The Economy and Business Outlook
Three out of four (76 percent) of small business owners are not satisfied with current federal economic policies (with 51 percent "not at all satisfied" and 25 percent "not very satisfied") while 20 percent are "somewhat satisfied" and only 3 percent "very satisfied." In terms of their outlook for their business, 49 percent of small business owners believe their finances will stay the same over the next six months, 18 percent believe they will get worse while 30 percent believe their financial conditions will get better.
The survey found that stress levels went down for only 13 percent of small business owners "when thinking about their business finances currently," compared to the past three months. It was "about the same" for 47 percent of business owners, while stress levels increased for 39 percent.
SBE Council chief economist Raymond J. Keating remarked, "The high level of dissatisfaction regarding federal economic policies among small business owners should be no surprise. For the most part, entrepreneurs want federal policymakers to impose a light tax and regulatory touch, keep spending under control, maintain low inflation, and otherwise get out of way so entrepreneurship and investment can thrive. Unfortunately, particularly from late 2008 through 2010, regulations mounted and federal spending careened out of control, raising additional questions and threats on taxes. And for several months now, inflation has accelerated. Gas prices are high and small business owners remain on edge about the new health care law and future costs. Until federal policymaking moves in a clear pro-entrepreneur, pro-growth direction, most small business owners face great uncertainty."
The Impact of Higher Gas Prices
The effects of rising gas prices are being felt by small business owners, with 74 percent reporting that higher prices are having an impact on their firms according to the survey. Business owners report a variety of strategies they have been forced to implement as a direct result of higher gas prices. In addition, these high prices are affecting their hiring plans. According to the survey:
• 41 percent have raised their prices because of high gas prices
• 26 percent have had to cut employees or their hours worked
• 47 percent report that higher gas prices are affecting their plans to hire new employees
"Obviously, higher gas prices are impacting worker hours and the ability of small firms to generate jobs," observed Kerrigan. "In addition, small business owners are being forced to raise prices, which they are loathe to do given fewer disposable dollars available to consumers and because it will put many of them at a competitive disadvantage. But when you're squeezed at both ends, you really have no choice," Kerrigan added.
• A staggering 38 percent of small business owners believe if gas prices remain high or increase further their business will not survive, according to the survey.
"If gas prices don't come down, the consequences for our economy could be quite profound," said Kerrigan.
The New Health Care Law and Affordability
Overall, only 7 percent of the small businesses surveyed said they used the new small business health care tax credit offered by the "Affordable Care Act." About as many (6 percent) were not sure if they had. That means 87 percent of small businesses did not use the credit or take advantage of it, or were ineligible. The reasons small business owners did not utilize the health care tax credit include the following:
• 20 percent were not aware of it
• 27 percent were aware but their business was not eligible
• 21 percent were aware, but said the credit is too small or offers no real benefit
• 13 percent were covered under another plan
• 3 percent were aware, but said it was too complex
• 4 percent were "unsure" as to why they did not use it
• 11 percent ("other") offered a range of reasons for not using the credit
"We've been saying all along that the credit is not robust enough and remains too restrictive in its eligibility criteria to help a large number of small businesses. Another problem is that the credit is temporary, and is therefore no use to many entrepreneurs who need to know it will be available over the long term in order to have practical utility," said Kerrigan.
According to the survey, most small businesses don't believe the new law will make health insurance more affordable. Only 17 percent of small business owners believe that "the new health care law will help to make health insurance more affordable" while 69 percent do not believe in that statement. (7 percent were unsure and 7 percent were "neutral.")
SBE Council will produce the "Entrepreneurs and the Economy" survey on a regular basis to help measure and analyze the sentiment and outlook of business owners as they relate to the economy and current issues. The report surveyed 304 small business owners (+/- 5.7 percentage points) between April 21-27, 2011.
SBE Council is a national, nonpartisan advocacy organization dedicated to protecting small business and promoting entrepreneurship. For more information, please visit: http://www.sbecouncil.org/.