Hearings to examine main street, focusing on growing the small business pet economy.

I call the Committee on Small Business and Entrepreneurship to order. Today folks, we are talking about our beloved pets and the entrepreneurial ecosystem that supports the ever-growing pet industry. Pets have a very special place in our lives, in our families, and even here in the Senate. And you can always ask Senator Justice, who often travels with his dog Babydog. They are there to greet us, support those with disabilities, and help our veterans regain their independence. Pets are abundant in Americans' lives, with around 57 percent of households owning at least one. In rural areas, this number is even higher. 71 percent of households have pets, and 47 percent report owning more than one animal. As more Americans have welcomed pets into their homes, businesses supporting our animals thrived. This growth has continued in our current golden age, where spending on pets is estimated to have reached $157 billion in 2025, a record high and a 75 percent increase since 2018. As the pet economy continues to grow, the number and variety of small businesses who support our pets continues to increase. Local vets, community trainers, and neighborhood pet stores are some of the first places people go to get support for their animals. Some of the small businesses we will hear from today participate in franchises throughout the country, serve on Main Street, and provide quality medical care when our pets need it most. They do all of this while investing in their employees and giving back to their communities. However, the difficulties pet small businesses face are no different to those who participate in any other sector of the economy. Accessing capital, navigating regulations, and recruiting qualified employees are just some of the many challenges these entrepreneurs encounter. We are here today to talk about how to support these business owners. We can start by passing my Made in America Manufacturing Finance Act, which will raise the Small Business Administration's 7A and 504 limits from $5 million to $10 million for small manufacturers, like Blue 9 Pet Products, that manufactures pet training products in Maquoketa, Iowa. I am grateful to my colleagues, including Senators Coons, Young, Hickenlooper, and Husted, for their bipartisan, get it, bipartisan, yeah, okay, we're trying to make a joke, support. This bill has already passed the House, and I will continue to work to pass it through our Senate chamber. As small businesses and their employees navigate tax season, they will be able to invest more of their profits in their employees and business growth thanks to the Working Families Tax Cuts that are now law. From pet groomers benefiting from the no tax on tips provision to small business owners taking advantage of the qualified business income deduction, more of the folks' hard-earned money is staying in their own pockets. Today we will also have a chance to examine the challenges businesses in rural areas face and the effective ways small business owners everywhere can recruit and retain employees. The pet economy is just as wide and diverse as the small businesses who participate in it. They care for our animals as their own, and it is important that we support them as they pursue growth and expansion of their businesses. I want to thank our witnesses for being with us today. We look forward to your testimony and hearing about your important work and the valuable services you provide to our communities. I now recognize Ranking Member Markey for his opening statement.

Thank you, Madam Chair, and thank you for this bipartisan spirit that you're bringing to bipartisan. And I had to grow up being bilingual because I had to sound like the kids down the park when I was growing up, which did not sound like the past is just a memory and the future is a hard reality. So you grow up kind of bilingual in Boston with these two different accents. But thank you, Madam Chair. The great thing about pet ownership is that it has never been something only available to the well-to-do. Anyone willing to open their hearts can bring a pet into their home. But today pet ownership is becoming harder and harder for many Americans. Trump's economic policies have created an affordability crisis for small businesses and pet owners across the country. Since Trump took office last year, gas prices are up 15 percent and rising. Electricity prices are up as high as 13 percent. Grocery costs are up with household staples like orange juice up 28 percent, beef up 13.5 percent. Healthcare costs are up with more than 10 million small businesses and their employees facing a 114 percent increase in their premium payments. Pet owners are getting squeezed, and not in a cuddly way. This petflation may mean that a trip to the vet, a visit to the pet store, or even keeping a pet at all is out of reach for many Americans. Trump's affordability crisis is forcing families to make tough choices: pets or prescriptions, dogs or diapers, cats or car payments. But pet ownership should not be a privilege reserved for the wealthy. In addition to the millions of pet owners unable to keep up with these rising costs, the thousands of small businesses that serve them are also hurting. And that's what today's hearing is about. Because Trump's senseless tariffs have been particularly damaging to the pet supply chain, increasing the cost of producing and distributing pet food and toys and vet supplies and packaging materials. Local pet stores already have a hard enough time competing with the Great Danes of the world, and tariffs have only made their fight for survival that much more difficult. So today I'm happy that one of the co-founders of a great Massachusetts success story, Polkadog, is joining us. Founded 24 years ago in a small corner storefront in Boston's South End, Polkadog has grown to over 11 locations in Massachusetts and Rhode Island and has developed a brand of sustainably sourced dog and cat treats that are now available across the globe. And like many small businesses, Polkadog's growth was helped along by an SBA loan. Later they worked with the Massachusetts Port Authority that runs our airport to open up a new production facility at the Boston Fish Pier. As Rob Van Sickle and his business partner built this business brick by brick, they made sure that it reflected their values and the values of the community they serve. Their stores provide a welcoming space for pet owners where you can stop by with your pet whether you're buying one of Polkadog's products or not. And Rob and his Polkadog team also have shown an admirable commitment to sustainable business practices, transforming byproducts from the fishing industry that would normally be thrown away into treats that dogs and cats leap for. But as Rob will tell you, being a small business owner is no walk in the dog park. He faces continuing price uncertainty due to Trump's affordability crisis. Polkadog has done all the right things and jumped through all the right hoops, and with their hard work and community-focused vision, Polkadog has become a fixture for pets and their owners in Massachusetts and around the globe. And we just can't let that success story fall by the wayside and be hounded by destructive policy decisions. Thank you, and I look forward to hearing from Rob and other witnesses today. Thank you.

Thank you, Ranking Member Markey. I think our jokes are kind of falling by the wayside.

I'll laugh at yours if you laugh at mine.

Yes, I promise to do that. Again, we want to thank our witnesses for being here today, extend a warm welcome to all of you, and I'm thankful that you took time out of your busy schedules to join us here in Washington, D.C. and share your expertise before this committee. We are going to go ahead with the witness introductions. I'll introduce the first two, and then we will leave the last one for Ranking Member Markey. And first we'll start with Mr. Josh Rodgers. He is from Parkville, Missouri and owns several Camp Bow Wow franchise locations across Missouri, Colorado, and Florida. Camp Bow Wow offers dog daycare and boarding services. Mr. Rodgers holds a bachelor's and master's degree in information management from Washington University in St. Louis. Next we have Dr. Gary Brown. He is a veterinarian from Princeton, West Virginia. He founded the Animal Care Center and is an expert on Italian Greyhounds. He now runs Willowbrook Cremations, which provides end-of-life care to help local pet owners and hospitals throughout West Virginia. He received his Doctor of Veterinary Medicine degree from the University of Georgia and has previously served as vice president, vice chair, and chair of the board of the American Veterinary Medical Association. And to all of you, thank you again. And now I will turn to Ranking Member Markey to introduce his witness.

And I thank you, Madam Chair. And again, please once again to talk about Mr. Van Sickle, who serves as the co-founder and CEO of Polkadog, a small pet treat business with 11 retail locations across Boston, two warehouses in Canton, Massachusetts, one manufacturing facility at the Boston Fish Pier. And he has been innovating for 24 years with sustainable and community-driven practices, becoming known for their single-ingredient cod skins, beloved by dogs and cats in Boston and beyond. He has a national reputation, and he lives with his family in Milton, Massachusetts, and we look forward to your testimony.

Great. Thank you, Ranking Member Markey. And briefly, I'll take a moment to explain the lighting system in front of you. There are three lights, and green means go, yellow means you are running out of time, and red means to go ahead and wrap up your remarks. I ask unanimous consent that the witnesses' full statements be included in the record without objection, so ordered. As your written testimony has been made part of the record, the committee asks that you limit your oral remarks to five minutes. And with that, Mr. Rodgers, you are recognized for five minutes for your testimony.

All right. Thank you, Chair Ernst and Ranking Member Markey and distinguished members of the committee, including my very own from Missouri, Senator Hawley. Thank you to this committee for the opportunity to be here and talk about the issues faced by our pet services business. I am here today with my powerhouse wife, Ashley, the real reason why we are in the pet business, and I'll go into that in a minute. We also have three dogs and today we're actually caretaking over 510 dogs across our seven locations. Ashley and I are first-generation college graduates from very humble beginnings. My father is a plumber and my mother is a seamstress. Growing up, I saw them struggle immensely to build their own businesses from scratch. They eventually succeeded through pure sacrifice, but they had no roadmap. A generation later, Ashley and I own and operate seven Camp Bow Wow locations across my home state of Missouri along with Colorado and Florida. We employ over 140 people. What's the difference between our small business experience and my parents'? I'll be candid: it's the franchise business model. The model substantially reduced our risk and enabled us to grow more quickly than we originally anticipated, seven locations in under four years. So we've grown quite quickly. So how did we get here? After trying out several different pet care facilities for our dogs, we decided to try Camp Bow Wow that a friend of ours had recently opened and really liked the premier experience Camp Bow Wow offered. That's when Ashley suggested we look into opening our own once we found out it was a franchise, reducing the risk. Having a comfortable, well-paying corporate job, my first reaction was a negative one, to be honest. But Ashley was persistent, and over time I agreed. The Camp Bow Wow franchise model changed everything. It allowed us to go into business for ourselves but not by ourselves. That proven system turned insurmountable risk into reality, allowing us to open our first location in April of 2022 and break even in six weeks, which is unheard of. And that success enabled us to grow to seven locations across three states with plans to expand further. According to a recent IFA survey of 3,000 franchisees earlier this year, 30 percent say they would not own a business without franchising. That represents thousands of small businesses never created without the franchise model. We are excited to see that pet services including grooming, boarding, daycare, and veterinary care are expected to be among the fastest-growing segments in the franchise sector. According to the American Pet Products Association, 94 million households own a pet and 51 percent of those pets are dogs. It's no wonder Americans love their four-legged family members. This growth wasn't accidental; it was fueled by one big beautiful bill which was enacted last summer. For example, the permanent 100 percent bonus depreciation has been a game changer for us. When we acquired our Liberty, Missouri location last September, we were able to immediately deduct much of that cost. That capital won't sit in the bank. Excuse me. It will be reinvested directly into facility improvements, new equipment, and our next expansion into Kansas. Furthermore, making the Section 199A deduction permanent has provided the parity and certainty we need for long-term planning. These aren't just technical tax provisions. They are the engines that allow local owners to reinvest in their communities and their workers. However, there is a common sense gap in our tax code that needs to be closed. For 25 years, restaurants have received federal tax credit for FICA payroll taxes paid on employee tips. The one big beautiful bill recently extended this to beauty services, but our pet groomers unfortunately were left out. Our groomers provide services like hair cutting, styling, and shampooing that are fundamentally aesthetic and analogous to human salons. It is only right that the Treasury Department clarifies that pet grooming businesses can utilize the Section 45B credit. This simple fix would reduce payroll costs for small employers and deliver a meaningful benefit to the frontline workers who care for our family pets. While Congress has provided certainty on tax policy, the franchising community and its 800,000 businesses still have no certainty for its business model. The federal joint employer standard has unnecessarily changed four times the past 10 years, and it has harmed the fundamental franchisor-franchisee relationship in our community. An unpredictable joint employer standard strikes at the heart of my independence as a business owner. I am an independent owner. I hire my own staff, manage my own payroll, and bear my own financial risk. I am not a managed employee of a corporation, and my workers are not hired or managed by our brand as they care for our four-legged customers. Congress has the chance to achieve a bipartisan victory for small business this year. This committee can support and enact the American Franchise Act. This bipartisan legislation introduced by Senators Roger Marshall and Angus King is the simplest way to help franchise small businesses. It provides the clarity we desperately need by codifying a narrow joint employer standard for franchising. By passing the AFA, you are giving us certainty to reinvest without fear of legal overreach. You are protecting our workers, ensuring they receive the best brand standard training and workplace support. And you are protecting our future by clearing the path for more first-generation entrepreneurs like myself to build something lasting. Our growth was built on hard work and a policy environment, SBA lending, smart tax treatment, and regulatory clarity that gave us the tools to compete and be successful. We need Congress to clear the remaining hurdles by passing the American Franchise Act into law this year. It is the most important bipartisan achievement you can enact for the franchise small business in 2026. Thank you, and I welcome your questions.

Thank you very much. Next we will go to Dr. Brown. You are recognized for five minutes.

Thank you and good afternoon, Chairwoman Ernst and Ranking Member Markey and members of the committee. I am Dr. Gary Brown, born and raised West Virginian, who proudly attended both Marshall University and West Virginia University and then obtained my Doctor of Veterinary Medicine from the University of Georgia. After graduating from veterinary school, I practiced as a mixed animal veterinarian in southern West Virginia. Then I started my own mixed animal practice in West Virginia, eventually selling the practice in 2022. I recently transitioned to primarily small animal with emphasis on surgery while also starting an additional small business in pet cremation services. During this time, I was heavily involved in organized veterinary medicine through the American Veterinary Medical Association, American Society of Association Executives, West Virginia Veterinary Medical Association, and many other associations and organizations. At the AVMA, I served as a delegate, AVMA vice president, the board vice chair and chair, and as vice president, I was honored with the opportunity to visit every single veterinary school in the United States and many other international schools. While with this extensive experience across the veterinary profession, I can attest that veterinary practices are central pillars of the communities across the United States. As a proud West Virginian, I feel that this is especially true in smaller towns and rural communities where the local veterinary clinic is often both an essential healthcare provider and a cornerstone of small business and often the front porch of that community. Veterinary medicine is a relatively small profession, but we have a disproportionately large and positive effect and impact on society. Across the United States, there are approximately 34,000 veterinary practices, and at their core, veterinary practices are community-based businesses that provide stable employment. Each veterinary practice typically have four additional employees, including highly skilled veterinary technicians providing clinical support and veterinary assistants along with administrative and client service team members. Veterinary practices also generate significant economic activity for their communities. The average companion animal practice generates more than $1.5 million in annual revenue. Each full-time veterinarian generates a mean median gross revenue of $600,000 supporting local economies in employee wages, business purchases, and reinvestment into the practice. Beyond employment, veterinary clinics are also capital-intensive healthcare facilities. Modern veterinary medicine requires sophisticated diagnostic equipment, surgical facilities, medical laboratory capabilities, and advanced medical technologies. These investments support a broad network of industries, from medical equipment manufacturers and diagnostic laboratories to pharmaceutical companies, pet food manufacturers, and distribution networks. In rural communities, the veterinary clinic is a main street business that helps anchor a network of local commerce. Policies that support small business, such as tax provisions that encourage investment, access to capital, and small business lending, help veterinary practices expand services, acquire and adopt new medical technologies, and continue providing high-quality care while sustaining local economic activity. For example, the reconciliation package passed last year included pass-through business deductions and an expansion of the ability for small businesses to expense business assets, which helps support many veterinary practices across the country. Like many small business owners, we are grateful that Congress reauthorized many of these important tax provisions. If the opportunity presents itself, I urge Congress to pass the Rural Veterinary Workforce Act, which would free up additional federal funds and allow more veterinarians to serve in these rural and underserved communities. Also passing the Association Health Plans Act would expand healthcare choices for small businesses and self-employed individuals through association health plans. When it comes to growing the small business economy, veterinary rural America, excuse me, veterinary care is essential infrastructure for communities, particularly in rural America. Veterinary practices continue not only to animal health and public health, but also to the long-term economic vitality of the communities across the United States. On behalf of the veterinary practitioners across the country, I thank you for your opportunity or for this opportunity to provide testimony on this important matter. We appreciate the attention the committee is giving to this issue and the commitment to the healthy U.S. economy. Thank you again, and I'm happy to answer any questions.

Thank you very much. And Mr. Van Sickle, you are next and recognized for five minutes.

Chairwoman Ernst, Ranking Member Markey, and members of the Senate Small Business Committee, thank you for the opportunity to be here today and tell you a little more about my journey as an entrepreneur and small business owner in the pet industry. My name is Robert Van Sickle, and I'm a co-founder of Polkadog, a Boston-based dog and cat treat manufacturer, distributor, wholesaler, e-commerce, and brick-and-mortar retailer. Like most American small businesses, Polkadog started humbly with an idea and not enough common sense to think it couldn't possibly succeed. Our vision was simple, make the best dog and cat treats we could and use our neighborhood shop to create a place where the people of the South End could come meet one another and form a community. It sounded easy, but we had absolutely no idea what we were doing, and that was 2002. Fast forward to today, Polkadog is celebrating our 24th year in business. We operate a 14,000 square foot commissary kitchen on the Boston Fish Pier where we manufacture and distribute our branded products to independent pet retailers, gift shops, and grocery stores around the world. We have two warehouses in Canton, Massachusetts that house and support our direct-to-consumer e-commerce business, polkadog.com, and own and operate 11 retail locations in the Boston area and beyond. We have a team of about 100 people. By all accounts, an undeniable success, and I would agree, but one thing it has not been is easy. In fact, despite our longevity and growth and how our company might look to someone from the outside, within the walls we still operate very much as the small business we were on day one, constantly looking for ways to optimize and streamline operations, innovate and be creative problem solvers to minimize costs and mitigate risk. And the age-old question of how to obtain access to fair and flexible capital. As most small business owners can attest, the line between success and failure is never far away, and so we are hardwired to always look for ways to do more with less. But what might before have been a worry whether George would show up for work on time or that we needed to call a plumber to fix the toilet, now it looks more like how do we compete to keep our brand relevant in the increasingly competitive and much more significantly funded multi-billion dollar pet industry. How are we going to balance wage consideration with rising utility...

Mr. Van Sickle, if you'd just maybe wait for one more, one moment. We'll check on this. Okay. Thank you. Go ahead.

Of course. How are we going to balance wage consideration with rising utility costs and health insurance premium increases? Can we finally afford to match our employees' 401(k) plans this year? How do we attract talent and continue to innovate when many days it feels like we're swimming just to keep our heads above water? None of these are questions easily answered, particularly when the answers themselves, like increasing prices to our customers, create other problems altogether. After all, there comes a point when we simply can't run any leaner or ask our customers to pay any more. There is a floor and a ceiling. At Polkadog, we've always believed in the power of American small business to not only be successful, but also do good. It's the foundation of how we started and how we think about the world and operate every day. We believe in building a company that manufactures itself and does so thoughtfully with sustainable and responsible sourcing of our raw materials, one that creates jobs and pays our employees fair and livable wages, one that builds relationships in our communities, supports local economies, and gives back to the neighborhoods that support us. We believe in doing things the right way, which more often than not is also not the easy way. What small businesses like ours need most is stability, predictability, and peace of mind to plan investments, hire workers, grow methodically, to know and be able to say we can support our teams and their families, to know we can support our own families, to know that our hard work will pay off, that we can make a difference for our team, for our local neighborhoods, and far beyond. More than anything, I believe we have done just that, now here on day 8,500. I'm proud of what Polkadog has become, a company that grew from one store on one street corner in one city in America to a global manufacturer, wholesaler, and retailer serving dogs, cats, and people around the world. Apart from being a husband and father, being an entrepreneur has been the most challenging, interesting, humble, heartbreaking, thrilling, and magically curious journey I could have imagined for my life. I'm grateful every day for the opportunities and lessons it has afforded and for our team and customers and all those that have supported us along the way. We would not have made it a week without that help, but here we are on day 8,500. What an amazing gift to be able to build a house out of thin air and have complete strangers help you raise the roof. I don't know any other place in the world where that kind of thing is possible. We are the American small business story. Tomorrow is day 8,501, and I can't wait to get back to work. Thank you for the opportunity to share what I've learned. I look forward to your questions.

Thank you so much, Mr. Van Sickle. Really appreciate that. Okay, we will go into the question part of our hearing today, and I'll now recognize myself for five minutes for questions. So we'll start with Mr. Rodgers. It is great to hear your business will be taking advantage of the working families tax cuts. In your testimony, you described your work with Prosperity. Is that right? Prosperity. Okay. To hire again, another paw joke, to hire at-risk single parents as dog groomers at your locations, which is really fascinating. In my home state, 150,000 Iowans are expected to benefit from no tax on tips. So talk to us a little bit about that program and then how is no tax on tips benefiting your employees and their families? And then if we could include one more provision in a second reconciliation bill to support you and your business, what would it be? So first talk about no tax on tips and then let's talk about if we had a second shot at it, what would you include?

Yeah, absolutely. Thank you. Yeah, absolutely. Thank you, Madam Chair Ernst, for the question or questions. The no tax on tips benefiting employees and their families, I mean that that's kind of a common sense thing. So that helps them at the end of the so at the end of the year they'll be able to deduct that and get a lot of that money back so it is taxed during their paycheck cycle but at the end of the year they'll get a nice bump from their return from the government which is great. I think they'll all be surprised on that when they see it. On the Prosperity relationship, so that is a non-for-profit that we work with. One of grooming is one of our focus areas within our business. It's kind of an ancillary service but is becoming one of our primary growth engines. And Prosperity is a non-for-profit that helps at-risk single parents that are really in poverty and they don't have any skill sets so Prosperity trains them to be groomers for dogs and that's, you know, that's a very rewarding opportunity for them and it's a very, you know, pays well. And so they can come and lift themselves out, they get a hand up instead of a hand out, which is great. And we hire those individuals, we've hired several and it's been a great relationship for us. The one thing that I think that they would like to see that I would like to see is the FICA, not having to pay the FICA tax on those tips. That would be something that I would recommend if you guys can put that in there, that would be awesome. And that would I guess that would be my second reconciliation bill recommendation.

Wonderful, beyond board. Dr. Brown, you started and operated a successful practice in West Virginia for more than 30 years, providing jobs, income and critical services in your community. You've also trained that next generation of veterinarians. How has serving a rural area benefited your business and community as it has grown?

Thank you, Chairwoman. The you know in a rural community where it would seem most everyone knows you or know you know who you are that that you know in a four countywide area when that happens there in a rural community it becomes a family not just you know in a family community. And when you have that community support you and you support those in that community, you get to really be able to know them, know what's needed and and take care of them. That could be financial, could be emotional, could be whatever the you know your your customers might need. And so doing that in a rural area really benefits you know especially with certain things that the government can do such as some of the tax relief the pass-throughs, those types of things really do help us provide that community.

Wonderful. No, thank you so much. And and Mr. Van Sickle, in your testimony, you raised the issue of access to capital and the increasingly competitive pet industry where you say you compete with large corporations who have greater access to liquidity. Can you describe how greater access to capital, including access to larger loans for manufacturers, would help Polkadog address these challenges?

Thank you, Chair Ernst. It is a it is sort of an age-old question for us as a small business and how do we how do we think how do we get access to creative capital, right? Because we are sort of trying to do a bunch of different things at once. As a as a retailer and a manufacturer and an exporter and a wholesaler, we have a lot of different mouths to feed so to speak. So part of what I think is challenging for us at at where we are is that we're not quite big enough to sort of take on a huge amount of debt. We've taken on an enormous amount of personal debt to grow and fund the business. We did have access to some SBA facilities at the beginning of our business, that has changed as we've sort of matured. But but it's it can go back and forth, right? Because I think as a small business owner, one of the things that was really hard for us at the beginning was to weigh the the calculus of do we want to take on personal debt to grow this business? And so, you know, we use we we've gotten a little bit more creative with our access to capital since that time using some of our POS providers, they have access they they will offer access to capital for their for their merchants. So we've we've taken advantage of some of those things. But I think the real struggle for us is sort of how to balance what we feel comfortable with in terms of leverage for our business but also trying to sort of facilitate the growth and supporting our our employees and our company and how do we get to the next to that next stage. So it's a bit of a juggling act I think in in all honesty and and you know as the as the industry continues to get more sophisticated and more sort of well-heeled with the likes of, you know, everybody seems to be in the pet industry now. You know, so everybody's kind of fighting for the same parts of the same pie. So as a small business owner, how do we kind of stand up and say, hey, don't forget about us, you know, we're still here and but you know local banks and things have been helpful. I mean we've been able to sort of facilitate some of that some of that work. But it comes at it comes at a cost I guess, yeah.

Wonderful, thank you. And now I will recognize Ranking Member Markey for five minutes of questions.

Thank you, Madam Chair. I want to talk a little bit about healthcare costs. They have been skyrocketing. The Affordable Care Act and those programs that expired on December 31st of 22 million Americans affected by it, 10 of the 22 million were either small business owners or people who worked at small businesses, 10 of the 22 million. So we know that obviously healthcare costs have been skyrocketing, Affordable Care Act subsidies for small businesses expired. So across the country, businesses and individuals are impacted by this. So Mr. Van Sickle, have you faced increased healthcare costs and if so, how has it impacted your business?

We have. We're actually up for renewal. Thank you, Ranking Member Markey, for the question. We we just actually were talking to our broker last week before I got the call to to come here and the estimate for our increases for next year is going to be 27 percent will be an increase on our premium. That's on the back end of having a 10 percent increase in 2025. So it's a significant expense for us for our business. And I think our struggle is how do we how do we balance the trying to do right by our employees, trying you know we can't really attract and retain talent if we're not providing reasonable health insurance to our employees. So it's a it's a struggle for us for sure.

So so what are the tradeoffs that you have to consider in terms of your employees or the services you can provide or the raises you can give?

Right, I mean I think that all comes into it. It's sort of like how do we can we can we give raises? Can we not afford to give raises? Do we invest in new equipment? Do we open another retail location? Do we take on a new distribution partner to to sell our wares? Do we take on a new piece of business that is going to tax our manufacturing capability and our ability to sort of hold, you know, grow build inventory and hold it and not get paid for 90 days from our from our our dealer so our vendors. It's challenging because we're trying to balance many different things and all of them are sort of a priority, right? Making sure our employees are taken care of, that their families are taken care of. As we get longer into the cycle of our business, we have more and more people that have been with us for a long period of time that may have started when they were 20 or 25 and now are having families of their own. So that's a huge consideration for them, you know, how do we balance all these different all these different threads that are being pulled.

That's huge. So last year your the hike in your premium was 10 percent. This year you got the bill, it's 27 percent hike in your healthcare premium, which is incredible. So small businesses are often at the front fright forefront of innovation, especially when it comes to environmentally sustainable products. And I know that you seek to do that, Mr. Van Sickle, but you try to build a business model around that sustainability that can withstand economic shocks and supply disruptions and rising costs. So you're in a business of sustainable pet treats, so what makes your products sustainable and what what are the other ways in which you're thinking about sustainability?

Yes, so we we do think about sustainability in a bunch of different ways. It is sort of a I think a core a core philosophy and principle of our business. It started with the codskins that you referenced earlier earlier. So we when we were making treats at the beginning, we were sort of doing it on our on our own in our in our in our store in our one oven and we had a friend who was a fisherman and they were selling, you know, the fillets to grocery stores and restaurants around the city and they were throwing out these skins. And the amount of skins that are thrown out and the amount of waste that's in the food processing is a whole different committee hearing that I'd love to be a part of. But we sort of identified that as an opportunity for us to make it into a pet treat. It's healthy, it's it's going into the garbage, it's going into landfill. And so that was sort of the beginning of our journey on sustainability. But since we've we've grown to do more work with waste stream products, invasive species, we're kind of thinking about all the different ways that we can make an impact on the planet. And part of that too is how we treat and care for our employees and how we think about our business in general, right? If we if our people that work for us aren't able to to afford working for us, it doesn't really make a whole lot of sense, it doesn't make a lot of good business sense. So and then also it extends to how we how we exist in our communities, supporting local nonprofits. We work with Mass Oyster Project and 1 percent for the Planet and the Surfrider Foundation. So we have our we again, we have our hands in a lot of different different places. But I think for us it's really creating that holistic sense of a of a company that's doing things the right way and thoughtfully. And that, you know, as I get older and I look at my kids, that's that's what I want to leave behind, right? That we did things the right way and that we're leaving the place the planet and the world in a better place than we found it.

I agree. Yep, it's God created it and we just have to preserve it and improve it. That's right. So we leave it out better than we have in the past. So I thank you, Mr. Van Sickle, I thank the other two witnesses as well, very good testimonies today. Thank you.

Thank you. I think we'll move into a second round of of questions and for all of our witnesses, I travel every year river to river in the state of Iowa from the Missouri River over to the Mississippi and back. And the number one concern that I'm hearing from all small businesses is the challenge of burdensome regulations. Which federal regulations or government processes have been an issue for your business or the pet industry? And Dr. Brown, we'll start with you.

Yes, certainly. Thank you, Chair. The

Very good. Thank you very very much for that. That is not what I expected. Yes. Thank you. Mr. Van Sickle, please.

For our business, the one of the main one of the main things that we come up against is registering with departments of agriculture across the 50 states. So there is no unified form submission process for that. And it's more time consuming than it is onerous from a financial standpoint. But just to have we basically have someone that spends a lot of their time figuring out which departments of agriculture we need to file. The forms are different, the expectations for the labeling on the products are different. There's no sort of like systemic agreed upon formula that you can use. And it sounds it sounds sort of insignificant, but in terms of like an operating business, I will get a note from Nebraska or Iowa and they say, hey, you didn't register these things and it's like, oh, we you know, we just forgot. There's a lot of different paperwork and administrative stuff that goes into sort of registering products in different states. So consolidating that and having one place that we could put all the information and it would apply to all 50 states and pay the states individually, whatever it takes, that would it would it would streamline a lot of of that kind of work.

That is really helpful info. Thank you. And Mr. Rodgers.

Yeah, and I would probably say for our business it's a little different than the other two. But the big the biggest one, which I've talked about already, is the joint employer and how that impacts on the franchise franchisor franchisee side is like when you buy into a franchise, you're buying a proven model, a proven system, right? And part and what you realize is you and you pay a royalty based on your revenues for that. Once you get open and operating and you start, you know, you start getting bigger and you need you know, one of the things you've got to do as a business owner is what's your employee handbook? What's your policies and procedures? And you look to the franchisor for that. And they won't touch it. And that's because of the joint employer rule. There are you know, the liability that would open the door for them. And then another thing is the 42 percent of our P and L is labor is associated with labor. And so looking at, you know, they have a wide view of 225 locations across the United States. What are the best practices that they're learning from these other owners and how do we, you know, how do they leverage that and then share that and educate the rest of the owners? But that would again be creating some kind of scheduling capability and as a joint employer, they they would run the risk their lawyers basically pull back and say, hey, don't support on these things because it becomes a liability for the franchisor. And that impacts my ability as a franchisee, especially if I'm coming in net new and I don't have seven locations, you know, I'm not I haven't figured it out. A new owner is is kind of walking in blind from that perspective and I think, you know, removing that would be huge. The second one, which I'm not sure you guys could help with, but I'm going to put it out there anyway, is one of the biggest things and I think my colleagues here would probably agree with me is is taxes on property. Property taxes have just we're in Colorado, we're in Florida and Missouri. And I'll just give an example in Boulder County and Larimer County in Colorado. We have a building that we lease, we don't own it, but we still have to pay the tax on it. It in two years ago it was 28,000, then it jumped up to 38,000 and we got a bill now it's 51,000. So why why why is that money ballooning the way that it is and you know, where's the auditors on making sure that that money's being spent in the right way and that we're getting our, you know, bang for our buck? Same with Larimer County, it's the same process. Our a building that we do own, it was 19,000 and and it jumped 10,000, so now it's 29,000. But we don't understand why, like where's the money going, why does it increase? And that impacts our ability to buy equipment because now we have an and we don't get, you know, they don't tell us in advance. It's it's pretty much like within six months of the bill that's due that your new payment is now 10,000 higher. And so that impacts our ability to hire people, it impacts our ability to fix things in the building that maybe the roof is leaking and now we can't because we got to pay a $10,000 real estate bill that was, you know, $10,000 cheaper last year. So those types of things.

No, thank you. And the states do administer those property taxes, but I started as a county auditor, so I totally get where you're coming from. And yes, I would want to know where those those dollars are going. All really, really good feedback. So thank you very much because there are some things that we can work on within this committee. Mr. Rodgers, one more question here. You mentioned in your testimony that you used an SBA 504 loan to expand the number of the locations you have. So tell me about how you utilized the program and what what you were able to do with that borrowed capital.

Yeah, thank you for the question, Madam Chair Ernst. So we started our first location was a ground up build. So we bought land, we acquired land and the acquisition of that land became our down payment for the SBA. We reached out we went to a local bank and said, you know, here's what we want to do. We're looking at purchasing this property. And it was a bank just down the street actually from the land that we were looking at, the parcel that we were going to buy. And they introduced us to the SBA. And since we were going to build a building, they introduced us to the 504 program, which introduced us to RMI, which is a CDC in rural Missouri. And we've been working with them ever since actually. So our first injection, you know, was 20 percent and we were able to, you know, build that building and we were really successful after, you know, six weeks of course, you know, it's it's the post pandemic era everyone had adopted a dog from a shelter or acquired a dog somewhere because they were looking for that fellowship, that friendship, you know, because everyone was home during COVID. And so we were at the right place at the right time and we just boomed after that. And that kind of opened the door for the next several opportunities. And we were able to use that 504 again. I think we have three 504 loans across of our seven locations. And we're actually getting ready to do a fourth in Kansas, so it'll be 504. One of the things that we're going to cap out because it's a $5 million cap soon. One of the things I would ask is if, you know, as you're going through that manufacturing is also look at the cost of building and cost of acquiring real estate has gone up substantially and the $5 million cap, you know, goes away really, really quickly. So I would ask, you know, if you guys can add one of those increase that cap, I think the last time you increased the cap was in 2010 from two and a half million to five. And I would ask, you know, maybe go seven and a half when you're doing this next legislation.

Wonderful. No, that's good feedback. And if we could talk about maybe I don't know if you've engaged in any of the loan programs as well, but Mr. Van Sickle, if you could talk about that cap as well.

Yes, thanks, Madam Chair. We did we did obtain a facility from the SBA at our at when we built our kitchen, our commissary. We got a 504 and a 7A loan both. And I I am generally in favor just as a manufacturer and somebody that believes in investing in business and trying to create create that environment in our in our in our towns and cities. The thing that I that I would say about about the SBA facilities that when we tried to get out of well, first two things. I think it is it can be challenging for a small business owner that doesn't know what they don't know about about taking on an enormous amount of debt, right? And so I worry about I worry about I worry about people sort of entering into that agreement or taking on a mountain of debt with being a, you know, a new business owner. It's a lot to it's a lot to wrestle with and it's sort of I think it's a pretty heavy weight for a lot of people. That being said, it was it was fundamental in us getting our feet, you know, our our business off the ground and getting running. But trying to get out of that when we did find some other financing through Mutual Bank in New Hampshire, it was a customer, it's a long story, but trying to get out of that and trying to undo, you know, the homes that we'd pledged and some of the other, you know, investments and other things that we had. I mean, I've signed my life away so many times in the course of 24 years that, you know, you starts to lose it starts to starts to lose its meaning, but it is onerous, I think, in in terms of a small business owner that's just getting off the ground to take on a mountain of debt like that, not really knowing what, you know, what could come down the line. And so how do you, you know, that's no good if people default on their loans, that's not good for anybody. So I think just trying to be mindful of that of that aspect of it is really important to to help support small business owners when they do enter into that obligation what it actually looks like on the on the back side of it.

Wonderful. Well, I appreciate it. So I think we'll go ahead and wrap up unless you have any further comments, Dr. Brown, on that topic. Okay, we'll go ahead and wrap up the hearing, but what I'd like to do in this spirit of bipartisanship here at the end of our committee hearing, just give you all the chance to extend a shout out of gratitude. I know a number of you mentioned your families, your supporters in your opening statements, but I'll give you the final word as well if you would like to share a moment of gratitude for those that have supported your businesses. So Dr. Brown, why don't we start with you.

Well, certainly I think family is the most important and has been true for me as well. My my wife and family have been, you know, very supportive whether it be late nights, you know, time spent together in the farm truck, you know, going to farm to farm, what have you. It you know, that that's been a pleasure. You might think it's tough at the time, but it's a pleasure, been a pleasure with that and things. I want to, I guess I might want to thank Senator Justice. He brings a lot of animal contact and appearance for that. And of course, Baby Dog is a really good example to do that as well, representative. But I do thank you for your time and all of that here. And welcome to ask any questions other than it during one of these hearings as well.

Thank you. Thank you, Dr. Brown. Mr. Van Sickle.

Thanks, Madam Chair. I have to say, if you'd told me 24 years ago that I'd be sitting here doing this 24 years later, I would have told you that things either went really well or not well at all. So I am extremely grateful for this opportunity and this experience. And being a business owner, a lot of it has been like this, right? Just sort of you kind of get in the river and it takes you downstream and you don't really know where you're going to end up most of the time. And sometimes it's great and sometimes it's terrifying, but it is really a magical journey. And I hope that others, I'm sort of at the age now where I'm making way for the next crop and I hope that the next generation of entrepreneurs is afforded the same opportunities that I had when we started our business. And I do mean it sincerely when I say that we wouldn't have lasted a week without the support of our families and our neighborhood, the South End, and the city of Boston. And you start to think back on all the things that sort of happened to get you to where you are now. And it was really literally one day at a time. So I'm just extremely grateful to all that. Thank you.

Thank you so much. And Mr. Rodgers.

Yeah, that's, I can relate. So like if you were to ask me six years ago if I was going to own seven Camp Bow Wow locations across three states, I probably would have laughed at you. You know, I came from the technology engineering space and worked for large Fortune 100 companies and, you know, that was kind of my trajectory. But at the same time, seeing my parents work really hard and put the effort in that they did to build the business that they have today, you know, that was always an itch that I needed to scratch because I wanted to go do that myself. And I think my wife Ashley's in the same boat. We're really grateful for all the people that supported us along the way, our parents, our neighbors, our friends, and then the blessings that, you know, God bestowed on us to enable us to do these things and make these good decisions, to take on the debt that we did and to move forward and be profitable is no easy undertaking. I also want to thank the franchise, you know, because there's other owners out there that we got to stand on their shoulders and learn from and we wouldn't have been able to do what we did in such a short period of time without their help. And then lastly, I would thank our customers. Thank you for letting us care for your dogs. I mean, they're the family members, right? They're the ones that get to snuggle with you and come up to you when you're having a bad day and they know they can sense it. And we really want to make sure that we constantly do right by them and take good care of those customers and their four-legged friends. Thank you.

Thank you. Yes, again, I want to say thanks so much to our witnesses for being with us here today. And we know how hard it is to start a business and keep that business going and expand your operations. And I know there are so many pet owners out there that are really grateful for everything that you do. So thank you for that. I ask unanimous consent that the record of today's hearing remain open for two weeks for members to submit questions, revise and extend their remarks, and submit additional information into the record. Without objection, so ordered. And again, we want to thank you all today and is there an update at all from the...

Everything is fine right now. It's on the second floor by your office actually.

Oh, great. Okay, so let's not go to my office after this. But there is an issue on the second floor, but if you can just avoid that, you will be fine. So thank you all again for being here today and with that, the Committee on Small Business and Entrepreneurship stands adjourned.