PRINCETON, NJ -- Small-business owners in the United States are most likely to say complying with government regulations (22%) is the most important problem facing them today, followed by consumer confidence in the economy (15%) and lack of consumer demand (12%).
Rounding out small-business owners' top five problems in the Oct. 3-6 Wells Fargo/Gallup Small Business Index poll is lack of credit at 10% and poor leadership by government and the president at 9%.
Looking ahead to 2012, approximately one in three small-business owners say they are very or moderately worried about going out of business. About the same number are worried about not being able to compete with large or global competitors, not being able to hire the number of employees they need, and not being able to pay their employees. Thirty percent worry they will have to reduce their number of employees.
On a personal basis, 67% of small-business owners are worried about not being able to put enough money away for retirement, and 49% are concerned about not being able to spend enough time with family or pursuing personal interests.
Better Economy Needed to Get Small Businesses to Thrive and Hire in 2012
When asked what they would need to see in order for their business to thrive in 2012, the nation's small-business owners are most likely to say growth in sales (15%), job creation (14%), and fewer government regulations (12%).
Small-business owners point to increased revenues (27%), an improving economy (20%), and growth or expansion of their business (17%) as their top motivations for hiring new employees in 2012.
Small-Business Owners' Outlook Worsens; Future Expectations Lowest Since July 2010
The Wells Fargo/Gallup Small Business Index is -3 in October. This suggests that small-business owners continue to be essentially neutral -- neither positive nor negative -- on the U.S. economy, as they have been for the past two quarters.
The index consists of small-business owners' ratings of the present situation and their expectations for the future. Small-business owners' assessments of the present situation are essentially unchanged at -11 in October from -10 in July.
Small-business owners' future expectations are down slightly in October to +8 from +10 in July. This is the lowest level of future expectations for small-business owners since July 2010, when the expectations part of the index stood at -2.
The Small Business Index tends to be a precursor of future economy activity. It peaked at the end of 2006 and matched that peak in June 2007, prior to the beginning of the recession late that year. The index consistently declined from 2008 through mid-2009, even as economists declared the recession officially over. It improved modestly thereafter as the economy recovered more slowly than anticipated, before falling to a new low in July 2010. The Index recovered significantly, turning positive in January 2011, but has since deteriorated.
Small-business owners' assertion that government regulations are the most important problem facing them today is consistent with another recent Gallup poll (Oct. 6-9) in which 14% of Americans volunteered that reduced government regulation is the best way to create jobs in the U.S.
There is always a debate to be had and a balance to be struck between the public benefits associated with government regulations and the cost of those regulations on business. While regulatory change can have a big impact on individual companies and industries, most often it does not have a major impact on the overall U.S. economy. However, these are not normal economic times, and small-business owners seem to feel government regulations are making their difficult operating environment even more challenging.
The magnitude of the challenges facing small-business owners is reflected by the one-third who are worried that they may go out of business or not have enough money to pay their employees in 2012. Small-business owners tend to be agile and demonstrate they can adjust to the business cycle as needed to survive. However, the current weak economy has persisted since 2008. Another economic downturn given the fragile nature of today's economy could have dire consequences for many of the nation's small businesses and those they employ.
The recent improvement in the job situation as measured by Gallup is a positive for small-business owners. On the other hand, Gallup data suggesting relatively flat holiday sales this year could mean another difficult Christmas holiday for many of the nation's small-business owners.
Results for the total dataset are based on telephone interviews with 604 small-business owners, conducted Oct. 3-6, 2011. For results based on the total sample of small-business owners, one can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.
Sampling is done on an RDD basis using Dun & Bradstreet sampling of small businesses having $20 million or less of sales or revenues. The data is weighted to be representative of U.S. small businesses within this size range nationwide.
In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
For more details on Gallup's polling methodology, visit www.gallup.com.