Spiraling health care costs, confusing tax-related regulations and a lack of disaster planning pose significant challenges for more than half of the small business owners surveyed nationally by the Travelers Institute.
According to the institute, a public policy division of the Hartford-based Travelers Companies Inc. and an advocate for small business owners, the majority of those surveyed are optimistic the economy will improve over the next year.
While the study reveals that small business owners believe their revenue will grow and that they will be hiring employees over the next year, close to a third of the respondents feel government regulations have a negative impact on their ability to hire and retain workers as well as growth their businesses.
To address those issues, the Travelers Institute has launched an advocacy project designed to raise awareness of the importance of small business to the U.S. economy and promote an atmosphere that facilitates success.
The Washington, D.C.,-based institute kicked off its national symposia series, “Small Business, Big Opportunity,” in March and published its study earlier this month. Senior management from Travelers will hold several panel discussions around the country this year.
“Through the survey, white paper and national series of symposia, Travelers aims to raise awareness of the importance of small business to the U.S. economy and promote an environment that fosters growth,” said Joan Woodward, executive vice president at Travelers Institute.
“An important aspect of the national symposia series is to facilitate dialogue and encourage debate that may identify and propose alternatives to some of the regulations that are overly burdensome. Further, we hope to highlight the importance of risk management and disaster preparedness to small business viability.”
The idea behind the symposium is to connect Travelers Institute senior management, industry analysts, local policy makers and entrepreneurs together to discuss the challenges to starting, operating and expanding a business. Specifically, the advocacy group will use the meetings to raise awareness, encourage discussion and solicit recommendations related to reducing regulatory burdens, job creation and disaster recovery management.
Woodward believes small businesses are uniquely positioned to advise local, state and federal officials on what regulations may be costly, duplicative, outdated or unnecessary.
For example, new federal requirements imposed on utilities and the oil and gas sector translate into higher electricity, transportation and operational expenses for small businesses. Energy bills are the third highest expenses facing small businesses. And when small firms face a spike in energy prices, they are unable to adjust the price of their goods and services quickly enough to match the cost increases.
By engaging in on-going discussions with the small business community, Travelers Institute hopes to identify key challenges that have the greatest impact on entrepreneurship. Travelers Institute hosted the second national symposia last week in Atlanta.
Woodward moderated a discussion on job creation and economic growth that included business leaders, government officials, community advisors and university experts.
According to the study, 47 percent those questioned find operational regulations — such as licensing, permitting and inspection issues — burdensome and 52 percent feel government regulations have a significant impact on small businesses.
In 2009, the public spent an estimated 9.8 billion hours responding to federal information and records requests — at an estimated cost of $48.72 an hour. Licensing and permits account for more than half of those costs, with invoices, storage of tax forms and customer data rounding out the rest of the burden.
The institute says small businesses shoulder regulatory costs that are 36 percent greater per employee than their larger competitors; firms with fewer than 20 employees spend $10,585 per employee per year while firms with 500 or more employees spend $7,755 per employee per year to comply with federal regulations.
More than 64 percent of those surveyed said it would be helpful if they could access to a single point of contact to deal with federal and state regulatory requirements to start a business.
More than half the survey respondents also said they did not have a business continuity plan in place in case of a disaster.
Connecticut, which ranks 41st on the Small Business Survival Index 2010 Rankings for friendliest policy environments for entrepreneurship, has 73,779 small businesses.
QUICK NOTES More than 60 percent of the business owners surveyed by the Travelers Institute said tax-related issues, government compliance and rising health care mandates consume a significant portion of their time and money. Here are some quick facts from the survey report: • There are 27.3 million small businesses in the U.S.; • Entrepreneurs launch 600,000 new businesses in the U.S. annually; • 33 percent of respondents said federal government creates the most regulatory burden for their business compared to 34 percent for state and 16 percent for local or county; • The tax code has four times more words than the Bible; • Tax compliance costs American small businesses $18 billion annually. Source: Small Business — Big Opportunity, Travelers Institute — May 2011
