Small business owners feeling glum about economy: poll
President Barack Obama called them the “engines of growth” in a debate this week against Mitt Romney, but small businesses are feeling decidedly glum about the broader economy and more than half of them have no plans to hire anytime soon.
Just a third of small businesses say they are optimistic the economy will improve this year, down from 61 percent who felt the same way last spring, showed a new survey by The Hartford insurance group released on Thursday.
Their uneasiness about the sluggish economy has small businesses holding off on hiring. Nearly 60 percent of the 2,000 small business owners, with fewer than 100 employees, surveyed back in August said they did not add staff in the last year and 67 percent did not intend to hire over the next 12 months.
That’s disconcerting news about a segment of the economy the U.S. Small Business Administration touts as responsible for creating more than half of all new jobs.
“The last six months something has changed their view point,” said Liam McGee, president and chief executive of The Hartford, which provides insurance to about a million small businesses. “There’s just so much uncertainty about all those things that it’s putting a damper on growth and hiring.”
About 40 percent of small businesses polled said they were focused on growth, while 52 percent said they were just trying to maintain their current revenue and employee levels.
Slow economic growth (67 percent), taxes (59 percent) and uncertainty with federal regulations (56 percent) were listed as the top reasons by small business owners for their lack of enthusiasm towards the overall economy.
More than 75 percent of respondents expected their taxes to increase and 54 percent said they would likely offset the impact by not hiring. Nearly 30 percent said they would cut staff to accommodate higher taxes.
“The uncertainty of their perspective environment, as it relates to taxes and regulations, is creating a lack of confidence and as a result of that they’re just not going to invest in people, in plant and equipment,” said McGee, noting the majority of the small business owners polled are “not creating businesses to get wealthy.”
McGee added 85 percent of small business owners said they just want to make enough money to live comfortably and 81 percent said they want to do something they feel passionate about. Additionally, 70 percent said they want to pay their employees enough for them to have a comfortable lifestyle.
Despite the overall economic malaise, close to 70 percent described their business as “moderately successful,” a seeming contradiction that McGee characterized as the “can-do” nature of entrepreneurs.
“They are realists, but they’re not going to sit around and wallow in it or complain.”
McGee, who was to speak about the report’s findings later today in Detroit, noted that Motown small business owners were more optimistic than the rest of the country. Despite being hit harder than most American cities during the recession, 53 percent of Detroit small businesses said they expect the economy will improve. Also 51 percent – versus 41 percent nationally – said they intend to grow their business.