[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]




                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES


                             SECOND SESSION


                              HEARING HELD
                              MAY 11, 2016


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


                         U.S. GOVERNMENT PUBLISHING OFFICE 

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                      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

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


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


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:
Answers for the Record:
Additional Material for the Record:


                        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 
    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 
    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 
    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 
    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 
    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 
    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.


                   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 
    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 
    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 
    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.


    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 
    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 
    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.


    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 

    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 

    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 

    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 

    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 

    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 

    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 

    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


            ``Inspiring Entrepreneurs and Learning from the


                               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 

    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 

    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 

    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 

    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 

    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 

    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 

    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 

    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 

    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 

    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


                   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 

    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 

    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 

    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 

    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 

    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.