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What Small Business Owners Are Saying About The Impact Of Sequestration

Washington, Sep 19 -

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 Ahead of Thursday's hearing, Sequestration: The Threat to Small Businesses, Jobs, and the Industrial Base, American small business owners shared how sequestration will impact their company through the Committee’s interactive website, “Small Biz Open Mic”:

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Dear Congressman Graves, I am the President and CEO Allied Associates International, Inc. We are a small business that supports the Department of Defense and the Intelligence Community. As yet sequestration has not affected our business but should it become a reality it could, in one fell swoop, destroy our company. I am sure that the large defense contractors will be hurt by sequestration, but they will survive. Small companies like mine, however, do not have the fiscal resources to stay in business while the Government sorts out the issues surrounding sequestration. As a result the people employed by small businesses will go from being vital, contributing members of our economy to being a drain on it, a drain that I am not convinced the economy itself can tolerate. In twenty years the country, I am sure, will recover from the devastation sequestration will cause. Unfortunately my employees cannot wait twenty years, or even two years, for a recovery. Their families need to eat every day; their mortgage must be paid every month; these things cannot be put off for another budget cycle. I understand that the country must do something about getting its debt under control. But I cannot see how throwing over a million people onto the unemployment rolls will aid in that endeavor. Sincerely yours, Perry C. Casto, Jr.

Perry Casto (Warrenton, VA) Allied Associates International, Inc., 9/17/2012          _________________________________________________________________________________________

I started a business about 3 years ago manufacturing and commercializing products for coating Petri dishes for researchers doing cell culture experiments. We have grown our product line to 50 products. Our business has grown >30% per year and is profitable employing 3 employees. There is a significant opportunity to grow business and I would like to expand the business further. However, due to the uncertainties with the new health care law, questions about the Obama Administration's wanting to 'spread the wealth' via taxation and the question about sequestration (cutting funds for medical research), I have decided to allow only modest growth of the company keeping it small to avoid the ramifications of high taxes and requirements for corporate health care.

David Bagley (Poway, CA) Advanced BioMatrix, 9/18/2012
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Our small Sub S corporation had been growing at an impressive rate. We have been approved for a loan to buy our own office space in the Wash DC area. But with the expiration of tax cuts and sequestration facing us, I can't bet that it is a good idea to take on this debt even though we really need our own office space. The business condo real estate market is completely flat so it is a good time to buy. The SBA program is a big help. But the overall economic outlook is a huge concern for me as a CEO. The compromise reached in 2011 for the FY 2012 Federal budget was undermined by this sequestration delay until March 2013. These budget uncertainty issues are causing us to fear problems with awards of contracts for which we have submitted proposals. We are a Healthcare IT firm with a lot to contribute to the future of the quality of healthcare and patient safety. We as a company need to move ahead to help save lives and take care of our Vets. Tax increases would hit us at a very inopportune time of what should have been planned growth and hiring. We aren't IBM, in order to hire someone we have to be able to bill them out to new clients.

J. Mulrooney (Clifton, VA) J P Systems, Inc, 9/16/2012

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We are a Service Disabled Veteran Owned Small Business that specializes in providing software and data base solutions in the defense and intelligence markets. Since our inception in early 2008 we have lead developments on numerous programs of national interest that involved highly complex data sharing and data ingest and analysis processes. In all cases we are subcontractors to large system integrators with our staff playing key roles due to their expertise. Since the threat of sequestration we have seen two programs canceled and we are now seeing short notice stop work orders on other programs. As a reaction some of our prime partners have started replacing subcontractors with their own employees. Most small businesses I interact with are debt free with limited cash reserves and in place of layoffs they carry staff through gaps in contract coverage; this is changing. With little end in sight most I talk to are planning short notice staff reductions as programs ends. I expect the small business set-aside numbers to continue to drop as they have over last several years and for many small businesses to go under during the next 6-12 months.

Mike Janeway (Potomac Falls, VA) APG Technologies, LLC, 9/15/2012

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My company provides Acquisition Logistics and Testing for procurement of military systems. Costs to have an employee with a $40k salary is about $65k. Income has been used just to keep the company operating. Profit - what's that? Due to current DoD funding cutbacks our work has been curtailed and has resulted in layoffs. Sequestration will most likely result in a going out of business sale.

H Howell (Woodbridge, VA) Defense Logistics LLC, 9/18/2012

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The NIH remains the primary engine of innovation in Biomedical research and development through its support of academic and small business R&D. As a small Biotechnology company developing platform technologies for therapeutic and diagnostic discovery and prototypes for new medicines and therapeutic strategies for major diseases of an aging population, such as Alzheimer’s, inflammatory diseases, cancer, and antibiotic-resistant hospital infections, CytoDesign, Inc. depends critically on NIH support through the SBIR and other grant programs, without which our projects in these areas would be shut down. Every new treatment that enters clinical trials generates hundreds to thousands of new jobs, and promises to improve quality of life and productivity for even more sufferers of these diseases. We cannot allow sequestration to threaten one of the few areas of scientific innovation in which the US remains preeminent in the world.

Robert Balint (Palo Alto, CA) CytoDesign, Inc., 9/16/2012             

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Recognizing the importance of entrepreneurs’ feedback in the process of shaping the very policies that will help determine their business sustainability and growth, Chairman Graves launched Small Biz Open Mic in September of 2011.