Q&A talks about the tempered optimism of small businesses with Kathy Bromage, senior vice president of small commercial strategy and marketing at the Hartford Financial Services Group.
Q: The Hartford recently released its 2013 Small Business Pulse survey. Explain its findings of optimism tempered by playing it safe.
A: Overall, the majority of small business owners (73 percent) feel their business is operating successfully. However, optimism in the national economy is declining year over year, and there is a trend towards small business owners being more conservative with the overall level of risk they are taking with their business. The main factors perceived as major risks to their business are slow economic growth, healthcare costs and taxes. These factors are potentially influencing small business owners to be more conservative with the overall level of risk they are taking with their business.
In The Hartford’s newest survey of 1,000 U.S. small business owners, the percentage of owners who identify themselves as conservative in risk-taking has steadily increased. In fact, when asked to rate the overall level of risk they are taking with their business, 80 percent defined themselves as “very” or “somewhat” conservative, an increase of 31 percentage points from our spring 2012 survey. Just 2 percent of small business owners rated themselves as very risky, down from about 1 in 5 (17 percent) from a year ago.
Q: If small business owners perceive things are going well overall, why are they being so conservative? Are they lacking confidence in the economy in spite of their businesses turning around?
A: Small business owners cite slow economic growth, healthcare costs and taxes as major risks to their businesses. One of the signs that small business owners are being more conservative with the level of risk they are taking is likely their recent and projected hiring behavior. Most small business owners have not hired in the past 12 months and most do not intend to hire in the coming 12 months. Additionally, over one-third indicate that they are taking on additional responsibilities themselves instead of hiring.
Even with a cautious mindset, most small business owners feel successful. Approximately half feel optimistic that the national economy will strengthen this year. However, when asked to directly compare the national economy and local economy, respondents feel more optimistic about their local economy than the national.
Q: How does the cost of healthcare factor into all of this? Are small business owners holding back on investments so they can pay for employee health coverage?
A: While there are many factors in play, anecdotally small business owners told us that one of the reasons they are currently more conservative in the level of risk they are taking with their business is due to the unknowns of how healthcare reform will affect them. From our focus groups, we heard small businesses are lacking clarity and are still concerned about the future.
Q: 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. What are the barriers to hiring?
A: 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; their business is not growing; or they are taking on additional responsibilities themselves. Only 14 percent cited a lack of qualified talent as a reason for why they are not hiring or not hiring as much.
Q: Something else The Hartford did recently was cash mobs. Explain that program and what was involved.
A: As a way to show our support of businesses around the country, employees of The Hartford organized several local cash mobs in Hartford, Conn.; New Hartford, N.Y.; Kansas City, Kan.; Charlotte, N.C.; Denver, Colo., and San Antonio, Texas.
The cash mobs, or Hart-Mobs, an idea developed by one of our employees, include meetings with local officials as well as shopping in small business districts in each city. Hartford employees are encouraged to participate, and show their support by shopping with their local small businesses. The Hart-Mob activities took place in lock-step with National Small Business Week, which took place June 17-21 across the U.S. In addition to supporting National Small Business Week, The Hartford organizes several Hart Mobs events throughout the year in an effort to support small businesses. The next one is scheduled for September.
