A Both/And Proposition for America’s Small Businesses

By Michael Hendrix, Research Manager

The Gallup Group recently released a survey that begins with the following title: “Gov’t Regulations at Top of Small-Business Owners’ Problem.” What’s always interesting about data though is that it tells a complex story.  As Adam Ozimek at Modeled Behavior points out, small businesses are worried about a whole range of issues, politics included.

When small businesses were asked what their top concerns were, sure enough, at the top of the list were government regulations.  Look at what also comes up on the list.  Points like poor cash flow, as well as (or because of) low consumer demand and the declining availability of credit.  Look too at the next question, where some 36% of small businesses say that they are worried about going out of business soon.

Ozimek puts the Gallup survey side-by-side with the most recent report from the National Federation of Independent Businesses (NFIB) on Small Business Optimism.  What he finds is that low demand may be a more important problem for small businesses than the Gallup survey highlights.  Far more businesses in the NFIB report cited “poor sales” as a problem today (28%) than Gallup let on to (12% targeted low consumer demand as an issue for Gallup) primarily because Gallup created a new category of “consumer confidence.”  Put together the 12% of businesses seeing anemic demand and the 15% lacking confidence and you get the same picture as the NFIB.  That is, demand is stagnant and businesses are as scared as consumers are.

Unfortunately, Ozimek chooses to again rank business’ concerns just after he artfully dissembles them.  He goes on to point out that when businesses were asked what they would want to see in order that they may thrive, they point to economic indicators like growing sales, improved consumer confidence, and (surprise) a better economy.  He concludes that businesses are far more interested in spurring demand than cutting regulations or improving the ease of doing business.  I would offer instead that it’s not an either/or proposition for business.  Both must occur.  Moreover, it doesn’t seem surprising to me that when a business is asked what will make them prosperous, they choose answers like “growth and sales increases.”  Having “better tax laws,” as one choice in the survey states, isn’t always immediately connected to the day-to-day of running a business.  Make no mistake though; taxes cost firms and consumers real dollars that really matter, and never more so in the bigger picture.

As we look for the ingredients of growth in America, let’s not forget that it’s a two-sided coin.  We need producers and we need purchasers.  We need job creators and we need good regulators.  It’s not either/or.  It’s both/and.

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