Owners of small businesses remain optimistic despite the bleak outlook about the global economy
A study has revealed that many small businesses in the United States remain optimistic about the future, despite regulatory challenges and talent concerns.
Both of these issues are negatively impacting the bottom line of small business, and potentially could alter how they vote in the US elections in 2012, according to the findings of The Hartford’s Small Business Success Study.
Despite high unemployment rates, finding qualified talent is a challenge for 59 percent of small-business owners, according to the study, which is based on a survey of 2,000 small-business owners nationwide.
At the same time, 68 percent say that their business is a consideration when voting, particularly if certain policies directly impact their business. The majority (70 percent) of small-business owners feel successful, even as they face challenging conditions, according to the study.
“We developed this comprehensive study of the nation’s small businesses to learn how well equipped they are to maximise their future success,” said Liam E. McGee, chairman, president and CEO of The Hartford. “Small businesses are the US economy’s primary job creators, and a powerful force – not just economically but also behaviourally. They carry on the tradition of the driven, confident, creative people who built America.
“From the study we learned that most of them expect to be successful in the next two years, even as they face challenging conditions. Our hope is that the US will foster an environment that is more hospitable to small businesses. Our country should be celebrating and liberating entrepreneurs, not burdening them,” he said.
Success, Not Profits
Small-business owners remain optimistic about their success – even in a tough economy – because profits aren’t always the definition of success.
In fact, 82 percent say they place great importance on doing something they feel passionate about and enjoy. Although 77 percent acknowledge that increasing profitability of the business year-over-year is very important, only 18 percent say this is the most important factor in defining success. The study also found most small-business owners want to stay deeply involved in the operation of their business (81 percent), and achieving a comfortable lifestyle for themselves (79 percent) and their employees (72 percent) is important. An overwhelming majority indicated they enjoy owning their business (90 percent).
The study’s findings also shed light on the widely held belief that all small-business owners seek to expand and maximise profitability. In fact, it found that growth is not a shared goal among all small-business owners. While 52 percent do consider themselves to be growth-oriented, 48 percent describe themselves as maintenance-oriented and are comfortable running their business at its current size.
In spite of the current economic environment, many small-business owners remain optimistic about their prospects for success in the short term, with 51 percent projecting that they will be very successful in the next two years. Only 6 percent predicted they would fail to achieve success in that time frame. Confidence in their ability to stay in business is a major factor leading many small-business owners to feel as though they are currently successful.
The national economy continues to put pressure on a majority of small-business owners, with 57 percent indicating it has had an impact. When asked what keeps their business from being successful, small-business owners note that financing their business is a particular area of pain. Specifically, 34 percent of respondents say that obtaining a loan or other capital is difficult.
Small businesses are also challenged by government regulations, which result in greater administrative and accounting burdens. According to the study, small-business owners identify economic constraints, such as government rules, regulations and taxes, as the single biggest factor holding them back (37 percent). And, they say that uncertainty about how public policy could potentially stunt the future growth of business is hindering their ability to plan ahead. Other barriers included rising energy and fuel prices and a lack of customers.