Small business owners should trust themselves, not surveys, when it comes to optimism

11/23/2011

The current economic climate has elicited a range of opinions among politicians and policy makers about how to get the nation back on its monetary feet. However, across the spectrum of partisan arguing, a common focus emerged: small businesses.

According to numerous figures and speeches, small businesses should be considered the "engine" of the U.S. economy, pushing revenues and prosperity along. With this in mind, surveys and studies monthly, annually and even weekly measure the small business mindset, including their top concerns, what they see as their barriers to success and their level of optimism.

This has produced a number of different and divergent responses, though. Consider a recent survey of 2,000 small business owners from The Hartford. The study found that while more than half of respondents believe their business ventures will achieve success within the next two years, they continue to be plagued by regulatory concerns.

Specifically, the study cites 37 percent of small business owners noting government regulations, rules and taxes as the top factors impeding growth and success. Furthermore, the research notes that these obstacles result in more time and money spent on administrative and accounting issues, with the uncertain political climate also contributing to an inability to properly plan for the long term.

"From the study we learned that most of them expect to be successful in the next two years, even as they face challenging conditions," said Liam McGee, chairman, president and CEO of The Hartford. "Our hope is that the U.S. will foster an environment that is more hospitable to small businesses. Our country should be celebrating and liberating entrepreneurs, not burdening them."

However, a recent New York Times article by Robb Mandelbaum points out how the report mimics rhetoric from the politically conservative National Federation of Independent Business. Mandelbaum cites Dan Danner, head of the organization, as calling the current situation for small businesses a "massive federal regulatory nightmare" that "stifles innovation, grinds small businesses down and prohibits job creation."

On first look, The Hartford survey would seem to accord with this perception of the relationship between the federal government and small businesses, yet Mandelbaum points out several issues with the reporting of the results.

While the survey writes that 37 percent of owners see "government rules, regulations and taxes as the single biggest factor holding them back," Mandelbaum writes that the 37 percent statistic is actually a cumulative one that includes respondents citing a lack of pay customers and other general economic complaints.

"In fact, regulations and taxes were the two smallest of the four factors constituting the 37 percent, while lack of paying customers and those unspecified complaints were cited by 26 percent of all responders," Mandelbaum explains.

When Mandelbaum contacted The Hartford for a response, he recounts that spokeswoman Deborah Pont backed up the survey's figures, explaining that frustration with regulatory problems, taxes and the economy were constant themes seen throughout the study.

However, Mandelbaum finds other aspects of the research less worthy of dismissal, particularly its figures measuring ambition.

The survey found that while 82 percent of business owners placed importance on doing something they are passionate about, 77 percent still said that increasing annual profits is "very important."

Small businesses should avoid judging their own business performance on others' perceptions. Instead, monthly or annually, small business owners can use a number of tools, including employee surveys, profit and revenue figures and their own gut feelings, to assess where they are at and where they want to be.