FINANCIAL SERVICES FORUM, SBE COUNCIL RELEASE NATIONWIDE SURVEY OF ENTREPRENEURS,
SMALL BUSINESS OWNERS
The nation's entrepreneurs and small business owners are pessimistic about the near-term prospects for the U.S. economy, with 79 percent of those surveyed in a poll-"Accelerating U.S. Job Creation: A Perspective From American Entrepreneurs and Small Businesses"-released by the Financial Services Forum indicating they expect current economic conditions to persist for at least another year, and 53 percent expecting current conditions to continue for 18 months or more.
Asked if they planned to hire new employees within the next few months, 51 percent of respondents said they had no plans to hire, while nearly a quarter responded that they are unsure. Reluctance to hire was greatest among newer firms, with 54 percent of businesses less than a year old indicating that they are not planning to add employees anytime soon.
"New businesses are the engine of job creation in the U.S. economy, and that engine is clearly sputtering," said Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council. "Both the number of new businesses created each year, and the number of new jobs created by new businesses, have been trending downward in recent years. Elected officials and business leaders - including the financial services industry - need to think seriously about advancing initiatives and policy solutions that address the challenges of entrepreneurs. If we are serious about accelerating economic growth and job creation, new businesses and entrepreneurs must be our focus."
The poll revealed broad concern regarding the reach and impact of government among the nation's small business owners and entrepreneurs - who, according to research conducted by the U.S. Census Bureau and the Ewing Marion Kauffman Foundation, account for virtually all net new job creation. Fifty-six percent of respondents said that government policies have hurt their businesses, with 25 percent responding that government policies have "strongly hurt" their businesses. Nearly 7 in 10 said federal policies, more so than those of state and local governments, have hurt their businesses.
"Given the importance of entrepreneurs to our economy, policymakers need to focus on solutions that will give our nation's start-ups the confidence to hire more people and grow," said Bob Litan, vice president of research and policy at the Kauffman Foundation. "The more Washington hears this message, the better."
Seventy-nine percent of respondents want the government to either stay out of the way of business or merely create the right environment for business to flourish. Of those, a plurality - 45 percent - said government should be limited to creating the right environment, while 34 percent took a harder line, indicating the government should simply get out of the economy's way. Only 17 percent of respondents want the government to take an active role in helping business, and 45 percent favor less regulation.
"America has long been known as the land of opportunity, where individuals risk all they have to live out their dreams and make a better life for themselves and their families," Sen. Jerry Moran (R-KS) said. "Small businesses are the true engine of job creation in our country and have a proven track record of success. To get our economy growing again, Congress must encourage the spirit of entrepreneurship in America."
The survey sampled the views of owners or senior executives at 842 new and small businesses - from high-tech and retail, to health care and construction - regarding a wide range of economic factors. The poll, which reflects samples taken of new and small business views in July and September, was conducted as part of a Forum initiative launched last spring to better understand the impediments to faster job creation.
"The purpose of the Forum's survey is to hear directly from the leaders of new and small businesses regarding the obstacles to starting and growing businesses, and accelerating job creation." said Rob Nichols, president and CEO of the Financial Services Forum. "Our hope is that this direct feedback from America's job creators will help inform our elected representatives about the relevant obstacles to faster job creation as they work to enact policies aimed at enhancing the circumstances for American entrepreneurs, existing businesses, and Americans looking for work."
In addition to the poll, the Forum conducted a series of roundtables with entrepreneurs and small business leaders in 12 cities around the nation - from Orlando to Seattle, and Los Angeles to Boston.
Asked to indicate the most significant impediment to hiring new workers, 34 percent of respondents cited the weak economy, 15 percent cited access to capital difficulties, and 13 percent cited the cost of hiring new workers.
When asked what incentives would most effectively encourage additional hiring, a combined 42 percent suggested changes in federal fiscal policy, with 22 percent calling for enactment of a credible plan to reduce the budget deficit and the balance indicating they want a permanent lowering of federal tax rates.
"We need to find ways to restore business and consumer confidence, and spur demand," said the Forum's Rob Nichols. "The financial services industry also takes seriously the concerns regarding access to capital. Many financial institutions are reviewing their lending policies or have already initiated specific programs, like second-look procedures, to ensure that sound businesses are getting the capital and credit they need to grow and create jobs."
The Forum has supported pending legislation in the House and Senate that will meaningfully enhance the circumstances for new business formation and survival by reducing the regulator burden and improving access to capital. Letters of support for H.R. 2930, H.R. 2940, H.R. 2167, H.R. 1965, and H.R. 3213, which are moving through the House, were sent to House Committee leadership. Additionally, Senate letters of support were sent today to Senate Banking Committee leadership on S.1831, S.1791, and S.1824 in advance of its full committee hearing tomorrow: "Spurring Job Growth Through Capital Formation While Protecting Investors," which will address access to capital and other issues important to new businesses. The Forum also sent letters to the Senate in favor of S. 1835, "The United States Covered Bond Act of 2011."
SBE Council is supporting these "capital access" bills as well, and has been particularly engaged in "crowdfunding legislation." State regulators and those opposed to this transparent and effective form of financing for small businesses will be testifying at the Senate hearing. Unfortunately, no entrepreneurs or experts in crowdfunding have been invited to provide testimony on how crowdfunding works, and Senators will only hear an unsophisticated view of these platforms. Crowdfunding actually empowers "the crowd" -- and probably better than regulators -- to effectively weed out the fraudsters.