Small business owners in the U.S. are optimistic about the future, but not necessarily about the government. In a recent survey of Infusionsoft customers, 95 percent of small businesses indicated they expect to grow in the next two years. In fact, 92 percent of them believe the next four years will be better for their company, but they don't think current policies and regulations add to that positive outlook.
Small business owners understand how much the government impacts the business environment; 70 percent of them believe government policies play a significant role in helping or hurting them. Given this, it is disheartening when you see 60 percent believe federal policies favor big business more than them - the largest job creators in the country. In the results, I clearly saw what they wish they could change, and their sentiment is most strongly reflected in seven concerns.
1. Reform Healthcare
While ensuring everyone has health coverage is an admirable goal, the way healthcare policies are currently implemented puts a significant burden on small businesses. Respondents wrote about the cost being a substantial portion of their profits, and the options available being less than stellar.
We found 42 percent said specifically the Affordable Care Act (ACA) had an adverse impact on their businesses, and 23 percent said it had a strong negative impact. They feel the ACA increases costs and paperwork and at the same time reduces coverage choices and benefits. Because tens of millions of Americans work for smaller organizations, ensuring health care is accessible, affordable, and manageable for small business owners is a serious concern.
2. Reduce and Simplify Tax Codes
The biggest stress weighing on the minds of small businesses is the belief that U.S. tax policies are hurting them. Some feel tax laws were made with big business in mind. This means small businesses, which account for the majority of companies in the U.S., have to try to fit into laws that are hard to apply and don't suit them well.
They are also frustrated at the tax rates, which disproportionately affects small businesses and sole proprietors. But their frustration isn't based on a feeling. A study commissioned by the National Federation of Independent Businesses and the S Corporation Association found S corporations with gross receipts less than $10M have the highest effective tax rate for any entity type.
In our survey, some of the respondents suggested the government should lower corporate tax rates for businesses making under $10M in profit or consider increasing small business incentives. Both approaches would allow smaller organizations to reduce their tax burden so they could afford to hire and expand their operations.
3. Implement Policies and Programs to Help Small Business
Many small business owners feel regulations on their businesses should be reduced, including rules on audits, record-keeping, and fees for LLCs and incorporation. Adhering to these rules require time and money, which causes smaller organizations to miss opportunities to invest in and grow their business. They would also like to see more government support and grants to help small companies as they grow in their first five years.
President Trump signed an executive order earlier this year aimed at reducing the number of business regulations in the country, but our survey results show Main Street America doesn't yet see the benefits.
4. Access to Capital
The first time Infusionsoft applied for a business loan we were rejected. It was terrible hearing we were denied. We were completely broke. It took three attempts and many hours before the loan officer finally agreed to make the $25,000 loan.
It's difficult to take time away from core business activities to raise funds. While big business can devote staff to creating proposals and finding investors, small business owners don't have that luxury. It's a catch-22. They need capital to grow, but they aren't big enough to be able to devote time and resources to searching for investors and opportunities. Having access to working capital and loans needed for development would make a big difference in many smaller organizations, and is a concern of nearly a third of small businesses we surveyed.
5. Stop Nickel-and-Diming
Small business owners express a lot of frustration at the growing number of costs imposed at both the federal and state level. A single policy change alone is usually not too difficult to handle, but when added together these expenses leave business owners feeling squeezed from all sides.
Minimum wage increases are a common source of this frustration. Many larger corporations exist in industries with profit margins that can absorb a pay increase. Small businesses that operate with lower profit margins, like food service and boutique shops, must pass those expenses on to the consumer. A major increase in minimum wage means increasing prices, a loss of customers, and possibly business failure.
6. Make it Easy to Import
Unlike large companies who can get volume discounts from most of their suppliers, small businesses spend a lot of time finding the best price, no matter where it is in the world. This means importing vital components or entire product lines from overseas.
Unfortunately, imports are a target of the current administration. Import duties, especially on Chinese goods, impact small companies significantly. Better relations with China, more open trade and a decrease in import duties are all key U.S. policies that small business owners wish the government would consider.
7. Educate Children on Entrepreneurship and Finances
Small business owners are very aware of how inadequate U.S. schooling can be. They believe real-world leadership skills, communication techniques, and financial responsibility are lacking in most school curriculums. They'd like to see education focused on science, technology, engineering, manufacturing, finance, budgeting and entrepreneurship.
To be clear, Small business leaders don't hold the government responsible for their company's growth and success. They know that nothing is perfect and wish they could change aspects of government policy. These seven areas represent the top concerns small businesses face today. Granting one single wish would move mountains to improve the trajectory of most.