Robert J. Samuelson had a solid piece in the Washington Post on October 4: "The real jobs machine: entrepreneurs.” He, like many entrepreneurs, doesn’t understand why the government continues to strangle this sector with costly regulation and other burdens that are preventing them from expanding and creating jobs. Samuelson writes:
“It's all about risk-taking. The good news is that the entrepreneurial instinct seems deeply ingrained in the nation's economic culture. Americans like to create; they're ambitious; many want to be "their own bosses"; many crave fame and fortune….The bad news is that venture capital for start-ups is scarce, and political leaders seem largely oblivious to burdensome government policies. This needs to be addressed. Entrepreneurship won't instantly cure America's jobs' deficit, but without it, there will be no strong recovery.”
Indeed, burdensome government policies and the threat of higher taxes and more regulatory intrusion are holding businesses back. Entrepreneurs and small business owners have no confidence in the current political leadership, and continue to have a gloomy outlook about the state of the economy. A September 2010 Discover Small Business Watch survey found “a record” 68% of small business owners rated the economy as poor; 26% rate it fair; 4% say it is good; and 2% rate it as excellent. This is really awful news.
Other highlights (or lowlights as the case may be) of the Discover survey include:
• In September, intentions for spending on business development in the next six months produced two record numbers. A record low 16 percent of small business owners plan to increase spending, down a percentage point from last month's then record low of 17 percent. Fifty-seven percent of small business owners report plans to decrease spending, the highest in the history of the Watch, while 24 percent report no changes to their spending plans and 3 percent aren't sure.
• 55 percent of small business owners report economic conditions are getting worse for their businesses, equaling the record high percentage from last month; 23 percent expect them to stay the same and 20 percent see them getting better.
• 57 percent of small business owners say the economy is getting worse, down 5 percentage points from August; 26 percent say it's getting better, 15 percent report it's the same and 2 percent aren't sure.
• Nearly three out of four respondents, 71 percent, said small business owners are waiting for the economy to improve before they do any hiring, with only 9 percent who think otherwise and the remaining 20 percent just not sure.
• When asked if the economic climate has hurt or helped their business, 73 percent said it had hurt them, 4 percent said it helped them and 21 percent said it had no impact. Of those whose businesses were hurt, 41 percent think it will take more than a year to recover, while 24 expect it to take six to 12 months, 11 percent said three to six months and 1 percent expects to recover in less than three month. Only 2percent of small business owners said their businesses had already recovered.
• When asked if they needed a loan to grow their businesses, 71 percent said they did not; 20 percent said they did, and 9 percent aren't sure. Of those who do need a loan, 44 percent need less than $25,000, 37 percent need $25,000 to $100,000, 11 percent need $100,000 to $250,000, 4 percent need $250,000 to $1 million, and 3 percent need more than $1 million.
• A 100 percent tax break for capital investments will only help about 1 in 4 small businesses: 26 percent said it will help, 51 percent said it won't help them, and 23 percent aren't sure.
The November 2 elections will certainly be a referendum on the approaches that the current party in power has used to try to restore the economy and help businesses create jobs. Unfortunately for them, the Democrats' spending strategy has been an abysmal failure. President Obama finally decided to do something around small business, and pushed forward with a bill – an assortment of half-measures on tax incentives and a $30 billion fund for community banks (to lend to small businesses), which he recently signed into law. But as Barbara Weltman writes in an American Express Open Forum column on the legislation, it does little for small business.
Weltman writes: “Each and every provision in the Act, on its own, appears to be favorable to small business. When examined a little further, the provisions offer more in the nature of public relations than actual small business help.”
The White House seems to think small businesses will fooled with legislative crumbs. They are still holding out hope that we remain confused about what was in the health care bill even though our insurance premiums continue to rise and we will lose the plans we currently have or offer under Obama Care’s grandfather rules. They keep telling us that “we have turned the corner” in the economy even though business confidence continues to slide and the majority of small business owners report that their economic conditions are getting worse, not better.
I recently read that President Obama plans to “scale back” his legislative agenda. From the small business perspective, scrapping it makes more sense.
Karen Kerrigan, President & CEO