Over the past year, the percentage of owners who identify themselves as conservative in risk-taking has steadily increased by 63 percent. Eighty percent rated themselves as conservative rather than risky in this recent survey, which is up from 73 percent in the company's Small Business Success Study in fall 2012 and 49 percent in The Hartford's Small Business Pulse in spring 2012. Just 2 percent of small business owners rated themselves as very risky, down from about 1 in 5 (17 percent) from a year ago.
"The decrease in the level of risk small business owners are taking is a significant concern," said Liam E. McGee, chairman, president and chief executive officer for The Hartford. "Entrepreneurs' drive, determination and readiness to take risks are what fuels small business creation, innovation and success, and we need to instill an environment that encourages their growth and development."
Even with a cautious mindset, most small business owners (73 percent) feel successful. Approximately half (47 percent) feel optimistic that the national economy will strengthen this year which is down from 61 percent one year ago. However, when asked to directly compare the national economy and local economy, respondents feel more optimistic about their local economy than the national (44 percent versus 23 percent, respectively).
Major Risks for Small Businesses
While small business owners cite slow economic growth (52 percent), healthcare costs (44 percent) and taxes (40 percent) as major risks to their businesses, these have declined since fall 2012.
"As a major risk, slow economic growth and healthcare costs continually affect how we operate as a business and plan long-term growth," said Dominic Liuzzi, owner of Liuzzi Gourmet Food Market in North Haven, Conn., a small business with 60 employees in both his retail store and distribution center, specializing in gourmet cheeses. "Like many other small business owners, I have been taking a wait-and-see approach this year, rather than making quick decisions about expanding distribution, hiring, or purchasing new equipment. This gives us the time to get a better read on economic conditions, and evaluate what is working well with my business and determine how we better differentiate ourselves from the big stock stores."
About half (49 percent) of owners feel that federal spending cuts caused by the recent sequester will have an impact on their businesses. Of this group, 76 percent think the impact will be mostly negative.
Hiring Retrospective and Outlook
The survey of 1,000 small business owners nationwide found that approximately two-thirds (68 percent) have not hired anyone in the past 12 months and 63 percent do not intend to hire anyone in the next 12 months. Of those that have hired during the last year, 7 in 10 (70 percent) have taken on just one or two new employees.
Barriers to hiring exist, and according to the survey, some barriers are intrinsically linked to the resources needed to hire. Small business owners who have not hired or not hired as much as they would have liked in the past 12 months reported the following reasons:
- They cannot afford to hire (47 percent)
- Their business is not growing (39 percent)
- They are taking on additional responsibilities themselves (39 percent)
Only 14 percent cited a lack of qualified talent as a reason for why they are not hiring or not hiring as much.