Fiscal Cliff Bickering Bad for Business, Private Companies Tell Washington

Dec. 26, 2012— -- It's ironic that at a time of year when people are traditionally focused on compassion and doing good for one another, our leaders in Washington remain far apart on addressing something that hurts every American business and their employees. Today, while President Obama and Congress once again engage in a game of chicken on the fiscal cliff, private companies are unable to make crucial investments in people and equipment.

Washington has once again, through poisonous dialogue and stubbornness, created a stalemate. We saw this same dynamic with the healthcare debacle. Urgent policy decisions are dragged through the muck of partisan politics for interminable time periods, leaving businesses with no time to plan for what lies ahead. The uncertainty surrounding whether and how the U.S. will avoid automatic spending cuts and tax hikes scheduled to take effect at year end has added to the risk that the 27 million privately held business owners already face daily. The political environment in Washington is so rancid right now that businesses are taking steps to prepare for the worst. They should. You can't expect them to plan for their 2013 and 2014 operations when you throw new policies at them on Dec. 31.

Private companies operate in extremely risky environments that most of us would not accept. If, in the best case scenario, fiscal and public policies were static, the volatile nature of running a business would remain. In this case, Washington adds even more variability to the equation. Business owners already have enough to worry about, and now they're further burdened with how new policies are going to affect their bottom line and discretionary income.

Take, for example, Larry Imeson, who owns and operates the Blowing Rock Grille in the N.C. mountain tourist town of Blowing Rock. He cut back hours for wait staff, cooks and dishwashers in the last month as customer traffic during an already seasonally slow period worsened. "It all comes down to consumer confidence," Imeson says, noting that many customers have expressed doubt Congress will get anything done. "I'm just afraid of what's going to happen in the first quarter."

Robert Baird owns ExhaustCLEAN, an eight-employee firm in Raleigh, N.C., providing commercial kitchen exhaust-system maintenance. In the last six months, he laid off a 14-year employee amid the economic uncertainty and a pullback by restaurants. Baird wants to fill the post again. "It's not going to change the economy, but every little bit helps."

But he cannot hire until Washington resolves the uncertainty, because he cannot plan. "My first priority, really even more than the company making a profit, is taking care of the people who work for me," he says. "At the end of the day, the company has to survive for all of the other employees to maintain [their jobs]."

While Imeson and Baird each have strong feelings about which side should yield more, they mostly want Congress and President Obama to get something worked out. "I hope they come to some agreement, but they seem to be at totally distant ends of the spectrum," Imeson says.

Private businesses, which create more than 65 percent of new jobs, operate in a very simple way: Owners look at what revenues are going to be over the next 12 or 24 months, and they look at expenses. If those are good and seem stable, and owners have a good idea of what taxes are going to be, they will hire people. Business owners would prefer to have a bad policy identified early than to have a good one put in place at the last minute, leaving them no time to plan to hire people and invest in growth.

It's popular to blame Washington for everything, but from a private-company perspective, it seems as if both sides in this case are doing more bickering and posturing than proposing options. If you look over the past 200-plus years of American history, we are in an unprecedented time where members of each party are so convinced of their moral correctness, that they're unwilling to compromise. For centuries, cooperation has traditionally been the fulcrum of our ability to get things done.

At the Constitutional Convention, Hamilton and Jefferson had deeply divergent views regarding the role of the federal government, the assumption of debts incurred during the American Revolution, and even where the Capitol should someday be located (aptly later put in a swamp in northern Virginia). Yet, they came together to find solutions for the greater good. Even Ronald Reagan, the iconic conservative figure, was able to work out deals with Tip O'Neill, the House Democratic majority leader.

Today, if I'm a politician in either party, and I don't agree with you, my view is that you are fundamentally wrong, not just a person who might have a different set of beliefs from my own. If I can label you as unreasonable or perhaps even evil, then I conveniently eliminate the need to hear you out and work with you. Some people reading this might contend that working with others leads to a kind of moral relativism, where there is no right and no wrong. My view is that people of good will with strong views can vehemently oppose one another's views, and still be able to compromise on most issues, certainly on fiscal ones.

The message to Congress is simple: Adapt. Figure it out. Make the tough choices. It's what business owners do every day, and it's what Americans have done for centuries – even when it comes to really hard problems. Tackle the problem instead of each other. Give businesses as much time as possible to plan ahead so they can do what they want to do: Generate more income (which can be taxed) and hire more people.

Edward Burke wrote that "all government—indeed, every human benefit and enjoyment, every virtue and every prudent act—is founded on compromise and barter." We need to heed these words now more than ever.

The opinions here are those of the writers and not those of ABC News.

Mary Ellen Biery, Research Specialist at Sageworks, contributed to this article.

Brian Hamilton is the co-founder and chief executive officer of Sageworks and a noted expert on privately held companies. He is an original architect of the company's artificial intelligence technology, FIND, which is used by approximately 700 financial institutions and 5,000 CPA firms to perform financial analysis of privately held companies. He is currently a guest columnist for Forbes and Inc.com. Brian also oversees Inmates to Entrepreneurs, a community outreach program focused on teaching ex-offenders to start low-capital businesses.