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In Election Year, Politics is Good Business

Republican presidential candidate, former Massachusetts Governor Mitt Romney sits in a 1961 Rambler with the cars owner, Michael Scheib, during a campaign event at K’s Hamburger on June 17, 2012 in Troy, Ohio.
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Republican presidential candidate, former Massachusetts Governor Mitt Romney sits in a 1961 Rambler with the cars owner, Michael Scheib, during a campaign event at K’s Hamburger on June 17, 2012 in Troy, Ohio.

Sundays are usually sleepy in Troy, Ohio, because many downtown stores are closed in the small city west of Columbus. But several thousand people crowded the blocks around K’s Hamburger Shop on E. Main Street when a bus convoy pulled up on a Sunday in mid-June.

K’s was only one of the shops that opened up for Sunday hours as Republican presidential candidate Mitt Romneyarrived for a campaign stop on his five-day “Every Town Counts’’ tour. At each stop along his winding route from New Hampshire through Pennsylvania and the Midwest, small businesses had the chance to reap part of the many millions being spent on the 2012 presidential election.

At K’s, Marcia Ryan, owner of the diner-style restaurant founded by her parents in 1935, served a meal of burgers, fries and soda to Romney, Ohio Sen. Rob Portman, and House Speaker John Boehner, who represents Troy as part of the 8th Congressional District.

“They took a hundred hamburgers and cheeseburgers with them when they left,’’ Ryan said.

Spending on the presidential contest this year, along with all Congressional races, is expected to top 2008’s expenditures of nearly $5.3 billion, as estimated by the elections watchdog group The Center for Responsive Politics. That figure includes outlays by candidates, political parties, and political interest groups.

Opportunities to snag some election-related business may be bigger in battleground states like Ohio, which are expected to decide the outcome of the presidential race. The intensifying campaigns in these swing states create demand for a host of products and services, including printed handouts, outdoor party tents, catering, hotel rooms, and lawn signs. (Related: Micro-Entrepreneurs and Job Creation)

But it’s hard to quantify how much election revenue actually ends up with businesses in each state, judging from disclosures on campaign expenditures filed with the Federal Elections Commission. Candidates and political parties often sign their checks to consultants, who in turn farm out work and make purchases not detailed in the public expenditure reports, said Edwin Bender, executive director of the National Institute on Money in State Politics. And many services, such as telephone polling, social media outreach, and printing, can be done outside the target states.

Small businesses, such as lawn sign makers, often profit more from localized races for state legislative or city offices than they do from federal elections when the White House is at stake, said Art Murray, a political consultant with the campaign management firm AmeriCan GOTV in Flat Rock, North Carolina.

In the highly centralized presidential campaigns, lawn sign manufacturers are competing with their peers all over the country, Murray said. Because of the competition, prices are pushed lower. Profit margins are often higher when the customer is a local candidate who lacks the same buying power, he said.

More money is spent in presidential election years than in off years, but those federal campaigns also compete for political contributions with local candidates who may be better clients for small firms in their home states, Murray said.

Without doubt, though, television stations in highly contested regions will be major beneficiaries of the costly campaigns in 2012.

“The TV stations make out like bandits,’’ said Michael Hartley, vice president of government relations for the Columbus Chamber of Commerce, and a former campaign operative in five elections.

As Election Day draws near, TV ad rates can double, Hartley said. Some of that revenue goes to outside media conglomerates that own local stations, but some flows to companies such as the family-owned Dispatch Broadcast Group in Columbus, Ohio, operator of the CBS affiliate WBNS-TV.

Money will also land with companies renting passenger vans that transport door-to-door campaign canvassers and shuttle voters to the polls, Hartley said.

“Usually you can’t get a van in the state of Ohio,’’ he said.

Restaurants are chosen for campaign stops because the owner is a known supporter, Hartley said. Campaign managers know that reporters will ask the owner’s opinion of the candidate, and they don’t want any unpleasant surprises, he said.

"[The campaigns] don't want to rent a tent because it will tip somebody off that they're going to do something." -political consultant, North Carolina, on how businesses that supply good and services to campaigns may need to declare their political loyalties in order to get the business., Art Murray

Marcia Ryan’s hamburger place has hosted Republicans from Dan Quayle to Rick Santorum. Even so, the conservative restaurant owner still draws customers from the Democratic campaign headquarters a block away.

“TheObama people come in for a burger,’’ Ryan said.

That said, some small businesses may need to declare their political loyalties if they want to seek campaign work, such as financial management, consulting, and polling.

“When a firm gets into this business, that’s probably the first thing they have to decide,’’ said Murray. AmeriCan GOTV is not aligned with either political party, but it promises confidentiality to its clients, he said.

Campaigners are intensely concerned that their business partners may leak information, however slight, that could reveal their strategies to opponents, Murray said. For some campaigns, that concern approaches paranoia, he said.

“They don’t want to rent a tent because it will tip somebody off that they're going to do something,’’ he said.

Businesses may not need to line up with a party if they’re doing work for individual candidates, but firms working for the political parties themselves are more likely to be active in party committees, Murray said.

Companies that remain unaligned should see to it that candidates would find nothing alarming in the mix of party registrations and political contributions among company leaders, Murray said.

“Make sure, at the top level, you have some of each,’’ he said.

Email us at SmallBiz@cnbc.com and follow us on Twitter @SmallBizCNBC.

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