and regulations to be cut, but that’s regrettably not going to happen with Bidenomics and would unfortunately be too little too late for so many new and struggling businesses across America.

John "Papa John" Schnatter is the founder and former Chairman and CEO of Papa John's Pizza International and a major shareholder in the company.

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