Small Businesses Still Not Confident

A new survey shows that small businesses are still not totally confident that the economy will improve in the next 6 months. The key findings show that a net negative 16% of small businesses expect the economy to get better, which is 6 points higher than in September but a whopping 26 points worse than in January.

The National Federation of Independent Business (NFIB) attributed the slight confidence uptick (1.3 points, still lower than the year’s average) to “less negative views about the prospects for future sales and business conditions.” However, while maybe less negative, the increase is far from positive, with a net negative of 4% believing that sales will improve soon.

The main obstacles to small business job creation cited in the survey? Businesses listed poor sales (26%), government regulations and red tape (19%) and taxes (18%) as the most important problems. All other problems, including, inflation, quality of labor, big business competition, etc., failed to break double digits. In fact, those citing regulation as the single most important problem affecting small businesses is approaching levels last seen during the early 90’s – also a recession.

Interesting enough, not many small businesses said that getting financing was a problem, as The Hill reports:

“Twenty-six percent of businesses reported that poor sales were their biggest obstacle, while just 4 percent said lining up financing was their biggest challenge. The vast majority of businesses — 91 percent — reported that they either could get the credit they needed or were not looking to borrow more.”

This comes to discredit the notion set up by the Obama Administration that small businesses are having trouble getting financing and therefore we – the taxpayers – need to spend more (and raise taxes even more) to make loans available.

What small businesses actually need are lower, fairer tax rates and less regulation. When this happens, it will be easier to hire, more people will have money and demand will not only increase, but it will last. The Keynesian theory currently being practiced by the White House gives temporary cash that will run out, meaning it won’t create lasting demand and therefore doesn’t spur anyone to hire.

If politicians in Washington want to create jobs, they need to listen to small businesses and remove the hurdles to job creation.

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