What Kills Small Businesses? Let's Ask Them

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Burdensome government regulations and a hyperactive legal culture topped the list of scourges in this new survey.

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President Obama talks to small business owners at a roundtable in Washington, D.C. this May. (Reuters)

Listen to the candidates this year. They all say they want to create more jobs. And each of them -- from both parties and from every part of the country -- trips over the others in their expressions of love for small business.

If they really mean what they say, shouldn't they be listening to what the people who actually run small businesses have to say about job creation? After all, small business employs half the nation's private sector workforce and accounts for more than 99 percent of its employers.

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According to a new nationwide survey commissioned by Common Good, the nonpartisan government reform coalition, 69 percent of small business owners and managers say that complicated government regulations are "major impediments" to the creation of new jobs. Notice they didn't merely say they dislike complicated regulations or that they are annoyed by them. They said complicated regulations are major impediments­­ to getting more of what Americans most need and want: jobs.

Anybody listening?

When over two-thirds of job creators tell us how to create jobs in an economy that desperately needs them, candidates and elected officials should not only listen, they should also tell us precisely where they stand on these ideas.

How government regulates commerce -- and not just whether government regulates commerce -- should be a major issue in this election. It would tell us a lot about how the candidates, if elected, would make critical day-to-day decisions that shape law, regulation, and, ultimately, the economy.

Can government protect public health and safety without complicated rules, bureaucracies, and mandates from Washington? Small-business-people seem to think so.

Would public health and safety be better served if regulations set clear, certain goals and gave the American people some freedom to use their own common sense in meeting those goals? Small-business-people, again, say yes.

But what do the candidates have to say on these issues? Unfortunately, these questions were not asked of Mitt Romney or Barack Obama in Wednesday's debate. Hopefully, they will come up in future debates, especially among candidates for the U.S. House and U.S. Senate.

The top two obstacles to business growth and job creation, according to the small business owners and managers polled, are burdensome government regulations (27 percent) and a legal system that encourages too many lawsuits (23 percent). These two concerns are followed by difficulty obtaining financing (20 percent), high taxes on business (18 percent), availability of a qualified workforce (9 percent), and the rising cost of energy (7 percent).

The small business survey also found:

  • 68 percent of those interviewed say that more businesses are investing in new technology rather than new employees "to avoid complications created by federal employment laws,

  • 86 percent say regulations would be more effective in protecting public health and safety if they gave business "clear, certain goals" as well as "more freedom to use common sense in making daily decisions."

  • 89 percent say that most government bureaucrats make decisions "based on rules and not on common sense" when regulating small businesses.

  • 69 percent say business would create more jobs if local, state and federal government agencies coordinated small businesses regulatory approvals and permits into a one-stop shop approach.


Conducted by Clarus Research Group, the survey interviewed 500 small business owners and top managers across the nation between September 19-25, 2012.

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Ron Faucheux is president of Clarus Research Group, a nonpartisan polling firm based in Washington, D.C. More

Faucheux has written or edited seven books on politics and is an advocacy strategist, pollster, university lecturer, and a former two-term state legislator and state-cabinet official. He is on the faculty at the Graduate School of Political Management at George Washington University and the Public Policy Institute at Georgetown University. He received his undergraduate degree from Georgetown University, a law degree from LSU, and a Ph.D. in political science from the University of New Orleans, where he concentrated on voter behavior research. He edited and published Campaigns & Elections magazine for more than a decade. His popular daily newsletter, Lunchtime Politics, summarizes polling from around the nation.

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