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	<title> - INSPIRING ENTREPRENEURS: LEARNING FROM THE EXPERTS</title>
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	[House Hearing, 114 Congress]
	[From the U.S. Government Publishing Office]










	INSPIRING ENTREPRENEURS: LEARNING FROM THE EXPERTS

	=======================================================================

	HEARING

	before the

	COMMITTEE ON SMALL BUSINESS
	UNITED STATES
	HOUSE OF REPRESENTATIVES

	ONE HUNDRED FOURTEENTH CONGRESS

	SECOND SESSION

	__________

	HEARING HELD
	MAY 11, 2016
	__________


	[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


	Small Business Committee Document Number 114-059
	Available via the GPO Website: www.fdsys.gov






	______

	U.S. GOVERNMENT PUBLISHING OFFICE

	20-074 WASHINGTON : 2016
	-----------------------------------------------------------------------
	For sale by the Superintendent of Documents, U.S. Government Publishing
	Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
	DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
	Washington, DC 20402-0001
























































	HOUSE COMMITTEE ON SMALL BUSINESS

	STEVE CHABOT, Ohio, Chairman
	STEVE KING, Iowa
	BLAINE LUETKEMEYER, Missouri
	RICHARD HANNA, New York
	TIM HUELSKAMP, Kansas
	CHRIS GIBSON, New York
	DAVE BRAT, Virginia
	AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
	STEVE KNIGHT, California
	CARLOS CURBELO, Florida
	CRESENT HARDY, Nevada
	NYDIA VELAZQUEZ, New York, Ranking Member
	YVETTE CLARK, New York
	JUDY CHU, California
	JANICE HAHN, California
	DONALD PAYNE, JR., New Jersey
	GRACE MENG, New York
	BRENDA LAWRENCE, Michigan
	ALMA ADAMS, North Carolina
	SETH MOULTON, Massachusetts
	MARK TAKAI, Hawaii

	Kevin Fitzpatrick, Staff Director
	Jan Oliver, Chief Counsel
	Michael Day, Minority Staff Director



























	C O N T E N T S

	OPENING STATEMENTS

	Page
	Hon. Steve Chabot................................................ 1
	Hon. Nydia Velazquez............................................. 2

	WITNESSES

	Ms. JJ Ramberg, Host, MSNBC ``Your Business'', New York City, New
	York........................................................... 4
	Mr. Ramon Ray, Editor, Smart Hustle Magazine, Elizabeth, New
	Jersey......................................................... 6
	Ms. Susan Solovic, The Small Business Expert & Advocate, St.
	Louis, Missouri................................................ 8
	Ms. Melinda Emerson, Founder & CEO, Quintessence Group & Melinda
	F. Emerson Foundation, Drexel Hill, Pennsylvania............... 10

	APPENDIX

	Prepared Statements:
	Ms. JJ Ramberg, Host, MSNBC ``Your Business'', New York City,
	New York................................................... 32
	Mr. Ramon Ray, Editor, Smart Hustle Magazine, Elizabeth, New
	Jersey..................................................... 36
	Ms. Susan Solovic, The Small Business Expert & Advocate, St.
	Louis, Missouri............................................ 38
	Ms. Melinda Emerson, Founder & CEO, Quintessence Group &
	Melinda F. Emerson Foundation, Drexel Hill, Pennsylvania... 46
	Questions for the Record:
	None.
	Answers for the Record:
	None.
	Additional Material for the Record:
	None.

	INSPIRING ENTREPRENEURS: LEARNING FROM THE EXPERTS

	----------


	WEDNESDAY, MAY 11, 2016

	House of Representatives,
	Committee on Small Business,
	Washington, DC.
	The Committee met, pursuant to call, at 11:00 a.m., in Room
	2360, Rayburn House Office Building. Hon. Steve Chabot
	[chairman of the Committee] presiding.
	Present: Representatives Chabot, Hanna, Luetkemeyer,
	Gibson, Brat, Hardy, Kelly, Radewagen, Velazquez, Hahn, Adams,
	and Lawrence.
	Chairman CHABOT. Good morning. The Committee will come to
	order. I want to thank all the witnesses for being here and we
	will get to you very shortly.
	Last week, our country recognized National Small Business
	Week, a time when small businesses and entrepreneurs are
	celebrated for the tremendous impact they have on every
	community all across America. Setting aside a week to highlight
	the importance of small businesses services is a reminder as to
	how crucial they are to our national prosperity and economic
	security. Here at the Small Business Committee we are reminded
	of this every day.
	It is often said that when small businesses succeed,
	America succeeds. At the very heart of small businesses, what
	allows them to succeed, are the people, the men and women of
	this country who set out with an idea and the desire to turn
	that idea into a reality. It is this enduring spirit of
	American innovation that continues to breathe life into our
	economy and create the jobs no government program can.
	Today, the Committee is excited to have before it what is
	truly an expert panel. Our witnesses today are prominent and
	passionate voices in the small business community all across
	America. Each of our witnesses have taken the lessons learned
	from building their own businesses and provide guidance to
	small business owners and aspiring entrepreneurs. The
	difference between a good idea and a good business is
	execution, and who do America's small businesses turn to for
	help developing and executing a business plan? They turn to
	J.J. Ramberg, to Ramon Ray, to Susan Solovic.
	Ms. SOLOVIC. Solovic.
	Chairman CHABOT. I apologize. They pronounce it correctly
	and they turn to her, and to Melinda Emerson, and today, so do
	we.
	Through their work, our witnesses have helped to inspire
	and shape countless small businesses all across America. They
	have their fingers on the small business pulse and can offer
	unique perspectives as to the challenges small business owners
	face every day. This Committee is eager to hear more about the
	great work our witnesses are doing to help small businesses and
	grow the conversation of small business success stories.
	I would like to thank all of the witnesses for coming here
	today. We will stop talking soon and turn to you all, and we
	will listen, but at this point I would like to yield to our
	ranking member, Ms. Velazquez, for her opening remarks.
	Ms. VELAZQUEZ. Thank you, Mr. Chairman.
	Our nation's culture, character, and economy have always
	been defined by entrepreneurship. Today, 28 million small firms
	drive growth and create opportunity in major cities, rural
	areas, and every community in between. Small businesses employ
	over half of all private sector employees. Their hard work,
	innovation, and ingenuity to create new products and open new
	markets contributes to all economic sectors.
	However, forming a new business is an inherently risky
	undertaking, and there are many obstacles entrepreneurs face
	when getting started. From accessing capital to navigating an
	uncertain tax code, to managing operations, to understanding
	their regulatory landscape, it is not as simple as it once was
	to start a small business. As a result, we have seen the face
	of small businesses change. Small businesses have always been
	dynamic, but in today's world, that rate of change is
	accelerating. Many entrepreneurs no longer choose the
	traditional brick-and-mortar business model. Instead, they opt
	for sole proprietorship and online models that provide greater
	flexibility. These structures allow many entrepreneurs to
	launch a new venture while avoiding risks, like sales revenue
	or cash flow, that are primary concerns for more traditional
	firms.
	We have also seen the face of entrepreneurship evolve to
	more accurately reflect our nation's diversity. The rate of
	minority- and women-owned small business growth continues
	outpacing other business growth. Released last year, the 2012
	Survey of Business Owners found that the percentage of
	minority-owned firms increased from 22 percent to 29 percent
	over a 5-year period. Meanwhile, the number of other businesses
	declined by 1.1 million. Women-owned firms also experienced
	higher growth rates than their male counterparts as their
	market share increased by more than 2 million firms.
	These are positive trends, but minority- and women-owned
	firms continue facing barriers to formation and growth. They
	find it harder to secure financing and often face unfair
	treatment in the marketplace from potential customers and
	vendors.
	If the economy is to benefit from the high rates of
	business formation and the job creation that follows, more must
	be done to ensure hurdles like these are removed. One role for
	this committee is ensuring these firms can access resources to
	overcome those barriers and expand opportunities for all
	Americans.
	In more than two decades on this committee, I have seen
	firsthand the ingenuity and resilience of small business
	owners, not only in my district, but across the nation. These
	firms can accomplish great things if they have the right tools.
	During today's hearings, some of the country's leading
	small business experts and advocates can provide us with useful
	guidance on how to better accomplish that goal. In that regard,
	I want to thank all the witnesses who traveled here today for
	their participation and valuable perspective.
	Thank you again, Mr. Chairman, and I yield back.
	Chairman CHABOT. Thank you very much. The gentlelady yields
	back.
	Now, before I introduce the panel, no more speeches, but I
	would like to just kind of inform you all about our lighting
	system. You all have probably been informed that you have 5
	minutes each to testify. The lights there will help you to stay
	within that if at all possible. The green light will be on for
	4 minutes. The yellow light comes on to let you know you have
	about a minute to wrap up, and the red light comes on and we
	ask that you try to stay within that if at all possible. We
	will give you a little flexibility, but not a whole lot, so try
	to stay within it. I do have a gavel up here.
	We would now like to introduce our very distinguished
	panel. We are pleased, as I said, to have a really fantastic
	group of folks here. First, we have Ms. J.J. Ramberg. Ms.
	Ramberg is the host of Your Business, a program on MSNBC that
	is dedicated to issues affecting small business owners, as well
	as the author of the best-selling book, It Is Your Business.
	She is also an entrepreneur herself, cofounding Goodshop, an
	online platform that has forged a connection between retail
	savings and nonprofit and school fund-raising. We welcome you
	here this morning.
	Our second witness will be Ramon Ray. Mr. Ray is an
	entrepreneur, keynote speaker, author, journalist, and
	publisher of Smart Hustle Magazine. This magazine is dedicated
	to telling the journey of entrepreneurs and small businesses.
	Mr. Ray's specialty is in working with small businesses to help
	them grow by better utilizing technology and marketing. Mr. Ray
	has traveled the Nation speaking at and hosting events designed
	to help small business owners and entrepreneurs grow their
	business.
	Our third witness today is Ms. Susan Solovic. Ms. Solovic
	is an entrepreneur, best-selling author, media personality,
	speaker, and she is known as ``the'' small business expert. No
	offense to the other witnesses here today. Ms. Solovic has
	served on the National Women's Business Council, and is a past
	board member of the Women's Leadership Board at Harvard
	University, the Women Presidents Organization, Women Impacting
	Public Policy, and the Institute for Economic Development of
	Women. We welcome you here this morning as well.
	I would now like to yield to the Ranking Member for the
	introduction of our fourth and final witness here today.
	Ms. VELAZQUEZ. Thank you, Mr. Chairman. It is my pleasure
	to introduce Ms. Melinda Emerson. Ms. Emerson, also known as
	the SmallBizLady, is the leading expert in all things small
	business. She is the creator and host of Small Biz Chat, the
	longest-running live chat on Twitter for small business owners,
	which reaches more than 3 million entrepreneurs each week. She
	was named by Forbes magazine as the number one woman for
	entrepreneurs to follow on Twitter. In addition to being a
	regular columnist for the New York Times, Ms. Emerson is the
	founder and president of the Quintessence Group, an award-
	winning marketing consulting firm based in Philadelphia,
	Pennsylvania, as well as the founder of the Melinda Emerson
	Foundation, which provides mentoring and business training for
	minority and women entrepreneurs. Welcome. Thank you.
	Chairman CHABOT. Thank you very much. We are done talking,
	so we will now start our panel. Ms. Ramberg, you are recognized
	for 5 minutes.

	STATEMENTS OF J.J. RAMBERG, HOST, MSNBC, YOUR BUSINESS; RAMON
	RAY, EDITOR, SMART HUSTLE MAGAZINE; SUSAN SOLOVIC, THE SMALL
	BUSINESS EXPERT AND ADVOCATE; MELINDA EMERSON, FOUNDER AND CEO,
	QUINTESSENCE GROUP AND MELINDA F. EMERSON FOUNDATION

	STATEMENT OF J.J. RAMBERG

	Ms. RAMBERG. Thank you. Good morning, everyone. Thank you
	so much, Chairman Chabot and Ranking Member Velazquez, and
	everyone, for inviting me to testify today. It is a true honor
	and I really appreciate having the time to speak with you all.
	For the last 10 years, I have had a really unique vantage
	point when it comes to small business and entrepreneurship,
	because during this time I both founded and have grown my own
	company called Goodshop, and I have been the host of Your
	Business on MSNBC. Through that I have been able to interview
	thousands of small business owners and investors and experts to
	really understand best practices when it comes to small growth
	survival and expansion. We were around in 2008, so we did a lot
	of stories on survival in those days.
	This show was originally supposed to be on air for just 6
	months, but we quickly learned that there was such a strong
	appetite by small business owners for advice and inspiration,
	and I think most importantly, just a sense that they are not
	alone on this journey. Now we are the longest-running show on
	MSNBC. We have been on for 10 years.
	Entrepreneurship is in my blood. I am a third generation
	entrepreneur on both sides of my family. My paternal
	grandfather moved here from Mexico, and his first job here was
	as a peddler selling pots and pans and blankets door to door.
	He then went on to open a furniture store which my dad took
	over, and then my dad opened a storage business, a document
	storage business, and a real estate development firm.
	On my mother's side, my grandfather was sort of a typical
	entrepreneur, always starting companies from a tropical fish
	company to he was the first person to bring frozen pizza to
	California, and he had a tire distribution company. My mom got
	the bug. When she was in her late forties, she partnered with
	my brother to start a company called JOBTRAK, a very
	bootstrapped company. I spent many of my summer hours making
	cold calls for that company when they first launched, and 12
	years after they launched they sold that company to
	Monster.com.
	I had a really special place by the time I started my
	company in 2005, because I had a front row seat to watching
	things go from idea to a business multiple times. As I look at
	my own experience, and I have talked to so many small business
	owners around the country, I know that having that experience
	and having a group of people around me who are advisors, who I
	can ask questions of very informally, really provides a
	shortcut to small business growth. It can be the difference
	between failure and success.
	I do believe nothing really prepares you, even though I
	witnessed all these businesses, for doing it yourself. I
	certainly went in with my eyes open and I had a good group of
	people around me. My company Goodshop, which I founded with my
	brother Ken, was conceived upon a foundation of socially
	responsible business. We wanted to do good and do well. We have
	partnered with more than 30,000 retailers, and we provide the
	best coupons and deals for those retailers. If a user selects
	their favorite nonprofit or school, a percentage of what they
	spend goes back to that cause. Now we have saved people about
	$100 million in savings when they are shopping, and we have
	donated more than $12 million to organizations, large and
	small, across the country.
	We now have about 60 employees and we continue to grow. We
	have a number of jobs that are still open right now that we are
	trying to fill. The company started just like many other
	bootstrapped businesses, with me working in my one-bedroom
	apartment in New York City, 24 hours a day, basically making
	calls in my pajamas, and my brother working at home at his
	place in Los Angeles, and just working hard. It took a lot of
	work to get to where we are today.
	A few months after we launched Goodshop, I had the honor of
	being called by MSNBC and being brought on to launch the
	program, Your Business. On this show, once a week, we tackled
	common small business issues through profiling small
	businesses. These are issues that we hear consistently across
	the country regardless of industry and regardless of geography.
	To give you some examples, we profiled a beauty salon in
	New Jersey, which was having trouble navigating the layers of
	regulations, local regulations, that kept them away from
	focusing on their growth. We told the story of a company that
	turns your T-shirts into blankets, and they could not find
	funding, despite very initial success that they had. We
	interviewed a woman whose clothing business was having trouble
	until she met an advisor from the SCORE organization. Simply
	having his perspective changed everything and her company
	started growing. Finally, we have done a series of stories on
	Main Streets across America, from Brundidge, Alabama, to
	Natchez, Mississippi, and I have seen the change that
	government grants can make--how money given to pave streets,
	help with signs outside of stores, get streetlights, flowers--
	can transform a Main Street and transform a city. Finding
	champions in those areas who are able to find those grants and
	get the businesses to work together can transform everything.
	Now, I believe we are at a very exciting time for small
	business and entrepreneurship. I have with me, as I said, true
	champions who have worked with small businesses to help them
	grow and transform the economy of different cities around the
	world. Technology companies, particularly in the FinTech world
	and the EdTech world are just beginning to address these issues
	of small business funding and getting an educated workforce. I
	am excited to see what happens as these companies and these
	industries grow.
	Now, there is no doubt, as we all at this table know, that
	owning a small business and entrepreneurship is no cakewalk. It
	can be hard. There are many people who struggle, and even for
	those who are very successful, there are a lot of pain points
	along the way, which is why I really want to thank you again
	for taking the time to talk about small business success
	stories. Because the more attention we can pay, the more focus
	we can put on both the challenges on small businesses and the
	success of small business and the contributions of small
	business owners, the more we can support this very incredibly
	important part of our economy. Thank you.
	Chairman CHABOT. Thank you very much. We appreciate it.
	Mr. Ray, you are recognized for 5 minutes.

	STATEMENT OF RAMON RAY

	Mr. RAY. Thank you very much. I would also like to
	acknowledge my wife of 22 years, who is there, and my daughter.
	I am sorry. Thank you. I would like to acknowledge my wife of
	22 years and my daughter Charity, who is over there to my left
	as well. It is good to be amongst friends and experts who I
	have learned from over the years.
	Chairman Chabot, Ranking Member Velazquez, thank you for
	inviting me to represent America's small business owners and
	entrepreneurs at this Committee hearing.
	I would also like to extend a great warm greeting to the
	representatives from New Jersey, where I live near Newark
	Airport, and those from New York, where I grew up in Brooklyn.
	It is nice to see you all here as well.
	Starting and growing a business, as we have talked, as you
	all know----
	Chairman CHABOT. You are making a lot of friends.
	Mr. RAY. Oh, great. Starting and growing a business is
	fraught with challenges as many of us know. I have started four
	businesses, and I have been blessed to be able to sell one of
	them and am on the way to selling the second one. I am an
	entrepreneur who is currently growing two companies, and one of
	those companies is Smart Hustle Magazine.
	The day-to-day challenges of business ownership includes,
	of course, hiring the right staff, obtaining financing, trying
	to get new customers, and maybe keeping the ones we have. Also,
	of course, navigating government regulations and so much more.
	Business ownership, it is not, of course, just about the
	challenges, but as many of us here on this panel know, it also
	comes with the sweet taste of independence, the freedom to
	chart our own course, the privilege of helping others with our
	income and, earning profitable rewards from the risks that so
	many small business owners and entrepreneurs take day to day. I
	think the greatest reward is the awesome responsibility of
	providing for our families and supporting our communities,
	which I know all of us here do.
	Chairman Chabot and fellow Committee members, more
	important I think than any of us in this room, of course, are
	the thousands and thousands of small business owners who I am
	privileged to speak to across the country on a yearly basis,
	and the millions of small business owners that I am able to
	touch through events, through conferences, being on J.J.'s
	show, Twitter chats, et cetera.
	Based on the input from this community--and I did ask, what
	should I tell the Committee?--there are three recommendations
	that they would like me to express to you today. Many of them
	you have heard, but I hope this helps to underline them.
	I think first is definitely a continued reduction of
	burdensome, and I would say unnecessary, regulation at the
	Federal level, but let's also try to work and help at the local
	and State level as well. We need regulation, absolutely, for
	our safety. Please make sure the plane I am flying on tomorrow
	is safe. But, we do not need burdensome or unnecessary
	regulation. I think as an example that we have seen, in my
	opinion, the treatment of Uber. It is now a very big company,
	but I think that aspect at a very local level of stifling
	innovation and limiting growth is an example of what I think
	small businesses do not need.
	Second, I would say the reduction and simplification of
	taxes. I count it as a privilege that I can pay taxes which,
	from my hard-earned income, helped to fund our awesome
	government. However, I would dare say, is there a limit to what
	taxes and tax laws are fair versus which ones are excessive and
	burdensome? Every year I pay thousands of dollars. Now, not as
	much as J.J. and Melinda and Susan pay, because they have a lot
	more money, but every year I pay thousands and thousands of
	dollars in taxes, and I would rather reduce the taxes I pay and
	instead use those funds to grow my business and invest in my
	community.
	Thus, as we said, investing in America.
	The third thing that my community has said, please tell the
	House of Representatives, please tell the congressmen and
	women, to foster small business education. I applaud the great
	work of the Small Business Administration, of SCORE, that I
	benefitted from many years ago; 26 Federal Plaza, that is where
	I went to. SBDCs and other government-supported organizations,
	they support and educate small business owners. I think the
	more we can invest in the education of business owners, the
	more we ensure that less businesses will fail and more will
	succeed. In particular, I applaud the great work of the New
	York City Department of Small Business Services. It happened to
	be in my backyard, but a great model I think that many local
	governments can follow.
	Private and for-profit education efforts, such as the
	Goldman Sachs 10,000, Google's Get Your Business Online,
	Microsoft's Small Business Academy, Kaufman Foundation, and
	many more, these are examples of not government organizations,
	but still in the whole sphere of educating small business
	owners.
	I was recently speaking with Robert Herjavec of Shark Tank
	and we discussed how all businesses hustle. They all work hard.
	They grind. We all work hard. However, it is those who are
	educated--and I think education is so important--who have smart
	hustle, who succeed. Educating business owners is essential.
	As I conclude my statement, I think of a company like
	Infusionsoft, which was started by three friends in a strip
	mall, or a company like SumoMe, started by someone who was
	fired by Facebook. They are in Austin, Texas. These companies,
	my company, and millions of other small businesses, they need
	to be encouraged to start, grow, and thrive.
	Let's think about the husband and wife who have just
	started their business today, what can we do to help them? Or a
	high school graduate who is now working on an invention right
	now to put me out of business, unfortunately. Or the laid-off
	50-year-old, who is forced to begin their own business. The
	best thing our government can do for small business owners, as
	I conclude, is to limit regulation, lower and simplify taxes,
	and continue to invest in the education of small business
	owners at the local, State, and Federal level.
	Thank you very much for the opportunity to share about the
	hustle--as I also like to say, the Smart Hustle--of
	entrepreneurship in America. Thank you so much.
	Chairman CHABOT. Thank you very much. It is not very often
	that we get called awesome around here. But thank you.
	Ms. Solovic, you are recognized for 5 minutes.

	STATEMENT OF SUSAN SOLOVIC

	Ms. SOLOVIC. Good morning, everyone, Chairman Chabot,
	Ranking Member Velazquez, members of the Committee. I thank you
	so much for giving me the opportunity to be here with you today
	to share my insights and experiences as a small business owner
	and as an instructor to small businesses around the country. It
	is truly an honor to be here.
	Let me begin by sharing a little bit about my
	entrepreneurial background. You see, I had a great mother. She
	became an entrepreneur right after she lost her first husband
	in World War II out of necessity, but she sure learned a lot.
	She had a number of businesses along the way.
	When she married my father and moved to the town he lived
	in, they opened up their own funeral home. A very small, rural
	Missouri town, 3,000 people, now 2,999 since I have gone. I
	grew up working in a family business from the time I could
	barely even walk, and I started my own personal journey when I
	was 15 years old. After waiting tables and getting blisters on
	my feet, I realized there had to be a much better way to make a
	living. I realized I could teach little girls how to twirl a
	baton every Saturday morning, 75 of them in the high school
	gym, for $1 each. I thought, this is pretty good, better than
	working for tips. I opened up a small dance studio in my
	basement and taught little girls how to do ballet, tap, and
	jazz. Then, of course, college comes along and I moved on.
	I followed a traditional career path for a while. I had a
	lot of success there. I was one of the first female executives
	in a Fortune 50 company in their financial services division. I
	am also, Chairman Chabot, like you, an attorney, and I got to
	work with many small business owners setting up their legal
	entities and structures. I also did quite a bit of franchise
	law during that time.
	I have worked with small businesses in many capacities, but
	my heart has always been in my own entrepreneurial endeavors. I
	truly enjoy being my own boss. I like making deals happen. I
	like making money, and I like seeing it all come together,
	birthing those entrepreneurial activities and watching them
	grow. I, too, have had the opportunity to sell a business, in
	2009, right toward the end of the recession. I was very
	fortunate; my business continues to prosper.
	Unfortunately, as I talk to small businesses around the
	country, many of them are saying they are discouraged and
	disheartened. They are struggling. We know now that the number
	of small business closures is exceeding small business
	startups. That is a critical issue for the recovery of our
	economy. The Capital One Spark Business Barometer just noted
	that small business confidence is down almost 10 points from
	where it was this time last year. Businesses are struggling.
	They tell me their business dreams have now turned into
	nightmares, and that is sad.
	I have created a process I call the 1 percent edge. It is a
	process to get small businesses growing again. It is to help
	them become and place innovation into the DNA of their
	companies because we all know now what is cool and hot today is
	obsolete tomorrow. If you are doing business the same old way
	you have always done it, you are falling behind when you get
	started.
	I got the idea when I was teaching an MBA class on
	entrepreneurial growth strategies, and I had a co-professor
	because I travel quite a bit. The co-professor would stand
	there and talk about case studies. He would put big formulas on
	the board. And then I would stand up to the class and say, now,
	let me tell you how it really works. If you are studying case
	studies in today's marketplace that is changing so rapidly, you
	are behind the eight ball. As someone once said, if you are
	just now jumping on the bandwagon, you are too late. You
	already missed it.
	We have to give entrepreneurs the opportunity to be
	innovative, not just in their product and service delivery, but
	in their internal processing systems as well. Technology is
	certainly changing, leveling the playing field for small
	businesses, yet we need to get them to embrace it. I love to
	see small businesses using social media because it gives them
	an opportunity to broadcast their brand. I had an advertising
	agency at one point in time and people used to say to me, I do
	not have money to market my business. Now they say to me, I do
	not have time to market my business. The world is changing.
	Before I run out of time, I do want to deliver another
	personal story. Ramon talked about regulations. I know you hear
	it all the time. In today's news we are talking about the
	increase in the overtime pay. My parents, in that little
	funeral home, had an ambulance service for many years. It was
	not a profit center; it was a service to the community. The
	Department of Labor sent an auditor in and audited my parents,
	and decided whenever a hearse had a stretcher in it, it was
	covered by the wage and hour law. Whenever it was a hearse, it
	was not. Well, what happened is he extrapolated all the back
	pay my parents owed their three or four employees, told them
	they had 2 years to sue, and told them how to do it.
	Unfortunately, because it was not a moneymaker for my parents,
	they did not pay, no one sued, but they, like many funeral
	homes, quit the ambulance service. My little small-town
	community in rural Missouri had no service for many years until
	the hospital decided to take it over.
	While I think that policies and regulations, as Ramon said,
	are good, and they are always passed with the best intentions
	at heart, sometimes we do not take time to understand the
	effects and the far-reaching effects that it has, not only on
	small businesses and jobs, but on our communities as well. I do
	believe that today we are living in a world where
	entrepreneurship is still great. This country was built on the
	spirit of entrepreneurship, and God love us all, it is still
	the greatest country in the world. Thank you all to the
	wonderful public service you do to help us and grow our
	businesses.
	I also want to applaud you for your bipartisan efforts, to
	get some victories through in terms of legislation. You are
	helping us, we appreciate what you do, and I look forward to
	our discussion today.
	Chairman CHABOT. Thank you very much. With the way I
	mispronounced your name, you have every right to call me Cabot
	or anything else you want.
	Ms. SOLOVIC. I am sorry.
	Chairman CHABOT. It is quite all right. Quite all right.
	Ms. SOLOVIC. Why would we not be simple like Smith or
	Jones, you know?
	Chairman CHABOT. There you go. That is right.
	Ms. Emerson, you are recognized for 5 minutes.

	STATEMENT OF MELINDA EMERSON

	Ms. EMERSON. Thank you Committee Chairman Chabot and
	Ranking Committee Member Velazquez, and the rest of the Small
	Business Committee. I truly am grateful for this opportunity to
	share with you what I think is the status of small business in
	the United States.
	My name is Melinda Emerson, but my nickname worldwide is
	SmallBizLady, and my mission is to end small business failure.
	Every single thing I do, every blog post I write, every book I
	have written, every interview I give, is about giving people
	nuggets that they may not even know will potentially befall
	them as they start a small business.
	You know, the funny thing about being a small business
	expert is I rarely hear bad business ideas. Unfortunately,
	however, I see poor business execution everywhere. It is like
	the cold and the flu, it is everywhere. I have to agree with my
	colleagues that there are four major things that I think we
	need to help small business with.
	Number one is access to credit and capital. A lot of the
	reasons why small business cannot get capital is because they
	have poor credit. I also think they need training. They need
	education. We need to talk about the best ways that the
	government can help do that. Certainly, there is SCORE. There
	is the SBA. There is the Small Business Development Centers.
	There are P-TECH centers, and there are some great work going
	on in these centers. However, there is some quality control
	issues. Depending on what city you are in depends on how good
	the services are in your city, and I think we need to do more
	with that.
	I also think that we need to look at how we can help
	entrepreneurs get access to networks, particularly minority and
	women entrepreneurs. We did not go to the business schools that
	other people got to, so when the major decision on whether or
	not you get private equity funding has to do with whether or
	not you went to the same B school as the people doing the
	funding decision, I think we need to look at different ways
	that equity can be done. I am aware of programs that, you know,
	sort of like how SBIR grants and things are done. There are
	organizations, nonprofit organizations that have been given
	funds from the government to do equity investment, so it is not
	just about going in with a pitch board and having the right
	deck and the right idea and the right management team. I mean,
	there are other ways to get private equity capital in the hands
	of businesses that so desperately need it.
	I also think we need to look at mentorship. Mentorship is
	essential. The work that SCORE does is God's work as far as I
	am concerned. I believe that SCORE has made the difference in
	so many. I am from Philadelphia, so I do have to give a shout
	out to SCORE Philadelphia. They have done an amazing job, and
	any time I can help them, I do. We do know that there are
	differences in other markets, so I do think that mentorship,
	networking, access to capital, and then just access to
	opportunities. I think if we look at the work that the
	government does and all the things that the government spends,
	I do think we need to enforce the set-asides, and it is not
	just enough for people to make a best effort; I think we need
	to start holding people accountable for missing their goals for
	set-asides for minorities, women, veteran-owned, as well as
	8(a) set-aside contracts.
	I also think that when these contracts are given or when
	people are partnered with prime contractors, we need to make
	sure they get paid, because one of the biggest issues that
	befall small businesses of all types, creeds, and colors, is
	getting paid. That is, whether they are doing business with
	corporations or doing business alongside a prime for a
	government contract, or, frankly, doing business directly with
	the government. Getting small businesses paid net 30 or faster
	through electronic funds transfer needs to become the standard
	and not something that if you have the right relationship you
	can make happen.
	I think if we look at some of those things, I think that we
	will go a long way in making sure that we grow America's small
	businesses.
	Now, Committee Member Velazquez, I wanted to address your
	excitement about the numbers of minority- and women-owned
	businesses that have been started over the last 5 years. While
	those numbers have grown, the revenues of those businesses have
	not. If you look at just women-owned businesses, for example,
	Asian-American women businesses, on average their revenue is
	$330,000. African-American women businesses on average start
	revenue is $38,000. What is the poverty number? Do you know
	what I mean? So when you look at what is really going on, a lot
	of these people are starting businesses because they got washed
	out in the recession. They still have not been able to find a
	job, so they are starting what I call side hustle businesses
	for cash. They are not really starting businesses that are
	going to scale. They are not starting businesses that are going
	to be able to hire employees if we do not give them some
	infrastructure.
	I also think that when we look at models of things that we
	want to do to help small businesses, we need to look
	internationally. I have had the opportunity to travel as the
	SmallBizLady around the world, and I see other countries
	approach entrepreneurship as their strategic advantage in their
	country. If you look at Singapore, for example, they invest $50
	million a year in youth entrepreneurship. They have a mall in
	the heart of their equivalent to Rodeo Drive just for youth
	entrepreneurs. Young entrepreneurs as young as 10 years old can
	get a stall in this mall and sell their products and services.
	They consider youth entrepreneurship up to 35 years old. They
	are strategically funding entrepreneurs and training
	entrepreneurs that young.
	If you look at China, I had the opportunity to travel in
	October to Hung Jo, which is the Silicon Valley of China, they
	have a place called Dream Town. If your business qualifies to
	get into Dream Town, you get office space in there for 3 years.
	They have a $300 million fund to put equity into these
	businesses. Other countries are taking entrepreneurship very
	seriously. If you look at Start-up Chile, for example, Start-up
	Chile will give you $40,000 and a place to stay for a year if
	you are willing to go to Chile and start your business.
	Start-up America is a PR campaign that at best you might
	network with some people if you go to one of their events. I
	think we need to get serious about entrepreneurship and these
	programs because I do believe it is a competitive advantage. I
	have a 10-year-old son who tells me all the time, Mommy, I do
	not need to go to fourth grade. I already know how to make
	money. I am like, well, sweetheart, I need you to know how to
	count money, so I need you to go to school.
	My point, simply, is that I think we need to bolster
	programs like Junior Achievement, like the National Foundation
	of Teaching Entrepreneurship, particularly in our urban
	decaying schools that are struggling anyway. When we look at
	our ex-offender population coming out, we need to teach these
	people how to start businesses because they are not going to be
	able to get jobs anyway. I do believe that entrepreneurship is
	the difference, and it is my passion. I really appreciate the
	opportunity to come here today to talk to you about what we
	need to do to help America's small businesses.
	Chairman CHABOT. Thank you very much.
	I have to say, as chair of this Committee, if this is not
	the best testimony we have had from a panel, it is certainly at
	or near the top. Well done. All four of you were good. I kept
	thinking, that was great. That was maybe even better, and even
	better. This is really, really good. Well done. Maybe we should
	just not ask questions and let you all talk. We would not do
	that. We are politicians after all.
	I will recognize myself for 5 minutes and we will move
	around here. I will begin with you, Ms. Ramberg, if I can.
	What are some of the top questions that you are asked by
	small business folks who ask you for advice, either on the
	street or on your TV program? What do they ask you and what do
	you tell them, a couple of things?
	Ms. RAMBERG. We get questions. It runs the gamut. Right?
	How do I find money? How much money is it going to take for me
	to start my small business? How do I find good employees? We
	get very granular, so it could be how do I fire my first
	employee? I think, how do I get an IP lawyer, right? Where do I
	find a company to develop my Web site? I get questions across
	the board. What it speaks to is the fact that all of us have
	mentioned, there needs to be small business education. We are
	not reinventing the wheel. Any problem that you, as a small
	business owner, are dealing with, someone else has.
	For instance, I belong to this organization called YPO,
	Young Presidents Organization, and we meet once a month where
	we talk about our business issues. It is an extreme shortcut
	for me to get to an answer about an issue that I am facing. So
	we need to create these networks, again, as Melinda just said,
	for everyone.
	Chairman CHABOT. Thank you very much. Thank you.
	Mr. Ray, I will go to you next. I had a prepared question
	but I thought of something I thought would be more interesting,
	so I am going to ask you something maybe a little off the wall.
	I had the opportunity to meet not only with you in my
	office before this, but also with your beautiful wife and your
	daughter Charity. I do not know if Charity is interested in
	going into small business someday. But, if you had to give her
	advice on how to be successful down the road, how to prepare
	herself and what kind of things she ought to be thinking about
	if she want to be successful in life, or in small business,
	what would you tell your daughter?
	Mr. RAY. I do advise her quite a bit to her angst,
	unsolicited. I think there are a few things. It is interesting
	you asked that because that is a question that many people ask
	me. You know, they see me on stage and et cetera, and it is
	very simple.
	I think, one, and this is not really small business advice,
	but for me, I find just being nice to people and making
	connections. Because there are some people who you come in
	contact with--I am sure we have all met them--there are some
	slimebucket nasty people out there. You cannot succeed unless
	you have a smile or are nice. That is one.
	Chairman CHABOT. That is kind of similar to the field that
	most of us are in up here, too. We would never say which ones
	are in that category.
	Mr. RAY. I understand.
	Chairman CHABOT. People usually figure that out on their
	own.
	Mr. RAY. Absolutely. The second thing I share with my
	daughter, you can ask her, I share with her and my son as well,
	make connections. Because the only thing different from me
	being here today, and we are all on the panel, and anybody
	else, is the connections I have made. Being nice, making
	connections, looking for and taking advantage of opportunities.
	The third thing I would say is that going back to the grit
	or the hustle, the hard work, is love to be punched in the
	face, get back up, ask for more, but learn. My point is being
	able to innovate. You are not going to get it right the first
	time. Those are the three things I would say.
	Chairman CHABOT. Thank you very much.
	Mr. RAY. You are welcome.
	Chairman CHABOT. Ms. Solovic, I will go to you now. You
	mentioned you had 75 kids that you taught years ago. I do not
	know if you have kept in touch with any of those or not, but
	did any of those young ladies ever become small business people
	or end up in careers that might be of interest to folks?
	Ms. SOLOVIC. You know, it is interesting. The little town I
	grew up in is very depressed and, unfortunately, most of the
	young people do not get out of that town. Very few people from
	there go to college. In fact, when I was growing up there it
	had the highest illiteracy rate of any area in the State of
	Missouri. So it is a very depressed community.
	I do keep up with some of them on Facebook. They seem like
	they are doing well. They are married with children of their
	own. I realize I could easily be a grandmother. Not a problem.
	But they are doing well.
	While we are talking about young women, though, I want to
	dovetail on something Melinda said, and that is growth capital
	for women-owned businesses. I know the Title III regulations go
	into effect on Monday. I think that is great for the
	crowdfunding source, but to really grow a large organization
	and scale it, you have got to get venture capital. It is very
	tough for most small businesses to get VC money. It is
	particularly difficult for women-owned businesses.
	I started one of the first video-based Internet sites, and
	I did raise venture capital. I did not go to a pedigree school,
	an Ivy League school. I was not from one of the coasts. I was
	from the Midwest, and the fact that I was a woman was a big
	hindrance. I will tell you, the first venture forum I ever
	participated in, one of the men said, well, you are the only
	woman who is presenting, who was asked to present here, but we
	sure are glad you are good looking. And I wanted to say,
	seriously? Who would have said that to a man? It was so
	inappropriate, but there is tremendous bias and it is something
	that needs to be addressed.
	Chairman CHABOT. Thank you. I am almost out of time. Ms.
	Emerson, very quickly, most of the folks here on the panel
	mentioned SCORE and how important that has been. Would you want
	to comment on SCORE and what you have seen?
	Ms. EMERSON. I am a huge fan of what SCORE does, and I have
	participated many times as a presenter for SCORE webinars.
	Chairman CHABOT. For the people that are watching this,
	would you tell those folks what SCORE is?
	Ms. EMERSON. SCORE stands for the Society of--Service Corps
	of Retired Executives. Thank you. It is an organization of
	folks that mentor and help, and they work with businesses face-
	to-face or online, and they have an amazing Web site full of
	resources at score.org. It is a really treasured, valuable
	resource here in the United States for small business owners.
	Chairman CHABOT. Thank you. Just for the record, we have
	heard the same thing from lots of folks, too, about how
	important SCORE has been to them.
	Ms. SOLOVIC. Can I make one comment on that?
	Chairman CHABOT. Yes.
	Ms. SOLOVIC. She mentioned their online training, which is
	very well-developed. The feedback I have gotten from some
	people, though, who have gone to SCORE is it is very diverse,
	sometimes, the quality of mentoring you get.
	Chairman CHABOT. You can get somebody really good.
	Ms. SOLOVIC. Right, or something--yeah.
	Ms. EMERSON. It depends on what city you are in. I think
	there are some hits-and-misses there, and that is what I was
	alluding to earlier about some quality control challenges, but
	you know, SCORE Philadelphia is awesome.
	Chairman CHABOT. All right. Thank you very much. Again,
	great panel. My time is expired.
	The Ranking Member from New York is recognized for 5
	minutes.
	Ms. VELAZQUEZ. Yes. I would like to add that the SCORE
	reauthorization was reported out of our committee and it was
	Ms. Adams who authored that legislation, so I am glad to hear
	how you really cherish the contribution that they do, as they
	are a resource partner with SBA, the Small Business
	Administration.
	I would like to hear from Ms. Ramberg and Ms. Emerson, you
	mentioned that the face of small businesses is changing. We
	have more women, more minorities, and younger people, right?
	Not everyone experiences the same struggles when starting or
	growing a business. This day, entrepreneurs are not only facing
	general startup challenges, but also student debt. How can we
	best help them overcome both of those challenges?
	Ms. EMERSON. Well, when it comes to student debt, I think
	we should make public universities free in America. I think
	that that might be a very good thing to do because I do not
	believe that the amount of money folks go to get higher
	education could at all possibly equate with the value of that
	education after they get it.
	Now, in terms of how can we help more minority small
	businesses, it goes back to what we talked about earlier. We
	have to have different diverse pools of equity funding
	available. We have to encourage public-private partnerships.
	There are major corporations with foundations who have
	entrepreneurship as a goal. They could partner with major
	cities in America and run business plan competitions.
	One of the things that I benefitted from in my business was
	the third year I was in business, I won the Minority Business
	Plan Competition in Philadelphia. I won $20,000 and free office
	space for 1 year in a business incubator called the Enterprise
	Center in Philadelphia, and that was a game-changer for me.
	That allowed me to hire my very first employee, and I have been
	in business for 17 years. So there are all kinds of things that
	can be done to help, but everybody has got to be on the same
	sheet of music to make sure that people are getting money to
	seed their ideas.
	Ms. VELAZQUEZ. Thank you. Ms. Ramberg, can you comment on
	what are the greatest obstacles facing students and recent
	graduates as they try to get their companies off the ground?
	Ms. RAMBERG. Money and education. It is as simple as that,
	right? You need to have an idea for a company and you need to
	know how to grow it. I cannot tell you how many companies I
	have gone into and I ask something about their financials--and
	this is not just the youth, actually, this is everyone--and
	they cannot quote them to me. They cannot cite their
	financials. They do not understand. I say, what is your
	revenue? They cannot give me a number. If you do not have that,
	you are not going to be able to go into someone, whether that
	is an angel investor, a bank, any kind of funder, and get
	money. It starts with education. Once you have that--and people
	understand--and also, an education around testing. To
	understand that there is a true market for their business out
	there. Right?
	We are dreamers. We sit around and we come up with ideas
	and we just believe that it is going to work. Understanding how
	to test whether there is a true market, someone is going to pay
	you for that, is something that every small business owner,
	entrepreneur needs to understand. Once they have tested, then
	you need to build out their networks and help them get face to
	face with funders.
	Ms. VELAZQUEZ. Thank you.
	Ms. EMERSON. Congresswoman Velazquez, can I add something
	to that?
	Ms. VELAZQUEZ. Yes.
	Ms. EMERSON. One of the other things I think would benefit,
	very early on when I started my first business I got a $25,000
	loan from a SBA-backed fund called the Competitive Edge Loan
	Program. In addition to the $25,000 I got, I got 25 percent of
	that loan in technical assistance. My first accountant and my
	first marketing consultant came from those resources that were
	paid for through that SBA loan fund. We need more programs like
	that because it is not just the money, it is the technical
	assistance folks need.
	Ms. VELAZQUEZ. We do have microlending under SBA, and it is
	both. It is access to capital, right, and it is technical
	assistance. By the way, when we look at the default rate, it is
	the lowest of any of the loan programs that we have in place.
	And 62 percent of those borrowers are low-income women.
	Mr. Ray, for those businesses without large operating
	budgets, word-of-mouth advertising is all they have. What more
	can be done to bring together small businesses and end users of
	their products?
	Mr. RAY. Thank you for asking the question. One of the
	things I talk about a lot is personal branding. I do not have a
	lot of money, did not have a lot of money. I do not know if I
	have a lot of money or not. I have to ask my wife. But my point
	is I did not have a lot of money.
	Chairman CHABOT. Just for the record, his wife is shaking
	her head no, they do not have a lot of money, or not enough.
	Mr. RAY. Ranking Member Velazquez, I think the biggest
	thing is building their personal brand. I think you need money.
	That is actually helpful. But those who do not, if you network
	like heck, if you build your personal brand, leverage the power
	of social content, video, you can rock it and do quite a bit. I
	have built my brand quite a bit with just a video camera, a
	smartphone, and just Tweeting.
	Ms. VELAZQUEZ. Ms. Solovic, would you like to comment?
	Ms. SOLOVIC. I totally agree with what Ramona is saying. As
	I said, people say to me, I do not have time to do it. You do
	not have time not to do it. It is a great way to build your
	brand. I was an early adopter of social media, and I remember
	after I sold my business and I was starting out again all over
	and I would sit there and Tweet things out and post things on
	Facebook, and my husband would say to me, you are wasting your
	time doing that. That is just silly. You should be making sales
	calls. Well, today, I do not have to do any outbound marketing.
	Everything comes to me and walks in the door simply because, as
	Ramona is saying, I have built my personality brand. I have a
	huge following. I am always listed in the top five of small
	business experts to follow on Twitter.
	It takes some time. It takes authenticity. You cannot job
	it out to anybody else. They want to know it is you. They want
	to talk to you. It is a great advantage for small business
	because large companies who are out there, it is great. They
	are building their brand, too, but they are not humanized. They
	need people like us to talk to the small business market, and
	that is what we do best.
	Chairman CHABOT. Thank you very much. The gentlelady's time
	is expired.
	The gentleman from Missouri, Mr. Luetkemeyer, who is the
	Vice Chairman of this Committee, is recognized for 5 minutes.
	Mr. LUETKEMEYER. Thank you, Mr. Chairman.
	Ms. Ramberg, I was interested in your comments a minute
	ago. Somebody who sits across the table from a lot of people
	who are aspiring entrepreneurs and trying to find ways to help
	them, what you said is really quite accurate from the
	standpoint that entrepreneurs quite oftentimes are people with
	big ideas or the folks who can dream and think outside the box,
	can see a niche, can see an opportunity, or sometimes they may
	be left-brained, but their right brain part of it, they do not
	understand the business part of this, how to set up a financial
	plan. You just said a minute ago that they could not give you
	the statistics off their P&L. That is where it is important for
	them to have access to that education to be able to understand
	there is a flip side of this, or be able to go find people who
	can help them do that. Your comments are very apropos here from
	the standpoint that in order for entrepreneurs to grow, they
	have got to have the ability of people to help them through the
	myriad of rules, regulations, access to capital. A number of
	you have talked about that this morning, and I think you
	mentioned it a minute ago.
	What do you propose to people who have access to capital
	problems? What is your advice to those people on how they can
	go find money or present themselves in a way to be able to
	access themselves to the kind of money it takes to be able to
	get a business started?
	Ms. RAMBERG. I do work with a number of people who are
	going to talk to angel investors. We have a number of angel
	investors who come on the program, and so help them in sort of
	organizing their thoughts down so that they can present their
	elevator pitch in a way that will at least pique somebody's
	interest. We also talk a lot about just alternative financing.
	Right? So all these FinTech companies, OnDeck Capital, the
	Lending Club, and thinking about factoring. Think beyond a
	traditional bank loan, if you are not in a position to get one,
	and look into some of these other ways to get money.
	I also talk a lot to people about bootstrapping. My company
	was bootstrapped. My mom's company was bootstrapped. The
	company that I mentioned, which turns T-shirts into blankets,
	was also bootstrapped. If you can get yourself to a certain
	position where you have a little bit of success, it will be
	much easier to get money on down the road.
	Mr. LUETKEMEYER. Ms. Solovic, where in Missouri are you
	from? I am a Missourian.
	Ms. SOLOVIC. Fredericktown, Missouri.
	Mr. LUETKEMEYER. Oh, yes. Very good. I was guessing
	southeast Missouri from the comments you made, but okay, very
	good. Nice little town, been there many times. Not in my
	district, but it is still a good place.
	Ms. SOLOVIC. Thank you. It is a good place to be from.
	Mr. LUETKEMEYER. Good place to be from. Well, that is okay.
	It is nice to go back home there, too.
	You talked quite a bit about some of the--again, going on
	some of the comments I addressed to Ms. Ramberg here, what do
	you see with the folks that you talk to with regards--to me,
	access to capital is really key to being an entrepreneur off
	the ground. You have to be able to get the money to make it
	work. It is what greases the skids and what makes it all--what
	is your advice to people to be able to get them to be able to
	take that idea to the next step?
	Ms. SOLOVIC. I am going to respectfully disagree with you
	on your comment because I think that when people come to me and
	they want to know where is the money, show me the money or I am
	just going to go out and get a SBA loan, and I am like, well,
	good luck with that, because most of us bootstrap. We use our
	own personal assets, credit cards, and go to family and friends
	for loans. So when people tell me, well, I have this idea and I
	would be able to make this business really go if I could just
	get some money. I want to say to them, you know what? You do
	not want to do it very badly. Because if you really have a
	passion, as my mama used to say, where there is a will, there
	is a way. If you really want to make it happen, you can start
	and make it happen. With technology today, the barrier to entry
	is so minimized, and you have got information and resources
	right at your fingertips.
	The one thing that I get a little alarmed about is the
	professional advice from attorneys. I have seen a lot of
	mistakes that come offline from going to those kinds of
	resources. But, it is there, it is available. You might not be
	able to start as big as you want. You may have to shrink your
	plan a little bit, but by golly, if you are willing to have
	that passion and put forth that sweat equity, you can make it
	happen.
	Mr. LUETKEMEYER. Okay. Mr. Ray.
	Mr. RAY. Yes, sir.
	Mr. LUETKEMEYER. One of the things that you were talking
	about here is reduction and simplification of taxes. Can you
	give me an example of where you would like to see some
	reduction and simplification? How it would work and what the
	advantage would be to small businesses?
	Mr. RAY. Sure. Having said that, I am not a tax expert by
	far. I am a personal branding expert.
	Mr. LUETKEMEYER. Again, we want your ideas. You are the
	entrepreneur here.
	Mr. RAY. Yes.
	Mr. LUETKEMEYER. We are the guys who are supposed to make
	this all happen.
	Mr. RAY. I went through a tax audit a few years ago. When
	the IRS called me, she had a southern accent so I assumed that
	she was my friend and she was the best person in the world. She
	said, Mr. Ray, we would like to come to your home and all this.
	The IRS is great, they do great work, we need to pay our taxes.
	But my point is that I wish half the problem was my own. I wish
	that I had better advice and taken better advice as many of us
	said. So that is one.
	But point two, just going through that process, the arduous
	process of the letters and the writing and the audit, it was
	exhausting. Thankfully, I had my tax attorney. We had to go
	through it. What I mean is that my industry is just content,
	but imagine the industries that deal with other things,
	manufacturing, et cetera. There are a lot of things they have
	to go through just to pay taxes. If they do not do it right,
	then there are things they have to go through to get it right.
	That is an example of what I mean by making it a bit easier for
	small businesses to pay taxes and to rectify if something goes
	wrong.
	Chairman CHABOT. The gentleman's time is expired.
	Mr. LUETKEMEYER. Thank you, Mr. Chairman.
	Chairman CHABOT. Thank you.
	The gentlelady from California, Ms. Hahn, is recognized for
	5 minutes.
	Ms. HAHN. Thank you, Chairman Chabot and Ranking Member
	Velazquez, for holding this hearing.
	Small businesses truly are the backbone of this nation. I
	represent a district in Los Angeles County, and I see firsthand
	the hard work of thousands of small businesses take to achieve
	that American dream that so many of you are speaking about
	today. I think this Committee is really one of the most
	important committees in Congress because 99 percent of all
	businesses in the United States are small business. During my
	time on this Committee, one of the things I focused on is
	women- and minority-owned businesses, because that is the
	makeup of my district back in Los Angeles. We brought many
	women and minority small business owners together for
	roundtables and SBA workshops, and we have in my hometown a
	number of successful women-owned businesses. Some of the San
	Pedro favorites are the Omelet and Waffle Shop, a new coffee
	shop called Sirens, and a clothing store called Dramatique.
	While these businesses have been flourishing in my district, I
	was a little bit disheartened to learn that the percentage of
	women starting small businesses has been declining over the
	past 20 years. A recent study by the Kaufman Foundation found
	that the share of women startups fell from 43 percent in 2010
	to 36 percent in 2015, which is close to a two-decade low. The
	decline is even more evident among younger women where the
	average number of businesses started by young women has
	decreased by 27 percent since 1996.
	I think there is a variety of reasons for the decreasing
	number of women starting businesses. According to one Wall
	Street Journal, women have less access to capital, are
	erroneously perceived as less competent than men, and have less
	confidence when it comes to their success and potential
	failure.
	I was going to ask those of you who are here today, how can
	we get more women to start businesses? What should this
	Committee and SBA do to address a problem that you might see
	happening out there? I would be interested in hearing all of
	your responses to this.
	Ms. EMERSON. Well, I would say that if you want to target
	more women business owners, particularly younger women business
	owners, we have to start talking about entrepreneurship much
	earlier in their educational cycle. I believe that elementary
	school is not too early to start teaching principles of
	entrepreneurship, and thus, we make it so that they understand
	that it is a potential idea as a career option, and it is not
	just about going to college and getting some good job. That
	does not exist anymore. So I think it is about helping people
	learn skills that are valuable much earlier.
	I also think it is about more targeted programs. We need an
	incubator for women entrepreneurs. We need funding specifically
	targeting minority and women entrepreneurs, and we also need to
	make sure they are not fronts for their husbands. There is a
	lot of stuff going on around folks self-certifying that they
	are women-owned, and we need to make sure that it is actually;
	for a woman-owned business, it is actually run by a woman.
	But, if we start doing targeted programs, targeted business
	plan competitions, that kind of stuff will help get the numbers
	up and really give them a boost because it needs to have money
	attached to it. Five thousand dollars is enough money to get in
	trouble. That is not enough money to run a business. We need to
	make sure that when we do business plan competitions and stuff
	like that, the prize money is $20,000, $25,000, $50,000, that
	it is real money that is going to make a difference in these
	people's businesses.
	Ms. HAHN. Thank you.
	Ms. SOLOVIC. I would like to note that I think it is
	education, because I think a lot of women start businesses
	because they are good at what they do. It is a little craft. It
	is a little something, but they are really not educated on how
	to build a scalable and sustainable enterprise.
	Also I mentioned I raise venture capital. After I did that
	in 2006, I wrote a book called The Girls' Guide to Building a
	Million-Dollar Business, because I figured if I could do it,
	anybody ought to be able to do it. It is not brain surgery. At
	that time, only 3 percent of women-owned businesses were
	grossing over a million dollars a year. According to a recent
	Forbes Magazine article, only 2 percent of women-owned business
	gross over a million dollars a year. A million dollars is not
	very much when you are talking about revenue.
	In working with some women's organizations, too, when I
	talked about making money and business, if you are not going to
	make money, go volunteer. They say to me, well, I do not want
	to make a million dollars. I do not need that much money. And
	they do not want to talk about the money part. You know what?
	You have got to talk about the money part, that is what it is
	about.
	I think there are stereotypes that still say to women in
	this country that making money, being aggressive, being
	successful is not feminine. We should not worry our pretty
	little heads about money, honey, and we have go to change that
	psychology. It is an undercurrent that still ripples through
	this country.
	Mr. RAY. I would add two things being the minority on the
	panel here of women, no pun intended. I would say two things. I
	would say, one, the focus could be not only on starting
	businesses, but I would encourage my women friends, also those
	who have already started, how can we encourage them to grow?
	You know, the number of who is starting, but let's say starting
	or not, those who are in it, what can we do to succeed?
	Two, I would say working with small business owners in
	large, many of them women entrepreneurs, there has to be some
	element of, without putting my foot in my mouth, getting out of
	the bubble of just being for women, if that makes sense.
	Meaning, I talk to many women entrepreneurs. I am a women-owned
	business. It is four women. Four women. Where this world is
	beyond just women. Do you know what I mean? So it is kind of
	reverse. It is in a bubble.
	Ms. HAHN. It is? Are you sure about that?
	Mr. RAY. Does that make sense what I am trying to express?
	Chairman CHABOT. I am not going to touch this debate here.
	Ms. RAMBERG. Can I just add one thing?
	Chairman CHABOT. Ms. Ramberg, go ahead.
	Ms. RAMBERG. It is examples. Right? When you see a
	successful woman, you see that you can do it. And so the more,
	I mean, it is amazing that there are three women on this panel,
	but the more we can show that women are successful. I am in New
	York, and in New York City there is a burgeoning and very
	exciting community around female entrepreneurship and there are
	lots of conferences and lots of mentorship. I think that is
	what it takes. Again, it is about a community.
	Chairman CHABOT. Thank you.
	Ms. SOLOVIC. Could I add one more comment?
	Chairman CHABOT. Go ahead.
	Ms. SOLOVIC. All right. So----
	Chairman CHABOT. I have lost complete control. Go ahead.
	Ms. SOLOVIC. So I have to share this story.
	Chairman CHABOT. As long as you pronounce my name right.
	Ms. SOLOVIC. What was that again? Cabot?
	I did some consulting for a very, very large financial
	services firm--and I will not mention their name here--on how
	to reach the women business owner market. They sent me all
	around the country to talk to their regional sales forces, and
	I was giving the statistics that we just discussed here and
	women growing businesses and all of that. I happened to have
	been south, and I will not say what state it was either, but we
	broke for lunch, and one of the investment counselors came over
	and he said, oh, there, pretty lady. You know, you did a nice
	job, but I just do not believe those numbers. And I said,
	really? He said, well, I know the only reason a woman goes into
	business for herself is because her husband wants to give her
	something to do or he needs a tax write-off.
	Well, thank you, Mr. Chairman. I know my time is expired. I
	appreciate the indulgence on this question.
	Chairman CHABOT. Long ago. But that is okay. This was
	great.
	The gentleman from New York, Mr. Gibson, is recognized for
	5 minutes.
	Mr. GIBSON. Thanks, Mr. Chairman. I must say this is an
	awesome hearing. I am learning a lot and I am really inspired.
	I appreciate that very much. I know our middle daughter, who is
	interested in going into business, she is going to find this
	link very informative and inspiring, and I think she will
	probably be looking up some of your shows and everything like
	that going forward.
	Mr. Ray, I was very interested to hear your comment. You
	were using Uber as an example, really as sort of a counter
	example. What I would like to hear is your thoughts on if we
	had a do-over, how might federal and state, perhaps even local,
	governments approach that issue in a manner that would
	certainly make sure that justice, safety, and public health is
	preserved, but at the same time, facilitates a good idea that
	is something that is really being demanded in the market.
	Mr. RAY. Being the travel expert that I am not, from my
	observation, as one who has used Uber before, and taking them
	as an example and then I will move quickly to another point,
	but as one who has used Uber and as one who has used taxis.
	There are two sides of this equation. We know it is a public
	debate, good and bad and et cetera.
	Regulation, obviously, is important. But, what I found, at
	least in New York, being a few minutes from Newark Airport, is
	that you have the taxi industry that was one bemoaning and
	complaining about it, which has a valid point. New York City
	has a lot of big taxi industry. But, I saw that with Uber, this
	is a small innovative company. This is a car-sharing service.
	Small business owners, when I go to Newark Airport from my
	home, there are guys who say I am using Uber to make more
	money. From my simple observation, clearly it is a company that
	is helping in some way. And we could do more. Mayor Baraka, I
	think in Newark, he made a deal with them, so I think we can do
	more to ensure citizens are protected, but while having
	innovation go as much as it can until it becomes a danger, like
	the airlines or something that has to have some, if that makes
	sense.
	Mr. GIBSON. Yes, that is helpful. Do any other panelists
	want to make any comment on that before I go on to the next?
	Ms. EMERSON. I think whenever we get in the business of
	trying to protect one industry to prevent another one from
	growing, that is a slippery slope for us to get on. In
	Philadelphia, there was also a nightmare fight with the taxi
	authority and the city with Uber, and I felt like if the taxi
	drivers had done a better job, Uber would not have a chance.
	They should be like any other business, and they should face
	competition like anybody else.
	Mr. GIBSON. I really appreciate those remarks. The last
	question I have has to do with access to credit and capital,
	which you all hit on in one form or another. Ms. Solovic's
	comments about being self-starters and finding ways and working
	with family, agreeing with all of that, I am also interested in
	hearing your assessments as to Dodd-Frank, as to how well it is
	going or challenges that have emerged as it relates to access
	to capital and credit.
	Ms. SOLOVIC. What we have seen as a result is that the
	level of lending, traditional lending, has really decreased to
	small business owners. There was a time, I think, during the
	recession that we heard a lot, or at least I did, from small
	business owners that they were not even applying for the loans
	because they did not want the debt. But also, there was that
	fear factor that their financial statements were not as strong
	as they had been and that they would not qualify, so what did
	it matter to try? But here we are, now, with some recovery
	going on in the economy, and you would think we would see a
	change in that, but we have not. As we said earlier, the
	crowdfunding platforms, the Title III regs, I think all of that
	is a positive step for small businesses. I do think that having
	more education, so that people understand, and more examples of
	how you can get a business off the ground without going out and
	putting yourself into debt with a bank or a lending program.
	Personally, when I started my Internet company, I took out
	a big credit line on my house, and we were totally self-funded
	originally. I remember going to the venture capitalist. We were
	in front of Sequoia and they looked at my numbers and they
	said, well, you need more eyeballs on your Web site. And I
	said, but we are profitable. Look at my financial statements.
	They said, we do not care about that. I said, if you were
	funding it out of your own pocket you would, by gosh. I think
	education is important.
	Ms. EMERSON. If I could add, when it comes to access to
	credit and capital, the first indication, small businesses knew
	the recession was coming before the recession hit everyone else
	because banks started rescinding people's lines of credit and
	they started turning them into term loans. People have not
	recovered from that. The people that were able to hang on and
	stay in business, they are not creditworthy. What has happened
	is now we have these cash loan lenders that have popped up and
	who are preying on businesses who cannot get capital anyplace
	else. They are happy to fund you if you have got a 600 or a 620
	credit score at 24 or 25 percent interest. If there is any
	place where you guys do need to start regulating is those
	people. These cash flow lenders out there, to me, are snake oil
	salesmen, preying on people who need cash. They are only
	willing to do loans for ecommerce businesses that are doing 10
	grand or more a month.
	Also, too, one thing about crowdfunding. Crowdfunding is
	great if you have got a great product business and some sharp
	marketing. But the average crowdfunding campaign makes $10,000.
	That is a hard way to make $10,000. I do think Title III is
	going to help more people be able to get into that business,
	but I also think that is a little bit of a panacea. Right? The
	deal is, if you want to start a small business in America, your
	money is going to come from your right or your left pocket, so
	you better have taken care of your savings, protected your
	credit. Hopefully, you own property that you can take out a
	home equity loan against because that is really what it is
	going to take because banks do not loan money to startup
	businesses until you can prove you do not need it. So that is
	it.
	Ms. SOLOVIC. I am also very concerned about the new
	calculations, and I am not an expert on this, but where someone
	leaves a company, they take a 401(k) plan, and then they flip
	it and make it a 401(k) in their company, and then they deplete
	those funds to start their business. We have got more baby
	boomers. I am a baby boomer, and we have retirement issues in
	this company. I am so fearful that people go out and bet the
	family farm and then what happens? Because you know what? Your
	challenges of starting a business, your likelihood of success,
	you might as well go throw the dice out in Las Vegas. It is
	just about as good an odds.
	Mr. GIBSON. Well, unfortunately, my time is expired. I want
	to congratulate each and every one of you on your personal
	successes and also thank you for sharing those stories for
	inspiring so many others.
	Chairman, I thank you for your indulgence.
	Chairman CHABOT. Thank you very much. The gentleman's time
	is expired.
	The gentleman from Mississippi, Mr. Kelly, is recognized
	for 5 minutes.
	Mr. KELLY. You know, I am starstruck with this panel. Thank
	you guys for being here. Mr. Chairman, thank you for bringing
	such a distinguished panel, and it is great to hear from--first
	of all, you are all excited about what you do, and I think
	enthusiasm is one of those things that any business, or
	whatever you are doing, that you have to have enthusiasm. To
	see people like you, you are all role models for people out
	there. So, thank you for being here, and for what you have done
	for small businesses in our industry.
	Mr. Ray, I want to briefly touch with you, and I had not
	intended to ask you a question, but I am so appreciative that
	you brought your family, because it is much like serving in the
	military or anything else. Whether you are a small business or
	anything else, it is a family deal. You are all involved and
	engaged. Not using someone else's name, like other people have
	mentioned, but to have people who are involved and are part of
	that, and you gave your daughter some great advice. I found in
	life, relationships and leveraging those, and understanding
	those is one of the greatest things you can ever have is the
	capital in people. So do you want to comment any more on that,
	Mr. Ray?
	Mr. RAY. No, just to thank you for having us and I think
	that, yes, family is important. I think the two things
	education, as we have said, education solves many problems, but
	definitely family. And I thank God for my wife. Not that she is
	always right, but she----
	Ms. SOLOVIC. Well, it is going to be a long ride home.
	Mr. RAY. However, however, she is right most of the time,
	and I am very happy that she is giving me advice in business,
	but also the things around business that make it successful. So
	I am very thankful for her.
	Mr. KELLY. And then Ms. Ramberg, although not in my
	district, Natchez, Mississippi, is in Greg Harper from my
	state's district. You noted in your testimony several
	consistent themes that you found in various cities that were
	part of the Main Street series. First, for those who may not be
	familiar with the series, will you briefly share about the
	series and particularly about the Natchez visit?
	Ms. RAMBERG. Absolutely. We have gone around the country
	and visited Main Streets across the country--Natchez,
	Mississippi; Galena, Illinois. We were just in Daytona;
	Brundidge, Alabama, to just try and get kind of a temperature
	check on what is going on on Main Street. What we found
	consistently at the Main Streets that were revived, over and
	over we heard the story of big box stores moved in, our
	factories closed, Main Street shut down. It became lots of
	shutdown businesses, crime. The Main Streets that were able to
	revive almost to a Main Street was because of one person or one
	organization that organized everyone. Because the fact is,
	running a business is hard and it takes all of your time. So
	you have to concentrate on running your business and also
	reviving Main Street. These Main Streets have had a person or
	an organization who did that for them. It was pretty
	interesting.
	Another interesting and important thing to note, about what
	we learned on Main Street, I have done a very informal poll of
	companies that I interview and just say, do you feel like
	anyone is looking out for you? We almost always hear no. I know
	this Committee does a lot, I know the SBA does a lot. I know
	there are a lot of organizations that are out there trying to
	help small business. But somehow it is not trickling down, so
	small businesses across this country often feel very alone and
	unsupported. I think there needs to be some education and some
	public relations around the resources that are available to
	them. We all know SCORE here. A lot of people do not.
	Mr. RAY. May I make a comment?
	Mr. KELLY. Be quick because I have one more question I want
	to get to.
	Ms. Solovic, and I hope I pronounced that right, in the
	South, we do not do over one syllable usually. But first of
	all, I want to thank you for your mother, and again, it goes
	back to family, and your father's service to this great nation.
	That is very important to me, and I think that our veteran-
	owned businesses, which we have not talked about a lot, I would
	like to give these guys and girls opportunities to proceed
	forward because they paid their debt to this nation, and
	anytime we can forward their agenda and help them to be
	successful in life after the military, that is great.
	But can you elaborate a little bit on the Department of
	Labor's overtime rule and how that has impacted your business
	and other businesses, please?
	Ms. SOLOVIC. Certainly. I get a lot of concern from small
	businesses, especially with the increase to the threshold of
	$50,000. It will cost jobs in many, many small businesses. And
	not just the level of increase which is huge, but the fact that
	the complexity of the guidelines is very, very difficult for
	small businesses to follow. To know who is exempt and who is
	nonexempt, and how it applies. When I mentioned my father's
	ambulance service, how do you say today it was an ambulance,
	tomorrow it was a hearse, and who worked when? The complexity
	of it was overwhelming to him.
	My other concern is, and I hear this from many small
	businesses in smaller parts of the country, particularly the
	Midwest and the area of the country I grew up in, $50,000 in
	Manhattan is nothing; $50,000 in Fredericktown, Missouri, is a
	heck of a lot of money.
	I just sold my family's home. My father is now in assisted
	living. It was a big house, 5,000 square feet, 4 bedrooms, 3
	full baths, 2 half-baths, a finished basement, and an extra lot
	for $116,000. It is a different world, we cannot make arbitrary
	decisions like that.
	We need to give small business owners the flexibility to
	manage their business in the way they deem appropriate. We are
	not slave drivers and greed mongers like we saw in the
	Industrial era. We want to care for our employees, we want to
	care for our families. We want to give back to our communities,
	and the statistics on how much more a small business gives back
	to their community as opposed to a large chain company is
	significant. So we are trying to be good. We are trying to do
	the right things. We just need government out of our business.
	Ms. RAMBERG. If I could add one thing to that. I cannot
	stress enough the problem with complexity. People are happy to
	follow the rules, but sometimes it is hard to know what the
	rules are. You spend money on lawyers, money on accountants,
	and time that you could be spending marketing or talking to
	your customers to just figure out if, in fact, you are
	following the rules correctly.
	Ms. EMERSON. And if you make a mistake, it is costly.
	Chairman CHABOT. Thank you. Thank you. The gentleman's time
	is expired.
	Mr. KELLY. I yield back, Mr. Chairman.
	Chairman CHABOT. Thank you.
	The gentlelady from Michigan, Ms. Lawrence, is recognized
	for 5 minutes.
	Ms. LAWRENCE. Thank you, Mr. Chair.
	I would like to ask this question of Ms. Emerson. Hearing
	the discussion on the challenges, there has been a shift in the
	development of small businesses to the use of incubators. What
	does it mean to startups to have that kind of business when you
	are saying you need support? What is the role, and how can we
	support the incubators if that is the way to provide you with
	the support that you need?
	Ms. EMERSON. Well, I am glad you asked me that question
	because I won a business plan competition that put me in a
	business incubator and I actually ended up staying in there for
	5 years. So I can talk a lot about the value of incubators.
	I think the number one thing you fight when you start a
	business is loneliness and feeling like you are by yourself. So
	the fact that you can walk down the hall and commiserate with
	someone else that is trying to figure out how to get paid by a
	vendor, I think that is very important to have a sense of
	community. What I also found valuable in an incubator is that
	education can be done right in the same building. Networks can
	be set up. Potential funders that are interested in the
	businesses in the building can come in and see a cadre of
	businesses, not just one type.
	The Enterprise Center in Philadelphia is where I was
	located, and that turned out to be such an incredible proving
	ground for me in my business. It made all the difference in the
	world because when I started my business, back in 1999, being a
	homebased business was not cool. If you were working out of
	your basement, people did not take you seriously like you were
	in business. When I won my business plan competition, I was
	like, I am out of here. I am going to work every day. I got a
	parking space. It makes you feel--nowadays everybody is
	telecommuting and everybody is working from home, but it was
	not like that almost 20 years ago. So I think it is a great
	thing to do.
	Ms. LAWRENCE. I appreciate that. I think we, as the Small
	Business Committee, should really spend some time supporting
	that.
	I want to ask Ms. Ramberg, one of the greatest areas of
	success in my home state in Metro Detroit has been the rise of
	women-owned small businesses. According to the U.S. Census and
	the Small Business Administration, Michigan ranks among the top
	10 states in the number of new small businesses operated or
	open by men and women who are self-employed. How can we sustain
	the growth rates among women in small business? As a small
	business owner yourself, you already outlined some of those,
	but what would you advise us on this Committee on how we can do
	a better job with women?
	Ms. RAMBERG. Again, I think it is truly about mentorship.
	We do have issues. There are still many women out there who say
	that they go to find funding and they are discriminated
	against. I am quite sure that is true, but I think that if you
	are a woman who is going for venture funding and you talk to
	another woman who has been to that same person and asked for
	money, you will know what to look for. Again, I believe the
	answer is quite simple, which is just get people together, the
	experienced with the inexperienced. Get networks of women.
	There is an organization called the WE Festival in New York
	City. It just happened, and it was for women entrepreneurs, and
	the excitement around it and the sharing of knowledge was huge;
	10,000 women from Goldman Sachs, again, another organization.
	If you just get people together.
	I went to a dinner. It was 20 women brought together from
	different industries by somebody, and by the end of the dinner,
	we went around and every single person had to ask something
	they needed help with. Three women at that table said I need
	help raising money for my company. And guess what? The next day
	they were contacted by people. Now, I do not know if they will
	get the money or not. It will depend if the businesses are
	good, but I am fortunate that I have this network in New York
	City. If we can create those same networks for people so that
	you feel comfortable saying I need this, and someone out there
	says, okay, let me help you.
	Ms. LAWRENCE. Mr. Ray, and this is the last question, what
	are some of the challenges that you face in the competition
	with the corporates? I hear that often. I am a small business
	and I keep jumping up raising my hand. Look at me. Look at me.
	I can do it. What are some of the challenges there?
	Mr. RAY. It is very competitive. For example, I produce
	events and I have a magazine. There are a lot of bigger
	companies than mine. Sometimes it is the wherewithal to keep
	pushing through. I think that is one.
	I think, two, it is the business owner not having the
	education to talk the language of the large business person.
	That is what I have learned, what has helped me. I am talking
	to a big company, I will not mention them here, but a big
	courier or a big financial services company, a big bank. There
	are ways I have to talk. There are documents I have to have.
	They are risk averse. They do not know who I am from Adam, or
	Eve, for that matter.
	Those are two things that I have found that will be
	helpful. The small business owner must learn to talk the
	language of big business and not think small, as you have
	alluded to. That is the way to succeed. Thank you.
	Ms. LAWRENCE. I hear clearly the need for information and
	training, and I love the analysis of not being alone and having
	access to those. So thank you, I yield back.
	Chairman CHABOT. Thank you very much. The gentlelady's time
	is expired.
	The gentleman from Nevada, Mr. Hardy, who is the
	Subcommittee chairman of Investigations, Oversight, and
	Regulations, is recognized for 5 minutes.
	Mr. HARDY. Thank you, Mr. Chairman.
	Thank you for being here. I must say that I believe, Mr.
	Ray, your father and mine must have hung out together because
	my dad used to tell me, son, you can do it and like it or you
	can do it and hate it, but either way you are going to do it.
	Your attitude determines your altitude.
	Mr. RAY. I think they did hang out together, I think so.
	Mr. HARDY. All of you seem to have a great attitude. I
	think that is part of the success.
	Myself, being a small business person in the past, I had
	some successes, had some challenges. One of the challenges that
	you brought up, Mr. Ray, and also Ms. Ramberg, the federal
	government and duplicative regulations coming from not just
	from the federal government, from the state governments, the
	county governments, the city governments. Can you elaborate on
	that a little bit, Mr. Ray, what is your conversation there?
	Mr. RAY. Absolutely. Sure. What I think, as you said, is
	that there is a labyrinth of different things. If I do it right
	this way, it is wrong this way. Right this way, wrong this way.
	The best example I can give, again, with New York City in my
	backyard, I know the New York City Department of Small Business
	Services, I think it is called Fast Track. I do not recall the
	exact name. They have a system where they set up where you go
	to one place and the organizations, the entities are all in
	kind of one place. That is an example of something that can
	help. You go there, fill out a form. Other people and the civil
	servants are trained to help you navigate through that. Because
	if you are not trained or educated--and all of us are just
	experts in what we are doing--it is tough. It was tough to get
	in this building, much less being a small business owner.
	Ms. RAMBERG. I think it is clarity and knowing where the
	information lies. In San Francisco, for instance, right now you
	need to put a new employee poster up right now. My company
	works with a PEO who tells us, hey, here is the poster, go put
	it up. If we did not work with them, we would not know it
	existed. That is a tiny example of things that happen all the
	time.
	The amount of time and energy trying to understand what the
	regulations are, trying to work with the government to get
	around them, if there is a way to do it if it does not work
	with your company, and then comply with them. Again, the exempt
	rules, they are very complicated. It seems like they are easy,
	but it is not. There are people who do not exactly fit into one
	side or the other, and there is no place to go ask. If you go
	ask someone they say, oh, you have got to go figure it out
	yourselves. Having that answer as a small business owner, when
	this is not your core business, is incredibly frustrating and
	time-consuming.
	Mr. HARDY. Thank you.
	Ms. Solovic, you mentioned in your testimony about the
	overtime rule being a backbreaker. Mr. Knight and myself
	brought over 100 congressional members together to sign this
	letter to try to rethink how we are doing this. Can you
	elaborate a little bit on some of the challenges, this being
	backbreaking also and one size fits all does not necessarily
	fit?
	Ms. SOLOVIC. Right. I think that is pretty simple right now
	just the way you said it. It is not the $50,000 necessarily. It
	is the nonexempt versus the exempt, the paperwork, the
	tracking. I said, in parts of the country, $50,000 is a lot of
	money to make. You are not victimizing a low-wage earner. Take
	the time to look at regulations such as that and look at the
	true impact on a small business and the community. If a small
	business has to cut jobs and they are on Main Street, it hurts
	that community. Where else do people go to get jobs? You do not
	have big industry or big companies coming in there, so it costs
	the entire community once those few jobs are gone.
	Mr. HARDY. I would like to touch on a little different
	subject somebody brought up, and I think this might have been
	you, Ms. Solovic, but it had to do with the length of pay,
	especially on federal government jobs. The challenge is, I have
	seen myself, it jeopardizes small businesses. I was usually the
	larger business. I would have to wait for 90 to 120 days for
	the federal government to get paid, which meant in turn it
	makes it tougher for me to get the finance to be able to pay my
	vendors and that trickle down. Any suggestions on how we fix
	that here federally?
	Ms. EMERSON. Well, I think you just have to make it a law.
	Folks have to get paid net 30. I mean, honestly, it is such a
	challenge because cash flow is king in a small business. If you
	have employees, you have to make payroll, regardless of when
	you get paid. Because it is so difficult for small business
	owners to get lines of credit, I mean, even if you qualify for
	a line of credit, the most you are going to get is 10 percent
	of your gross revenue. So for a business doing half a million
	dollars, that a $50,000 line. Well, if the government owes you
	$180,000, do you know what I mean? It strangles small
	businesses if they cannot get paid on time.
	Mr. HARDY. Then that 10 percent retention on top of that
	ends up strangling somebody when you do not even have that kind
	of----
	Ms. EMERSON. Then by the time you get the money, it is not
	even the same value if you had to go out and factor the invoice
	or had to go to one of these payday lenders for small business,
	which is what I call these cash flow lenders. It is strangling
	people's margins, and people are not able to make money because
	they cannot get paid on time. It is a huge issue, but it is not
	just a huge issue in the federal government. I think that there
	should be some MOUs that go out with corporations because I
	have found that the larger the corporation is, the harder it is
	to get paid, too. So it is not just a federal government
	problem; it is a problem all over the place. Everyone thinks
	they can pay a small business last or late.
	Mr. RAY. May I underline something?
	Chairman CHABOT. Yes, go ahead.
	Mr. RAY. I wanted to underline that. Thank you for asking
	the question. It is a double problem because, again, your money
	comes in late and you have big checks, $20,000, $30,000, or
	Melinda has $100,000 checks, and you have to pay out. I just
	got an email last night from one of my vendors who I work with.
	Ramon, I sent you an invoice for $1,000. I need that money. Can
	you get it to me? I am going to forward that money to him
	tonight. But the money that is coming in for me is going to
	take 45, 30, 90 days. I just wanted to underline it, is jamming
	me up.
	Ms. SOLOVIC. I would say when it comes to the corporations,
	even in the agreements that I sign with them now, they will
	just put 90 days. You have to float that money, and it is tough
	on us.
	Chairman CHABOT. The gentleman's time is expired.
	The gentlelady from American Samoa, Amata Radewagen, is
	recognized for 5 minutes, and she is the Subcommittee chairman
	on Health and Technology.
	Mrs. RADEWAGEN. Thank you, Mr. Chairman.
	This has been really fascinating. I have learned so much
	today.
	I have a question for all of you, is the same question.
	Maybe we can start with Ms. Ramberg. What are some of the
	things that can be done to inspire the next generation of
	entrepreneurs?
	Ms. RAMBERG. I think we are inspiring them. I think if you
	talk to millennials, if you have been into a WeWork office
	recently, it is filled with people who are inspired to start
	businesses. What we need to do is we need to keep them inspired
	and we need to keep them realistic. We need to talk about the
	challenges around small business, and we need to give
	education. It is the same as we have been talking about here.
	When I started my show 10 years ago, there were organizations
	focused on small business and entrepreneurship that were
	shutting down. Now there is a cult of entrepreneurship, and I
	think people are very excited to start their own small
	businesses, we just need to provide them the resources to do
	it. I think they want to.
	Mr. RAY. Thank you for the question, my answer to that
	would be, just keep doing more of what we are doing here and
	keep providing platforms. I mean, the four of us, we have
	reached a level of success, but I think there is that cult of
	entrepreneurship. What can we do to go to the inner cities,
	those who are not yet inspired who think they cannot do it? I
	would just add that. How can we go maybe to small islands, et
	cetera, and help inspire them more and more and more. Thank you
	for the question.
	Ms. SOLOVIC. I agree. I also believe, I have always told
	people children emulate their parents, so they behave and do
	things, what they see growing up. I think the same is true for
	young people today. You know, let's lead by example. Let's give
	them opportunities, even in grade school, to understand what
	entrepreneurship is and how fun it is to run your own business
	and be your own boss and make money. There are options other
	than traditional work paths for them to be successful in this
	country.
	Ms. EMERSON. I would like to echo the same. I think it is
	about highlighting success stories, big and small. Highlighting
	youth entrepreneurs, women entrepreneurs, veteran-owned
	entrepreneurs, and making sure that National Small Business
	Week is not just PR. It is really about highlighting the
	successes and honoring people who are doing this work so that
	people can say, you know, I want to get that award one day.
	I think also looking at MED Week and putting some real
	teeth and resources around MED Week and highlighting minority
	women entrepreneurs during those times is really important
	because people look at that and see that as something of value.
	Everyone likes to hear their name called and get a little
	plaque with their name on it. So I think that more of that
	really will go a long way of making people feel appreciated and
	acknowledged and other people inspiring to feel the same way.
	Mr. RAY. May I add one more? May I answer one more?
	Mrs. RADEWAGEN. Yes.
	Mr. RAY. I wanted to add, ma'am, and say that, not to be
	the contrarian, but small business ownership, entrepreneurship
	ownership is difficult. I think it could be interesting to
	highlight it so people can see, you know what? This is not for
	me. Let me go, I do not know, go work in Congress or something
	like that.
	Mrs. RADEWAGEN. Thank you, Mr. Chairman.
	Mr. RAY. I am just teasing.
	Mrs. RADEWAGEN. Thank you, Mr. Chairman. I yield back.
	Chairman CHABOT. We hope you are.
	The gentlelady yields back.
	I think all the questions have been asked and answered. As
	chair of the Committee, I want to thank you all for your
	testimony here today. It has been very inspiring. I know that
	we have all learned a lot. In fact, we have decided to have you
	all come back every week from now on. We really do appreciate
	it.
	I think Chris Gibson, the gentleman from New York who has
	left at this point, he mentioned he was going to have his
	daughter, who is an aspiring entrepreneur, watch this maybe
	down the road. I would recommend that our staff tries to get
	this out because I think a lot of small businesses all over
	America, whether they are thinking about starting a small
	business or whether they already have one and they are looking
	for ways to improve it, I think there are just pearls of wisdom
	here that we do not want to just go off into the ether. You
	have all really done a great job, and thank you so much. I
	think you have done your country a great service, you really
	have, so thank you very much for this morning.
	I would ask unanimous consent that members have 5
	legislative days to submit statements and supporting materials
	for the record.
	Without objection, so ordered.
	If there is no further business to come before the hearing,
	we are adjourned. Thank you very much.
	[Whereupon, at 12:33 p.m., the Committee was adjourned.]
	A P P E N D I X


	JJ Ramberg Testimony

	U.S. House of Representatives Small Business Committee

	May 11, 2016

	Good morning. Thank you Chairman Chabot, Ranking Member
	Velazquez and the Committee for the invitation to provide
	testimony today.

	My name is JJ Ramberg and I am the founder of Goodshop.com
	and the host of the program Your Business on MSNBC which is the
	longest running television show aimed at inspiring and helping
	small business owners.

	For the past ten years I have both grown my own company and
	interviewed thousands of small business owners, investors and
	experts to learn best practices for small business growth and
	survival.

	I am a third generation entrepreneur. My paternal
	grandfather moved to Los Angeles from Mexico with his young
	family and his first job in this country was a peddler selling
	pots, pans, and blankets door to door. He eventually opened up
	a furniture store in Downtown Los Angles catering to the
	Hispanic community which turned into a small chain of stores.
	My father took over that business and then subsequently
	branched out to establish one of the first document storage
	companies in the country which was ultimately acquired by
	Bekins and then Iron Mountain. He then went on to create a real
	estate development firm.

	My maternal grandfather opened a series of small businesses
	from a frozen pizza manufacturer to a tire distribution
	business and tropical fish store. In 1988 my mother, who was in
	her late-40's and had been a stay at home mom for the majority
	of her children's school years, partnered with my brother Ken,
	a recent Stanford graduate, to start a company called JOBTRAK.
	JOBTRAK was a pioneer in the online career space, partnering
	with college and university career centers across the US and
	Canada and, after 12 years, was acquired by Monster.com.

	I began my company with my brother Ken in 2005. Goodshop
	was conceived upon a foundation of social responsibility.
	Goodshop provides the best coupons and deals for more than
	30,000 retailers and service providers and, if you select your
	favorite cause, a percentage of what you spend at thousands of
	those stores is donated to that organization. Today, we have
	saved shoppers more than $100 million and donated more than $12
	million to organizations ranging from the American Cancer
	Society and the Humane Society of the United States to local
	schools, homeless shelters and parks.

	The proudest moment of my entire career was the November
	after our launch when we sent our first checks out to the
	causes. We were still very much in start-up ode and my brother
	and I recruited some friends, his in-laws, his kids and our
	siblings to create an assembly line in his living room where we
	printed the donation checks, put them into envelopes, added
	stamps and sent them out. That day proved that the idea Ken and
	I came up with was actually viable.

	Goodshop began, as many small businesses, with me working
	from my small apartment in New York City and Ken working from
	his home in Los Angeles. We contracted with a designer and
	developer whom we knew from Ken's previous business. Our first
	true employee, Kari McMinn, worked with me at my home, much to
	her mother's chagrin who hoped she would take the job she was
	offered from a more seemingly stable consulting firm.

	Today, Goodshop is based in San Francisco, has 56 employees
	and is rapidly expanding into new verticals. We also have a
	number of open jobs which we are trying to fill.

	I have been in a unique position during the expansion of my
	company. As the host of MSNBC's Your Business, I have also had
	the honor of interviewing so many small business owners around
	the country in whose companies have been in differing stages of
	growth.

	Each week on the program, through profiles of small
	businesses, we tackle common business issues. For example, we
	explored how to handle pricing through the story of a hot air
	balloon company in Napa Valley; we covered expansion by telling
	the story of a children's playspace company which started with
	one location and now has stores around the world; we explored
	creating a good company culture by spending time with a
	plumbing business in New Jersey; and we discussed open book
	management by profiling a design/build firm in Maryland. Our
	stories have addressed issues ranging from how to find funding
	to how to recruit the best employees and how to market your
	product or service. In addition, since our show was on the air
	during the recession, there was a time when we did many stories
	on how to survive when the economy is heading south.

	The program also incorporates segments around the best
	technology to use in your companies, elevator pitches--where
	someone pitches their company to a panel of experts in our
	studio--and ``how to'' segments such as how to look for new
	office space and how to determine whether to use a Professional
	Employer Organization or not. As you can see, we get quite
	granular in our segments.

	Over the last ten years, since starting my company and
	launching our program, I have seen a great change in attitude
	towards small business. There is a much more public focus on
	entrepreneurship and a celebration and appreciation for small
	business in general. When we launched Your Business,
	publications which focused on this population were shutting
	down. Today, there are many resources available for small
	business owners.

	And, when it comes specifically to women owned small
	businesses, while there were pioneering organizations like the
	National Association of Women Business Owners supporting them,
	there was not nearly the support there is today. While we are
	not where we want to be on that front, we have made progress.

	I thank you for holding this hearing focused on inspiring
	entrepreneurs and learning from the experts because I believe
	the best education you can get when it comes to starting your
	own company is from people who have been in the trenches
	themselves. I was extremely fortunate to have had a front row
	seat in watching both my father and my mother--in partnership
	with my brother--start their companies. Because of those
	experiences, by the time I launched my own business, I had a
	real sense of both the excitement and the challenges I would
	face. Of course nothing really prepares you for doing it
	yourself, but I was able to go in with my eyes open.

	When I'm asked about the most important things to consider
	when founding a company, I provide people with this initial
	checklist:

	1. Gather a good group of advisors. By this, I do not mean
	a list of big names or famous people. Rather I mean make sure
	you have people around you who can advise you on the issues
	with which you are not familiar. These can be paid advisors or
	those who are doing it for free. It can be structured or more
	casual. You are providing yourself with a critical shortcut if
	you have people to turn to for advice. I personally belong to
	an organization called the Young Presidents Organization which
	meets once a month to discuss issues we are dealing with in our
	companies. I find the advice I receive from these CEO's
	invaluable as inevitably some subset of us has gone through the
	problem one of the other members is facing.

	2. Before you launch your business, ensure that there is
	actually a market for it. Entrepreneurs too often fall in love
	with their ideas and do not get a true sense of whether or not
	customers will be willing to pay for their product or service
	before spending a lot of time and money on developing their
	company. While I believe surveys and focus groups are helpful,
	in my own experience, I have found that they can be misleading
	and so the more experiential you can make your test, the
	better. Whether you are starting a technology company or not, I
	believe it's important to familiarize yourself with the idea of
	a Minimum Viable Product, a concept made popular by Eric Reis's
	book The Lean Start Up.

	3. Access to and preservation of capital is one of the
	biggest issues that small business owners face today. There are
	a number of ways to fund your business beyond traditional bank
	loans and equity investors such as online lending, grants,
	crowdfunding, and factoring to name a few. But, I also
	encourage people to read the stories of companies who did a lot
	with very little. We recently profiled a company called Project
	Repat which turns your old t-shirts into blankets. After being
	turned down by multiple lenders and investors, they were forced
	to bootstrap their business. Today, they are grateful for what
	seemed a hardship at the time. Because they had limited funds,
	they had to become incredibly creative with their marketing and
	it worked. Now, not only is the company successful, but they
	own most of it themselves and do not have any debt. If and when
	they do go out to raise money, they will be able to do it at a
	much higher valuation.

	We are at an exciting time for small businesses. Yet it is
	still a struggle for many. Over the past few years, we have
	done a series on Your Business on Main Streets across the
	country where we have profiled cities including Natchez,
	Mississippi; Brundidge, Alabama; Golden, Colorado; Daytona
	Florida; Galena, IL; Woodstock, NY and many others. Through
	these stories, I have found a few consistent themes:

	1. Many of the Main Streets which were thriving were doing
	so because one individual or one organization led the
	revitalization. This included discovering and applying for
	grants to pay for improvements (like street lights and repaving
	sidewalks,) organizing local businesses to work together to
	plan events, and working with the local government to help
	boost excitement amongst consumers. To have more success on
	Main Street, it's important to identify and support these
	champions.

	2. In spite of the work of this committee and the Small
	Business Administration, many business owners on Main Street do
	not feel like anyone in government is watching out for them.
	While they hear elected officials and members of the government
	in Washington speak of supporting small business, many business
	owners do not feel like they are seeing much action around that
	support. There is an issue around communication of
	improvements. More business owners need to know of the work you
	are doing here and learn how to take advantage of the resources
	provided by the federal government to help them grow their
	companies.

	3. While a lot of attention is paid to federal regulations,
	there is less focus on local and state regulations. Many small
	business owners--both on and off Main Street--cite these as
	challenging because it is difficult to keep track of
	everything.

	In addition, both on and off Main Street, we have heard a
	common refrain: difficulty finding affordable funding to
	expand, a challenge around recruiting top notch employees and a
	sense of loneliness and lack of community to help with business
	issues.

	That said, I believe we are in the beginning of a sweeping
	change when it comes to small business. Companies in the
	fintech and edtech space are working to address the issues of
	financing business and educating our workforce. With
	millennials now making up the largest share of the American
	workforce and primed to take over an increasing share of small
	business ownership, much will continue to change when it comes
	to entrepreneurship.

	Thank you again for taking the time today to celebrate
	small business owners and all they do. The more attention we
	can collectively bring to both the challenges of small business
	owners and their contributions, the more we can support this
	incredibly important segment of our economy.
	Ramon Ray, Editor, Smart Hustle Magazine

	Statement to U.S. House of Representatives Small Business
	Committee - 11 May 2016

	Chairman Chabot, Representative Velazquez thank you for
	inviting me to represent America's small business owners and
	entrepreneurs at this Committee hearing.

	I would also like to extend a special greeting to the
	Representatives from New Jersey, where I live and New York,
	where I grew up.

	Starting and growing a business is fraught with challenges.
	I've started four business and sold one of them. I'm an
	entrepreneur who is currently growing two companies--one of
	those companies is Smart Hustle Magazine.

	The day to day challenges of business ownership include
	hiring the right staff, obtaining financing, trying to get new
	customers and keep the ones you have, navigating various
	government regulations and more.

	Business ownership is not just about challenges, but it
	also comes with the sweet taste of independence, the freedom to
	chart our own course, the privilege of helping others with our
	income, and earning the profitable rewards from our risks and
	hard work.

	The greatest reward is the awesome responsibility of
	providing for our families and supporting our communities.

	Chairman Chabot, fellow Committee members, more important
	than any of use in the room here are the thousands and
	thousands of business owners I speak to, in person, across the
	country every year and the millions of small business owners
	and entrepreneurs I reach through my writing, speaking and
	media appearances.

	Based on input from the small business community I
	represent, there are three things our government, this
	Committee, can do for small business owners.

	First, continued reduction of burdensome and unnecessary
	regulation--at the Federal, State and Local Level. We NEED
	regulation for our safety, but we do not need burdensome or
	unnecessary regulation. The horrendous treatment of Uber (now a
	large company) is the most public example of regulation gone
	wrong--stifling innovation and limiting growth.

	Second, reduction and simplification of taxes--I count it a
	privilege that I can pay taxes, from my hard earned income, to
	fund our government operations. However, is there not a LIMIT
	to what tax rates and tax laws are fair versus which ones are
	excessive and burdensome? Every year I pay thousands of dollars
	in taxes, I would rather reduce the taxes I pay and instead use
	those funds to grow my business, invest in my community and
	thus invest in the growth of America.

	Third, foster small business eduction--``smart hustle''--I
	applaud the great work of the Small Business Administration,
	SCORE, SBDC's and other government supported organizations who
	support and educate small business owners. The more we invest
	in the education of small business owners the more we ensure
	businesses succeed and not failure.

	In particular, I applaud the work of the New York City
	Department of Small Business Services.

	Private and for profit education efforts such ass the
	Goldman Sachs 10,000, Goggle's Get Your Business Online,
	Microsoft Small Business Academy, Kaufman Foundation and so
	many other initiatives are an important part of the small
	business education ecosystem as well.

	I was recently speaking with Robert Herjavec of Shark Tank
	and we discussed that all small businesses hustle--they work
	hard. However, it's 'those who are educated, who have SMART
	HUSTLE, who succeed. Educating business owners is essential.

	As I conclude my statement I think of a company like
	infusionsoft started by 3 friends in a strip mall in Arizona.
	Or a company like SumoMe started by a fired Facebook employee
	in Austin. These companies, my company and the millions of
	other small and medium sized businesses need to be encouraged
	to start, grow and thrive.

	Let's think about the husband and wife who start a business
	together, or a high school graduate working on an invention, or
	that laid off 50 year-old forced to begin their own business.

	The best thing our government can do for small business
	owners, is to have limited regulation, lower and simplify taxes
	and continue to invest in the education of small business
	owners at the local, state and Federal level.

	Thank you for the opportunity to share about the hustle,
	the smart hustle of small businesses in America.
	Testimony of


	Susan Solovic


	THE Small Business Expert


	On


	``Inspiring Entrepreneurs and Learning from the


	Experts''


	Before the


	Small Business Committee


	United States House of Representatives


	May 11, 2016


	The Honorable Steve Chabot, Chairman


	The Honorable Nydia Velazquez, Ranking Member

	Good morning Chairman Chabot, Ranking member Velazquez and
	members of the committee. Thank you for the invitation and
	opportunity to provide testimony and to share my experiences
	working with small business owners and entrepreneurs. It is an
	honor to be with you today.

	Let me share with you a little bit about my entrepreneurial
	background. My mother was a pioneering entrepreneur. She opened
	her first business after her husband died in World War II and
	it was one of several she launched throughout the years. By the
	way, she also got her pilot's license in 1944. I still have her
	log book, which shows when she took her first solo flight.

	After she married my father, they opened a funeral home in
	a small, rural Missouri town and I grew up working in the
	family-owned business. Personally, I started my first business
	when I was 15 years old. I taught 75 little girls how to twirl
	a baton for $1.00 each on Saturday mornings in the high-school
	gym. Soon, I expanded to teaching dance classes in my basement.
	When I left for college, one of my star students took over and
	paid me 10 percent of the revenue for the first year. I guess
	you could say entrepreneurship is in my genes.

	I've also worked successfully in the corporate world
	becoming the first female executive in the financial services
	division of a Fortune 50 company. Additionally, I'm a licensed
	attorney, but my heart has always been in entrepreneurship and
	at this point in my life, I guess you could say I'm totally
	unemployable. I like calling the shots, making deals happen,
	running my own show, and bringing in money. I'm fortunate
	because my business is prospering, but the picture is not the
	same for millions of other small business owners in this
	country.

	Small businesses are struggling in the U.S.--as I'm sure
	you're aware. The number of small business closures is out-
	pacing startups for the first time in 30 years. According to
	the Capital One Spark Business Barometer, small business
	confidence has dropped nearly 10 points since the same time
	last year.

	However, there are bright spots for small businesses.
	Thanks to technology, the barrier to entry is greatly reduced
	compared to when I started my first business decades ago.
	Resources rest at your fingertips to help you do everything
	from establishing your legal entity to learning how to manage
	and grow your business. Additionally, cloud-based solutions
	give small firms the ability to access sophisticated software
	solutions affordably, allowing them to compete more effectively
	with bigger companies. And, technology allows small businesses
	to do business around the globe from their garage or spare
	bedroom.

	Yet even with these developments, startup founders who
	begin with passion and a sparkle in their eye now tell me their
	business dream has turned into a nightmare. However, we know
	many great companies have launched in the midst of difficult
	economic eras and have risen to the top echelons of business,
	so I encourage small businesses to focus on what they can
	control, rather than external pressures they can't control. In
	other words, don't point fingers and place blame. Focus on
	building a great company that brings true value to the market.

	As such, I've created a methodology called The One Percent
	Edge: The Critical Difference That Will Make or Break Your
	Business. The business world is changing rapidly today. What's
	new and cool today is obsolete tomorrow. Therefore, businesses
	that survive and thrive are the ones that have innovation in
	their DNA. They are constantly looking for enhancements and
	opportunities to bring something unique to the marketplace.

	In my own experience, I launched one of the first video-
	based Internet companies that provided news and information to
	the small business market. While there were other companies
	that provided similar content in a text format, we delivered
	the information via streaming video. We recognized small
	business owners are time and resource constrained. Statistics
	show that while it takes several minutes to read a 2,000-word
	document, it can be delivered in a much shorter amount of time
	via video and/or audio. Plus, while watching content on our
	site, owners could multi-task. And, unlike our larger
	competitors that had made huge capital investments in print
	publications, equipment and personnel, we were completely
	digital with a small staff. So when the recession hit, we were
	able to remain profitable while many of our competitors closed
	their doors.

	A number of years ago I taught an MBA class on growth
	strategies for entrepreneurs. Because of my travel schedule the
	university provided me with a co-teacher who was finishing his
	PhD in entrepreneurship. During our class time, my co-professor
	would discuss case studies and write formulas on the board.
	Once he finished, I'd stand up and tell the class how things
	work in the real world. The bottom line is that if you're
	following case studies or textbook formulas you are already
	behind in the game. There is no blueprint for success in
	today's dynamic business world. My motto is if you're jumping
	on the bandwagon now, you're too late. The window of
	opportunity has passed.

	Small business owners, not only need to make product and
	service enhancements, but they also need to embrace technology
	for greater productivity and profitability. Companies with the
	1 percent edge, constantly re-evaluate their operations, plan
	accordingly and adjust in a timely fashion. They are proactive,
	not reactive. Small businesses have a tremendous advantage when
	it comes to this process because they are agile. Large
	businesses often fail in adjusting to market needs because they
	are too large to make timely adjustments to their business
	models. That's why only 71 of the original Fortune 500
	companies remain today. The others have gone to the grave,
	often simply because they failed to recognize market trends.

	One positive note, I've seen is an increased use of social
	media by small businesses. More and more small companies are
	using social media to broadcast their brands, engage with
	customers and increase their sales. Many years ago, I owned a
	boutique PR and advertising agency. Our clients complained
	about not having enough money to market their businesses.
	Today, the major complaint I hear from small business owners is
	that they don't have the time to market. The myriad social
	platforms often confuse them and they don't understand how to
	take advantage of this game-changing technology.

	Similarly, when I had my agency, we worked hard to get our
	clients booked on traditional radio and TV shows or mentioned
	in a newspaper or magazine. The value of the new coverage was a
	huge boost for small companies. Today, small businesses can
	become their own media company by creating video content,
	podcasts, hosting a radio program and blog posts. One financial
	services advisor I know has become a well-loved and respected
	resources in this community because of a weekly radio show and
	a self-produced cable television show. The bottom line: Small
	business owners can create a celebrity brand position with the
	simple tools available today giving them a significant
	advantage.

	I was an early adopter of social media. After I sold my
	Internet business, I began working independently building my
	own brand. My husband would question why I was wasting time on
	social media instead of getting on the phone making sales
	calls. Today, he has to eat those words as I am consistently
	ranked in the top five of small business experts to follow on
	Twitter. I do zero out-bound marketing as business
	opportunities come to me. It's an excellent position to be in
	and one I primarily attribute to my social media presence.

	Small business owners still need assistance and mentoring.
	I get hundreds of emails every week from business owners
	seeking advice on every aspect of their business development.
	This tells me that even with all the great resources on the
	Internet, business owners still like the one-to-one, personal
	touch.

	I'd be remiss if I didn't mention small business capital
	needs. Traditional lending is down, and most startups use
	personal assets, credit cards and loans from family or friends.
	Crowdfunding is helping some small companies get off the ground
	and I am optimistic that the equity crowdfunding, including the
	new Title III regulations to the JOBS Act that will go into
	effect of May 16, will open up a new source of funds for small
	firms. Will it be enough? The jury is still out.

	Growth organizations need access to venture capital, and
	that is an area of concern for me in terms of being a woman in
	business. I wrote a book called ``The Girls' Guide to Power and
	Success'' in 2001. Sadly, in the 15 years since its publication
	the statistics have barely changed--particularly when it comes
	to VC funding of women-owned businesses. That is partly the
	reason fewer than 2 percent of women-owned firms ever gross
	over $1 million in revenue.

	Having gone through the VC process myself, I can verify
	that the bias against women-owned businesses is real. There are
	myriad research studies that will also confirm it, but I
	experienced it firsthand. Being the only women-owned CEO
	selected to present at a venture forum, one of the organizers
	said he was glad I was attractive. I ask you, do you think he
	said that to any of the men?

	Training programs that focus on helping women understand
	how to pitch to the VC community and the addition of more
	female VCs is beginning to make small improvements in this
	area. But it's only the tip of the iceberg; we have a long way
	to go to level the playing field.

	While there are many positive developments for small
	business, there are a significant number of obstacles resulting
	in a stifling affect. I'd be remiss if I didn't touch on some
	of those. Politicians praise the importance of small business
	in producing jobs and innovation on one hand, yet continue to
	impose regulations and laws that create an environment that
	makes it nearly impossible for them to thrive.

	The regulatory burden in this country is in the trillions
	of dollars and small businesses pay 36 percent more than larger
	enterprises.

	Could small businesses in the U.S. eventually become
	extinct? In my opinion, if we continue down this path of hyper-
	regulation, they will certainly become an endangered species.
	How can we protect this important market sector? As one long-
	time entrepreneur said to me when I asked what needs to be
	done: Get out of our business.

	I truly believe that most governmental policies are passed
	with the best intentions in mind, and of course some
	regulations are necessary to protect our citizenry.
	Unfortunately. the consequences are not always understood and
	the results wreak havoc on small business owners. As former
	Senator George McGovern said after his business venture in
	Stratford, Connecticut failed, ``I ... wish that during the
	years I was in public office I had had this firsthand
	experience about the difficulties business people face very
	day. That knowledge would have made me a better U.S. senator
	and a more understanding presidential contender.''

	In my role as a small business expert, I speak to thousands
	of small business owners from around the country. They are
	discouraged and disheartened. So I'm asking you to walk a mile
	in our shoes today so you can better understand what is
	happening to small businesses and why they are slowly dying
	off.

	The average sole-proprietor in the U.S. grosses annual
	revenues of $44,000 and works 52 hours a week. She is he most
	likely has put their personal finances at risk to start and run
	his business. He or she sacrifice family time, holidays,
	weekends and vacations. There is no family medical leave for
	the entrepreneur. If they don't work, they don't get paid.
	There is no overtime, and if their businesses don't make it, no
	one is there to help bail them out or offer him an unemployment
	check.

	Small business owners are not the captains of industry from
	the industrial age. They aren't slave drivers requiring their
	employees to work long hours with little pay in poor working
	conditions. They are individuals who are trying to provide a
	living for their families, to give back to the community, and
	to treat their employees with respect--often going without a
	salary themselves in order to pay their employees during tight
	times. We aren't money-hungry greed mongers, and those who make
	a profit put a larger share of that back into the business. But
	I ask: When did it become a crime to want to better yourself
	and build wealth in this country? After sacrificing so much to
	build our businesses without governmental assistance, should we
	be penalized for this effort? Should the government tell us how
	to run our companies?

	Allow me to share a personal story. My parents grew up in
	the depression. My father served in the Navy in World War II.
	Neither one had any education to speak of, but they knew how to
	work hard. In 1963, they launched a funeral home in the small
	town in southern Missouri where I grew up. At that time, our
	business, like most funeral homes offered ambulance service to
	aid the community. In the '70s, the DOL audited my parents for
	wage and hour violations. The auditor spent two days examining
	their books and talking with employees. His conclusion: When
	our vehicles were used as hearses overtime did not apply, but
	if the vehicle was used as an ambulance, then overtime did
	apply. The auditor extrapolated over a two-year period how much
	back pay my parents owed. When my parents refused to pay it
	because they thought the decision was unfair and arbitrary, the
	auditor met with our three or four employees and explained to
	them they had a right to sue and how to do it. Thankfully none
	of them did. But my parents quit the ambulance business, which
	was never a profit center, because trying to comply with the
	regulations was too costly and complex. As a result, our small
	community was left with no ambulance service until much later
	when the hospital began to provide it.

	Unfair and misguided regulations such as these, not only
	affect the operations of a small business, but also hurt
	communities and jobs.

	Speaking of overtime regulations, the increase in the
	overtime threshold to nearly $50,000 is one such back-breaking
	regulation. First, it is extremely complicated for small
	business owners to determine precisely which employees are
	exempt and which are not. Culling through the guidelines, which
	are almost as thick as the tax code, is just an added headache
	for an owner who is already stressed by simply trying to keep
	up with daily business operations. Therefore, the risk of
	misclassifying an employee is significant. Small business
	owners don't have the funds to hire labor lawyers to help them
	navigate the complexity of the system. This puts them at risk
	for audits and even worse, lawsuits, which could be more costly
	than the overtime itself.

	Additionally, an arbitrary amount doesn't take in account
	the differences in geographic economies. For example, $50,000
	in the little town I grew up in is a big amount of money. I
	recently sold my family home, which was over 5,000 square feet,
	4 bedrooms, 3 full-baths and two half-baths, finished basement
	and an extra-large lot for $116,000. On the other hand, $50,000
	in Manhattan wouldn't allow me to come close to affording my
	apartment there.

	Increasing the overtime regulations means small business
	owners will have to reduce the number of employees, convert
	full-time to part-time positions, or increase the price of
	their products. Most small businesses find themselves competing
	on price with larger providers or big-box stores, therefore,
	price increases are not truly an option. Because profits
	margins have already been whittled away during the last
	recession, cutting operational costs--employees--is the logical
	answer.

	The same result occurs with the increase in the minimum
	wage. Small businesses simply can't absorb the increase so they
	will cut the number of employees. One businessman from Ohio
	told me how he has been squeezed so much that more costs are
	something he can't absorb. He plans to raise his prices, which
	he says the consumer doesn't want to hear but the money has to
	come from somewhere. It doesn't grow on trees. Another
	restaurant owner from the East Coast said he simply plans to
	close some of this locations because it is impossible to
	operate them profitability.

	The Affordable Care Act has also had a dampening effect on
	job creation. Many small business owners have held their
	employee count down to avoid the employer mandate.

	Mandatory family leave sounds good in theory, but let's
	apply it to a typical small business. What do you do when a
	team member takes leave for 12 weeks? You still have to pay at
	least part of his or her salary so you can't afford to bring on
	someone else. Even if you could afford it, how do you train
	replacements quickly, invest money in them, and then let them
	go when your original employee comes back? The only other
	option is to ask your remaining staff to pick up the slack.
	Employee morale and productivity is sure to wane impacting your
	bottom line. You may lose existing customers and business
	opportunities. Most small businesses have family-friendly work
	environments to accommodate personal needs. Isn't it better to
	allow the business owner to manage in way that is appropriate
	for his business?

	What about the business owner himself who has a medical
	issue? For example, my mother had Alzheimer's. My father became
	her primary caregiver, which left no one to manage our family
	business other than me--an only child. I had to juggle
	commuting back and forth to my hometown to keep the business
	running while still trying to manage the demands of my own
	company until I was able to sell our family business.

	The same is true for equal pay. I have been the victim of
	pay disparity when I was an executive with a Fortune 50
	company. When I was elevated to the executive level, I was paid
	about $20,000 less than my male predecessor. I understand how
	unfair it is and it is an issue that should be addressed, but
	not legislated. I understand how unfair it is and it is an
	issue that should be addressed, but not legislated. Business
	owners need the flexibility to establish wages based on
	experience and skills, not mandated by law. A man and woman who
	come to a job with the very same credentials should be paid
	equally, but if one has less experience and fewer skills then a
	business owner should have the flexibility to establish wages
	accordingly.

	The tax code is also problematic for small businesses.
	While I think it is important to lower corporate tax rates to
	stay competitive internationally, most of us are pass-through
	entities, therefore, we are just as interested in a less
	complicated and lower personal tax rate. Because of the
	complexity of the tax code, many small businesses don't take
	advantage of available tax credits and deductions. The cost of
	complying with the tax code is 206 percent higher than a larger
	company.

	While we're on the subject of taxes, let's discuss the
	death tax. For many small business owners, their business is
	their greatest asset and they want to pass it on to their
	heirs. Yet having paid taxes on it for years, when the owner
	passes away it becomes part of an estate that may be taxed at a
	rate as high as 55 percent by the government. Unfortunately,
	most small business owners don't have the money in their
	estates to pay the taxes so the business must be sold or
	liquidated to pay the tax. There goes the business and there
	goes the jobs.

	There are still many bright spots for small business
	owners. America remains a great country with opportunity, which
	is why so many want to leave their homelands to come here. Our
	country was built on the spirit of entrepreneurship. Let's not
	extinguish this important characteristic of our culture. Let's
	create a pro-business environment that gives entrepreneurs the
	ability to start, grow, and build great companies that provide
	jobs and continue to drive our economy.

	Thank you again for the opportunity to testify. I am
	grateful the great bipartisan work of this committee, which has
	led to important legislative victories and progress for
	America's small business owners and entrepreneurs. I look
	forward to our discussion today.
	Testimony of


	Melinda Emerson


	``SmallBizLady''


	America's #1 Small Business Expert


	``Inspiring Entrepreneurs and Learning From Experts''


	The Small Business Committee


	United States House of Representatives


	May 11, 2016


	The Honorable Steve Chabot, Chairman


	The Honorable Nydia Velazquez, Ranking Member

	Good morning, thank you Committee Chairman Chabot and
	Ranking committee member Velazquez and the rest of the Small
	Business Committee for the opportunity to testify on the status
	of small businesses in the U.S.

	My name is Melinda Emerson, but I'm known worldwide as
	SmallBizLady, America's #1 Small Business Expert. My
	SmallBizLady brand reaches 3 million readers each week online.
	I've been an entrepreneur for 17 years as President and CEO of
	the Quintessence Group, a marketing and management consulting
	firm based in Philadelphia, Pennsylvania. We specialize in
	working with Fortune 500 companies who target small business
	customers.

	For the last 8 years, I have also run SmallBizLady
	Enterprises, which is our training and development company for
	small business owners, Our mission at SmallBizLady Enterprises
	is to End Small Business Failure. We work directly with women
	and minority entrepreneurs who want to start and grow
	successful small businesses. We publish a resource blog at
	succeedasyourownboss.com, which is syndicated through The
	Huffington Post. We reach millions of entrepreneurs a week and
	22% of my audience is international. I get letters and emails
	each week from around the world asking for tools, advice, and
	funding.

	I am also the bestselling author of the book, Become Your
	Own Boss in 12 Months, which is in its second edition and the
	ebook. How to Become a Social Media Ninja. In addition to these
	for profit pursuits, I also run the Melinda F. Emerson
	Foundation for small business success, which hosts a flagship
	conference every fall called Reinvention Weekend. I am also a
	former columnist for the New York Times, Inc. and
	Entrepreneur.com.

	Technology really makes a difference for small business to
	get information to help them grow their businesses. For the
	last 7 years, I have also hosted a live tweetchat weekly on
	Twitter called #Smallbizchat to answer small business
	questions. Our audience ranges from start-ups to more
	established businesses depending on the topic of each show. We
	are the largest live small business audience on Twitter.

	One of the things I am known for is the Emerson Planning
	System, which I highlight in my book Become Your Own Boss in 12
	months. It's my six-step system to transition from employee to
	entrepreneur:

	Step 1: Develop a Life Plan Before You Ever Write a
	Business Plan

	Step 2: Develop a Financial Plan, as the money to start
	your business will most like come from you right or left pocket
	and banks do not loan money to start-up, you must be in
	business at least two years with position cash flow.

	Step 3: Validate Your Business Idea, based on what skills
	you have and need to run that business

	Step 4: Know Your Paying Customer, don't fall in love with
	your Idea, make sure there's a demand for It and a customer
	willing to pay.

	Step 5: Write a Business Plan, you must plan for success it
	will not just happen to you

	Step 6: Launch While Working, It takes 12-18 Months for a
	Small business to break even let alone replace your corporate
	salary.

	As I thought about my opportunity to shed light on the
	state of small business in the U.S., I first looked back over
	my nearly two decades in business for ideas. And Chairman
	Chabot, I heard you were looking for some bold ideas to shape
	the future, so here goes a few.

	There are three critical things that really propelled my
	business success. The first was the initial business loan I
	secured. It was a $25,000 loan from Ben Franklin Technology
	Partners in 2000. It was a SBA backed loan fund, called the
	Competitive Edge Loan Program. What was unique about this
	program was that in addition to the funds, I also received 25%
	of the loan's value in technical assistance for my business. My
	first accountant and marketing consultant were hired with these
	funds, and I must say they saved me. I was a former television
	producer, and I knew how to tell great stores on video, which
	is what my firm do, but I didn't know a lot about running a
	business. I have a journalism degree from Virginia Tech, in
	fact the reason I started my business was because Oprah Winfrey
	inspired me, she was the first journalist I ever saw start a
	business. This made me think I could do it too.

	But there was a lot to learn, I second thing that made the
	biggest difference for me was that I recognized early on that I
	had to grow myself to grow my business. Every year I've been in
	business I've invested in some course, coaching or leadership
	development program.

	I have participated in executive training program at
	Dartmouth College, and the University of Virginia, I did the
	E200 training program sponsored by the SBA, the 8a Academy,
	Fast Track, I also went through Leadership Inc. Philadelphia,
	and the Urban League Leadership institute, but the first class
	I ever took was the SEA Program, which was a FREE state run
	program for people who were unemployed called the Self-
	Employment Assistance Program, which was run by the Women's
	Opportunity Resource Center in Philadelphia. It provided 8-week
	business plan course, allowing me to collect unemployment while
	I built my business. I think a National program like this could
	help a lot of unemployed people reinvent themselves as small
	business owners.

	The third thing that was a pivotal moment in my business
	was when I won the minority business plan competition which was
	sponsored by The Enterprise Center and the City of
	Philadelphia. In 2001, I won $20,000 and free office space in a
	business incubator for one year. This enabled me to hire my
	first employee, and that's when my business took off. We need
	more public/private partnerships America that seed and launch
	small businesses with grant dollars and incubation spaces, but
	we need some that intentionally support minority and women
	owned business that are main street businesses.

	In Hungzhou, China's Silicon Valley, start-ups are given
	three years of space in business incubators and they have a
	$300-million dollar fund to seed new businesses. In Singapore,
	there is a mall in the heart of the financial district
	dedicated to youth entrepreneurs. Young entrepreneurs, as young
	as 10 years old, once accepted into the government training
	program can get discounted space, training and mentorship to
	sell their products, and when their business get big enough
	they can get retail space. They define youth entrepreneurs up
	to age 35.

	In Chile, Start-up Chile, provides $40,000 and place to
	live for one year if entrepreneurs are willing to come and
	start their business in that country. In this country, Start-up
	America, is largely public relations initiative with very few
	resources to provide anyone other than networking events.

	Because we have some of the greatest businesses in the
	world in America, we think that we have cornered the market on
	innovation. But I have traveled internationally as the
	SmallBizLady, through the World Entrepreneurship Forum, and we
	are losing our edge. We need to start teaching entrepreneurship
	education starting in kindergarten. We need to support and fund
	Junior Achievement and NFTE's, especially in urban communities
	with decaying school districts to make sure that the next
	generation are ready with skills to launch and lead businesses.

	My biggest concern about what efforts the government, SBA,
	and MBDA are doing is only focusing all the efforts is on
	finding the next Facebook or tech start-up and that is a
	dangerous precedent. 95% of all small business in the world
	will never gross of one million in revenue. We need programs
	that bolster main street businesses.

	There are four things businesses need: Access to Capital,
	Mentorship, Training, and Networking. This is especially true
	for women and minorities. We need access to networks, industry
	decision makers and market leaders. Especially those in non-
	tech industries, that are not expected to leaders outside of
	their typically networks and this limits their ability to
	scale. We just don't have the mentorship or sponsorship
	relationships rather to build traction in our businesses and
	meet equity investors. They need that patient money that an
	equity investor could provide.

	Since the great recession of 2008, small businesses owners
	that were able to hang in there are hurting. They can't get
	credit or capital. Although, if they are ecommerce business and
	have cash flow of at least $10,000 a month or more they can get
	high interest loans from cash flow lenders like Kabbage,
	Merchant Cash, On Deck or one of 50+ others. This industry
	needs some regulations and close scrutiny. Many of these
	lenders will fund a business with a 620 credit score at a 24-
	26% interest rate with immediate payment terms. This industry
	is preying on desperate small business owners, who can't
	qualify for lending from traditional banks.

	And when business owners do apply for an SBA loan the
	delays and paperwork burden, make that a loan of last resort.
	Because when business owners need money, they need it in a
	hurry. One of the other main drawbacks from using SBA
	guarantees for loans, is that the government demands a UCCI
	lean on all current and future assets. That means for a $25,000
	loan, a start-up business would never be able to use business
	assets as collateral for a future loan, once the business
	starts to scale.

	Now there is a lot of talk these days about crowdfunding,
	which has created some opportunities for product based business
	with sharp marketing, but the average crowdfunding campaign
	generates $10,000, and it a lot of work for so little money.
	Now I am slightly optimistic with the pending approval of Title
	III from the JOBS Act, but I am concerned that too many small
	businesses who are not properly networked or prepared will
	pursue this option with poor results.

	Technology is tough for some business owners. While cloud
	based computing has made enterprise level software available
	and affordable, there are too many options with no time to
	learn new software. This keeps many businesses paralyzed doing
	things the same old way. Too many business owners still do not
	have websites, which is their #1 sales tool. They are also
	overwhelmed with social media marketing. Everyone is out here
	trying to use them all Facebook, Twitter, Instagram, Goggle+,
	Snapchat, Pinterest, etc., but they must be strategic online. I
	advise small business owners to focus on one or two social
	media platforms, and they should be the ones where their best
	target customer is hanging out online.

	There are other regulatory challenges that small businesses
	face that should be reviewed.....the expanded categorization of
	who can and cannot be considered a 1099 independent contractor
	is a challenge for small businesses that cost of full-time
	employees is prohibitive to cash-strapped start-ups. The tax
	code needs to be simplified to help more small business owners,
	it costs a lot to be in business in the U.S. And 12 weeks of
	mandatory family leave for a team of four in typical small
	business in a real hardship for a struggling business with
	ongoing cash flow issues.

	When I think about things your committee could do to help
	on the enforcement of set aside goals and plans. This is
	critical for minority and women owned business success. The old
	``good faith effort'' excuse should come with some financial
	penalty for agencies and prime contractors who do not meet
	goals. Create incentives for larger government contractors to
	identify and team with certified minority and woman owned
	firms. Also disadvantaged firms who are able to scale through
	8(a), women-owned and veteran owned firms program should be
	encourage or maybe even required to help smaller firms grow
	once they are over $30 million in gross revenue.

	Despite all of the challenges, being a small business owner
	is still the greatest reward in business. We live how most
	people won't so that we can live how most people can't. Now is
	still an amazing time to launch a business, and no matter who
	you are, the world is still waiting on a better mousetrap. My
	favorite advice to give small businesses is, ``You never lose
	in business either you win or you learn.''

	Thank you very much for inviting me to testify. I feel
	honored to be here.

	[all]
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