Posted on 15 Nov 2011
According to The Hartford's Small Business Success Study released today, small business owners are battling regulatory challenges and the war for talent, factors that are negatively impacting their bottom line and potentially altering how they vote in 2012.
Despite high unemployment rates, finding qualified talent is a challenge for 59 percent of small business owners. At the same time, two-thirds (68 percent) say that their business is a consideration when voting, particularly if certain policies directly impact their business. The majority (70 percent) of small business owners feel successful, even as they face challenging conditions.
The Hartford's Small Business Success Study surveyed 2,000 small business owners nationwide to gain a better understanding of the issues and factors impacting their success and outlook.
"We developed this comprehensive study of the nation's small businesses to learn how well equipped they are to maximize their future success," said Liam E. McGee, Chairman, President, and Chief Executive Officer of The Hartford. "Small businesses are the U.S. economy's primary job creators, and a powerful force — not just economically but also behaviorally. They carry on the tradition of the driven, confident, creative people who built America.
From the study we learned that most of them expect to be successful in the next two years, even as they face challenging conditions. 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."
Different Ways to Define Success: Passion Before Profit
Small business owners remain optimistic about their success — even in a tough economy — because profits aren't always the definition of success. In fact, 82 percent say they place great importance on doing something they feel passionate about and enjoy. Although 77 percent acknowledge that increasing profitability of the business year over year is very important, only 18 percent say this is the most important factor in defining success.
Other notable findings include:
• Most small business owners want to stay deeply involved in the operation of their business (81 percent).
• Achieving a comfortable lifestyle for themselves (79 percent) and their employees (72 percent) is important.
• An overwhelming majority indicate they enjoy owning their business (90 percent).
The study's findings also shed light on the widely-held belief that all small business owners seek to expand and maximize profitability. In fact, it found that growth is not a shared goal among all small business owners. While 52 percent do consider themselves to be growth-oriented, 48 percent describe themselves as maintenance-oriented and are comfortable running their business at its current size.
Maintaining a Positive Outlook
In spite of the current economic environment, many small business owners remain optimistic about their prospects for success in the short-term, with 51 percent projecting that they will be very successful in the next two years. Only 6 percent are predicting they will fail to achieve success in that timeframe. Confidence in their ability to stay in business is a major factor leading many small business owners to feel as though they are currently successful.
Additional Barriers to Success
It is clear that the national economy continues to put pressure on a majority of small business owners, with 57 percent indicating it has had an impact. When asked what keeps their business from being successful, small business owners note that financing their business is a particular area of pain. Specifically, 34 percent of respondents say that obtaining a loan or other capital is difficult.
Small businesses are also challenged by government regulations, which result in greater administrative and accounting burdens. According to the study, small business owners identify economic constraints, such as government rules, regulations and taxes, as the single biggest factor holding them back (37 percent). And, they say that uncertainty about how public policy could potentially stunt the future growth of business is hindering their ability to plan ahead.
Other barriers include rising energy and fuel prices, and a lack of customers.
Few Focus on Long-Term Planning
It's not uncommon for many small business owners to overlook long-term planning goals while focusing on short-term business needs. The study's findings validated this common oversight, with only 35 percent of small business owners saying they have a formal, written business plan for the future