The Government’s Impact on Small Business—Stay Tuned!

The last time we covered small business in depth was in December 2020. Our aim was to see how small business—as an industry—was faring through the Covid Pandemic. Our previous reporting indicated that the small business sector has been experiencing a steady decline since 2008.

As a point of reference, in 2008 53% of the US economy was produced by small business.  A report issued by the Small Business Administration (SBA) in January 2019 (pre-pandemic) showed that small businesses accounted for 44 percent of U.S. economic activity. 

Longtime Washington, D.C.-based small business attorney Shavon J. Smith says that entrepreneurs are being hit the hardest by economic uncertainty caused by the Trump administration’s erratic policies over its first two months. 

Smith, founder of SJS Law Firm in Washington, D.C., frequently works with small business owners who have told her they are scrapping multi-year growth and strategic plans amid economic anxiety. This anxiety has been worsened by continued inflation and reduced consumer spending. Smith advises that business owners remain agile and develop backup plans.

“One of the drivers of this economic uncertainty is recent Executive Orders and decisions by President Trump,” she added. “Small business owners who are struggling right now need to factor continued uncertainty into their plans for the near future.”

In the current political state, the slash and burn approach to downsizing governmental agencies might mean the Small Business Administration (SBA) has been decimated, if not, completely eradicated. The full impact of what is happening to the SBA and the small businesses it serves needs to be studied. It is very likely that the impact of wildly fluctuating markets has caused the wheels of small business to seize up. 

Smith notes that a recent survey of small business owners by the National Federation of Independent Business found that their uncertainty over the future was the second highest since the question was first asked in 1973.

Historically, the three main issues negatively impacting small business were healthcare, taxes and funding. Nearly fifty-five years later, these same three issues that negatively impact small businesses have actually grown worse—a reality that needs to be examined during 2025. It is also important to consider that the largest chunk of Trump’s tax cuts—during his first term—went to large corporations and the top 1%, throwing small businesses under the bus. 

“Small businesses have less margin for error than big multi-national corporations,” said Smith, whose new business advice book will soon include a bonus chapter about the Trump administration. “If one of their core products is affected by a new tariff or a retaliatory action from another country, that could be financially devastating, while a larger competitor might just shift its emphasis to another product.”

Smith points out that tariffs on some of America’s most significant economic partners, ramped-up immigration enforcement and low consumer confidence create a difficult environment for small business owners.

The 2025 United States federal budget currently pending before Congress purportedly sets the stage to extend the previous (2016) Trump tax cuts, and provide new tax relief to American workers, small businesses, and families.

We are committed to telling the stories of small businesses who are pressing on in the face of great adversity.  In the coming year, we will be keeping a close watch on economic trends impacting small business. Our August 2025 Magazine—Startup Nation—will focus on entrepreneurship, funding, and best practices for helping a small business to thrive. 

Editor’s Note: Shavon J. Smith, Esq. is known for working with business owners, start-ups, and entrepreneurs on various legal issues. She has orchestrated multi-million-dollar commercial real estate deals, corporate governance disputes, end-to-end contract support, and employment issues. She is also the author of the new small-business advice book “Tell Me About the Hard Part.”  To learn more about Ms. Smith’s law practice visit: https://www.thesjslawfirm.com/about.