Biggest problems facing small business

biggest problems for small business owners and business problems and solutions examples
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Dr.KeiraCollins,United States,Professional
Published Date:07-07-2017
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Small Bu SSS ine Small Bu SineSS Por BS lem Por BlemS & PrioritieS & PrioritieS August 2012 Holly Wade www.nfib.com/pnp2012Small BS u SS ine PB ro S lem and PS rioritie The 2012 issue of Problems and Priorities is published on the heels of the worst U.S. recession since the 1930s. The four years between the last edition published in 2008 and the current edition saw a near collapse of the financial system and housing market, unprecedented government bailouts of the banking and automotive industries, and the enactment 4 of massive economic stimulus programs. The immense magnitude and duration of the recession significantly altered the small-business land- scape along with the problems owners now face in operating their busi- nesses. Unemployment is still over 8 percent as small-business hiring remains stagnant and housing foreclosures remain at historically high levels. Consumer confidence continues to lag pre-recession levels and businesses are still reluctant to hire or invest even as sales start to im- prove. And with the added pressure of high gas prices, similar to price increases last seen in 2008, the likelihood of rapid economic improve- ments is remote. While the economy is over two years into its recov- ery, progress is painfully slow as economic headwinds and uncertainty remain. The effects of the recession and fragile economic recovery are reflected in owners’ assessment of the list of 75 business problems. PB ro lemS of GreateSt ConCern The “Cost of Health Insurance” continues as the number one small-business problem, a posi- tion it has held for 25 years. The number one ranking is reflected in all but nine of the 50 sub-categories of businesses analyzed in this survey. Four of the nine defectors, including agriculture and transportation/warehousing, rank Energy Costs, except Electricity as their number one problem. The percent of small-business owners who cite the “Cost of Health Insurance” as critical fell slightly from 56 percent in 2008 to 52 percent in 2012. In 2004, this figure reached 66 percent during the height of yearly premium increases. But despite the slowing rate of pre- mium increases, the percent who find it a critical problem overshadows its number two rival, “Uncertainty Over Economic Conditions” by 14 percentage points. Health insurance costs for small firms have risen 103 percent in the last decade, an in- 5 crease outpacing wages and inflation. Rising health insurance costs have proved unaffordable for many small-business owners resulting in some owners terminating their employer-spon- sored health insurance program and delaying or prohibiting non-offering firms from offering 4 The 2008 Problems and Priorities survey data was collected between January and March 2008, before the sever- ity of the economic downturn was fully appreciated. 5 Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2011. www.nfib.com/pnp2012 7 Small Business Problems & Prioritiesthe benefit. This trend is reflected in the decline in small-firm offer rates from 47 percent in 6 2001 to its current rate of 36 percent. Chart 1 h ealth i S n C uran e o ffer r ateS and a G vera e y early PS remium for BS u SS ine S e with l eSS t han 50 e P m S loyee , 2000 - 2011 Offer Rates Cost 60% 6,000 5,000 50% 4,000 40% 3,000 2,000 30% 2000 2001 2002 2003 2004 2005 2006 2008 2009 2010 2011 Source: Department of Health and Human Serivces, Agency for Healthcare Research and Quality, Center for Financing, Access and Cost Trends. Medical Expenditure Panel Survey-Insurance Component, 2000–2011. Federal and state governments have largely failed in their attempts to lower the cost of health insurance or even slow its rate of growth. The hotly debated Patient Protection and Affordable Care Act (PPACA), commonly called Obamacare, was signed into law in March 2010, and was the most aggressive effort to reform the healthcare system ever. But as with most health reform efforts, it failed to address the fundamental causes of rising healthcare costs while opting to focus on coverage. The Administration’s highly touted small-business health insurance tax credit was one of the only efforts in the law to ease costs for offering small-business owners and attempt to lure non-offering firms to offer. The measure largely failed in its objectives, again leaving small-business owners to find ways to ease the escalating cost burden or forgo offering completely. Without a major refocus of current thinking, the cost of health insurance will almost certainly be the most critical business problem facing small-business owners again in four years. Economic and government “uncertainty” continues to mar recovery efforts. These areas of uncertainty trigger anxiety among consumers, investors, and business owners alike. The degree to which “uncertainty” negatively impacts the small-business economy generates much de- bate, prompting the addition of two new problems, “Uncertainty over Economic Conditions” and “Uncertainty over Government Actions.” “Uncertainty over Economic Conditions” is one of the six new problems added to the survey this year. Small-business owners rank it as the second most severe problem facing their business and is critical for 38 percent of them. Recessions of the last four decades are typically followed by a robust recovery that quickly re-builds consumer and business confidence. The most recent recession proved to be anything but typical and its recovery is following a similar fate. The severity and breadth of the recession left behind a much weak- ened and fragile economy. Consumer confidence plummeted and has not yet recovered, stuck in a vicious cycle where consumer confidence and the slow recovery perpetuate each other’s existence. Almost equally challenging for small-business owners is “Uncertainty over Government Actions” which ranks fourth and is critical for 35 percent. In the last four years, the federal government approved legislation to overhaul the financial industry, the healthcare system and promote economic stimulus. The upheaval in policy changes is immense and will con- tinue as the regulatory system works to implement the laws’ directives. In addition to the headline reform efforts, regulators of other government agencies are also broadening rule- making efforts in areas of employment and the environment. Uncertainty also surrounds 6 Department of Health and Human Services, Agency for Healthcare Research and Quality, Center for Financing, Access and Cost Trends. Medical Expenditure Panel Survey-Insurance Component, 2000–2011. www.nfib.com/pnp2012 8 Small Business Problems & Priorities Percent Owners Who Offer Health Insurance Average Yearly Premium for Individual Health Insurancepending government action on the expiring Bush tax cuts, the debt ceiling and the federal budget. All of these policy changes and those yet to be visited, create a huge “question mark” for small-business owners, impeding their ability to make short and long-term busi- ness decisions. “Energy Costs, Except Electricity” ranks as the third most serious problem for small- business owners, one position lower from 2008. Thirty-five (35) percent of owners evaluate the problem as critical, down from 42 percent. Historically, the ranking of this problem re- flects the average price of gasoline, not surprising considering the primary energy costs for 38 percent of small employers is in operating vehicles (Chart 2). Chart 2 e G ner y CoSS t , C ex P e t e leCC tri ity and a G vera e riCe of Gallon of GaS , 1982 – 2012 P Rank Average Price of Gallon of Gas 0 3.50 5 3.00 10 2.50 15 2.00 20 1.50 25 1982 1986 1991 1996 2000 2004 2008 2012 Source: U.S. Energy Information Administration, Inflation Adjusted Average Yearly Gasoline Prices, 1982-2012 “Electricity Costs (rates),” the second energy-related problem addressed in the survey, th ranks 12 in relative importance among small-business owners, down three positions from 2008. Seventeen (17) percent of owners find this problem critical, nearly unchanged from 2008 where 16 percent did so. Electricity costs are one of the top three business costs for 25 percent of small-business owners. Most small employers are acutely aware of how much their electricity bill affects their bottom line as 57 percent of small-business owners own their busi- 7 ness property and of those who rent, 70 percent of them pay the electricity bill themselves. Tax-related issues continue to be significant problems for small-business owners. Small- business owners not only find current tax rates a burden but equally problematic are the com- plexity of tax compliance and the frequency of changes in tax laws. The top 10 most severe problems for small-business owners is now populated with five tax-related small-business is- sues, one more than in 2008 (Chart 3). The monthly Small Business Economic Trends survey reflects this sentiment as “taxes” typically ranks second as the most important problem for 8 owners since 2008. “Poor Sales” remains the number one problem in that survey. The most severely ranked tax problem in the top 10 is “Federal Taxes on Business In- come.” It ranks sixth, down three positions from 2008. Despite its decline in the ranking, 30 percent of small-business owners find it a critical problem, 5 points higher than four years ago. Its state equivalent, “State Taxes on Business Income,” found a similar fate as it also fell in the ranking from seventh to tenth but saw an increase in the percent who find it critical from 21 percent in 2008 to 24 percent today. “Tax Complexity” is the second most severe tax issue ranking seventh, two positions lower than in 2008 where it ranked fifth and was first introduced to the survey. It is critical for 29 percent of small-business owners, up from 23 percent in 2008. Mounting pressure to simplify the tax code is not surprising as tax compliance becomes more costly and time con- 7 Energy Consumption, National Small Business Poll, (ed.) William J. Dennis, Jr., NFIB Research Foundation, Vol. 6, Iss. 3. 2006. Also available online at http://www.411sbfacts.com/files/energyconsumption1.pdf. 8 Small Business Economic Trends, (ids.) William C. Dunkelberg and Holly Wade, NFIB Research Foundation, series. www.nfib.com/pnp2012 Problem Rank Average Gas Prices (in 2012 dollars) 9 Small Business Problems & Prioritiessuming for filers as the number of new tax laws and rules increase. Most small-business owners 9 (88 percent) use a tax preparer and their main reason in doing so is to ensure compliance. Chart 3 t ax i SSS ue - PC er ent CritiCal (in 2012 rank order ) Issues 2012 2008 Federal Taxes on Business Income Tax Complexity Frequent Changes in Federal Tax Laws/Rules Property Taxes (real, inventory, or personal porperty) State Taxes on Business Income Dealing with IRS/State Tax Agencies FICA (Social Security taxes) Estate Tax 0 5 10 15 20 25 30 Percent Related to “Tax Complexity” is the eighth-ranked small-business problem, “Frequent Changes in Federal Tax Laws and Rules.” This problem moved up seven positions, a significant th jump from 15 in 2008. In the last four years, real and anticipated changes to the tax code took center stage through a number of tax changes imbedded in the new Patient Protection Affordability Care Act and the looming sunset of the Bush tax cuts and payroll tax holiday which are set to expire at the end of 2012. The unpredictable nature and often hidden changes of the tax law proves a significant burden on small-business owners. Finally, in ninth position is “Property Taxes (real, inventory or personal property).” This problem fell 5 positions when it ranked fourth in 2008. The recession took a heavy toll on real estate values thus tempering the impact of property taxes on small-business owners. As real estate prices increase, this will likely become a greater problem. Small-business owners are heavily invested in real estate, with 92 percent owning property, most owning their primary 10 residence but many also owning commercial and investment properties. PB ro lemS of l eaSt CC on ern The 10 problems of least concern are generally issues of limited exposure to most small-busi- ness owners and typically find themselves at the bottom of the ranking each year. Three prob- lems are new to the top 10 of least concern and one problem in the group is new to the survey. th “Exporting My Products/Services” holds onto the 75 ranking, a position held for six of seven editions that it has been listed as a problem. It moved up one position in 2000, replaced by the problem “Y2K Impacts.” Only 3 percent of small-business owners find exporting a critical problem, nearly unchanged from 2008. Sixty (60) percent find it to be “not a prob- lem.” Small-business owners are largely uninterested in exporting their product or services and if they are, seem to find adequate resources to help them succeed. Small-business markets 9 Tax Complexity, National Small Business Poll, (ed.) William J. Dennis, Jr., NFIB Research Foundation, Vol. 6, Iss. 6, 2006. Also available online at http://www.411sbfacts.com/files/taxcomplexity1.pdf. 10 Small Business Credit Access, and a Lingering Recession, William J. Dennis, Jr., NFIB Research Foundation, January 2012. Also available online at http://www.nfib.com/research-foundation/surveys/credit-study-2012. www.nfib.com/pnp2012 10 Small Business Problems & Prioritiesare typically in the general location of the business itself and growth is a product of expanding those local boundaries. However, expanded high-speed Internet access and the increased use of business websites certainly allows for market expansion through online sales, some even from overseas. th The 74 ranked problem in the survey is “Undocumented Workers,” a problem first introduced in 2008. Seven percent find it a critical problem compared to 55 percent who do not. While the issue draws substantial media attention and passionate view on both sides, the number of small-business owners concerned by the business implications of undocumented workers is minimal. rd “Access to High-Speed Internet” ranks 73 and is critical for 7 percent of small-business owners. The technology gap between rural and urban business owners has dissipated dramati- cally over the years as over half of owners find it not a problem. A recent SBA study found that Internet utilization by small-business owners is similar between those in urban and rural areas. The differentiating factor between these two groups is the cost of Internet access. Small-business owners in rural areas generally pay more for less bandwidth than their urban 11 counterparts. The study also found that 71 percent of small-business owners have a website. While cost may still be a burden for some, the problem of access appears to be generally re- solved for those who are interested. nd The 72 ranked problem, “Employee Turnover,” is a new entrant to the bottom 10 as st it ranked 51 in 2008. The economic downturn ignited extensive layoffs by both large and small businesses. The number of businesses decreasing their labor force far outweighed those increasing it, leaving few alternative job opportunities for those who remained employed. This continues as the economic recovery remains anemic and business owners are hesitant to expand. If the economy continues to improve and job openings increase, this problem will certainly move up the ranking in the next edition of the survey. st The 71 ranking belongs to “Cost and Frequency of Lawsuits/Threatened Lawsuits” down six positions from 2008. NFIB’s poll Use of Lawyers found that most small-business owners retained an attorney for a legal matter but relatively few used one for legal disputes regarding 12 their business. Of those who did, about 70 percent only had one or two disputes in the last three years and the majority settled the dispute out of court. It appears this problem has not developed into something more as the ranking remains low. th “Using Social Media to Promote Business” ranks 70 and is one of the new problems introduced to this year’s survey. This potential problem was added due to the swift develop- ment of popular websites that provide business promotional opportunities. Over the last four years, websites including Facebook, Twitter, GroupOn and Living Social rose in popularity as more and more consumers use these websites to find products and services. Despite its initial low ranking, this issue could cause future problems if the utilization of these websites for ad- vertising purposes expands. th “Winning Contracts from Federal/State/Local Governments” ranks 69 of the 75 listed problems, moving up two positions from 2008. This survey shows that while all three levels of government try and promote procurement opportunities to small businesses, the problem is modest in the scheme of things. NFIB’s Contacting Government poll found that 72 percent of owners made no sales to a government agency in the last three years and 84 percent did 13 not expect to bid on a contract during the next three years. Small-business owners are either just not interested in pursuing a government contract or do not believe they will succeed in obtaining one. 11 Telenomic Research, The Impact of Broadband Speed and Price on Small Business http://www.sba.gov/sites/de- fault/files/rs373_0.pdf. Published by U.S. Small Business Administration, Office of Advocacy, November 2010. 12 Use of Lawyers, National Small Business Poll, (ed.) William J. Dennis, Jr., NFIB Research Foundation, Vol. 5, Iss. 2, 2005. Also available online at http://www.411sbfacts.com/files/useoflawyers_poll.pdf. 13 Contacting Government, National Small Business Poll, (ed.) William J. Dennis, Jr., NFIB Research Foundation, Vol. 3, Iss. 1, 2003. Also available online at http://www.411sbfacts.com/files/comtactinggovt_poll.pdf. www.nfib.com/pnp2012 11 Small Business Problems & PrioritiesThe U.S. trade deficit, especially with China, spurs heated policy debates and occasional rallying cries to “Buy American.” Heightened debate initially began with the passage of the North American Free Trade Agreement (NAFTA) and continues in most attempts to imple- ment subsequent free trade agreements. However, the problem of “Competition from Im- ported Products” continues to be a low priority issue for most small-business owners as it th ranks near the bottom at 68 , two positions lower than in 2008. This problem though varies greatly in importance by industry. Small businesses in manufacturing and agriculture find this issue much more problematic than the general population. th The problem of “Protecting Intellectual Property” ranks as the 67 most severe problem nd for small-business owners, five positions lower than in 2008 where it ranked 62 . Just under 5 percent find it to be a critical problem compared to 34 percent who do not find it a problem at all. Small businesses invent and improve on processes and products to enhance productivity and market share. According to NFIB’s Innovation poll, over 40 percent of owners introduced at least one new or significantly improved product, service, process or design into their sales 14 inventory in the prior year. Most of this is done without seeking formal protection of their innovation through copyright or patents as only 13 percent of owners own a copyright and 5 percent own patents. But for those small-business owners who do seek patents for their prod- uct/service/process, they will encounter a much different system than their predecessors in light of the recently passed American Invents Act. This law moved the patent process from a “first-to-invent” to a “first-to-file” system. Future editions of this survey might bring more light into the effects of this legislation for small-business owners. “Credit Rating/Record Errors” rounds off the top-10 problem list of least importance th ranking in at 66 . Whether owners’ credit ratings are good or bad, it seems few have a serious problem with errors associated with them. NFIB’s Finance Questions poll found that most small-business owners do not regularly check their credit score and those who do and find er- 15 rors are generally satisfied with the agencies help in correcting them. t able 1 m S ea S ure of Small BS u SS ine ProBlem i mPC ortan e Percent Standard Percent “Not a 2008 Problem Rank Mean Deviation “Critical” Problem” Rank Cost of Health Insurance 1 2.18 1.73 52.3 6.0 1 Uncertainty over Economic Conditions 2 2.40 1.57 38.3 2.8 new Cost of Natural Gas, Propane, Gasoline, Diesel, Fuel Oil 3 2.72 1.82 34.8 6.0 2 Uncertainty over Government Actions 4 2.73 1.83 35.1 5.9 new Unreasonable Government Regulations 5 2.76 1.81 34.1 5.7 6 Federal Taxes on Business Income 6 2.86 1.82 29.5 6.5 3 Tax Complexity 7 2.92 1.80 28.8 6.2 5 Frequent Changes in Federal Tax Laws and Rules 8 3.15 1.83 24.0 7.0 15 Property Taxes (real, inventory or personal property) 9 3.18 1.90 24.4 8.6 4 14 Innovation, National Small Business Poll, (ed.) William J. Dennis, Jr., NFIB Research Foundation, Vol. 5, Iss. 6, 2005. Also available online at http://www.411sbfacts.com/files/Innovation5-5-061.pdf. 15 Finance Questions, National Small Business Poll, (ed.) William J. Dennis, Jr., NFIB Research Foundation, Vol. 7, Iss. 7, 2007. Also available online at http://www.411sbfacts.com/files/financial%20questions.pdf. www.nfib.com/pnp2012 12 Small Business Problems & Prioritiest able 1 Continued m S ea ureS of Small BS u SS ine PB ro lem i P m C ortan e Percent Standard Percent “Not a 2008 Problem Rank Mean Deviation “Critical” Problem” Rank State Taxes on Business Income 10 3.21 1.92 23.8 9.9 7 Cost of Supplies/Inventories 11 3.35 1.74 16.3 6.8 8 Electricity Costs (rates) 12 3.38 1.77 17.3 7.0 9 Cash Flow 13 3.38 1.82 17.6 8.0 11 Poor Earnings (profits) 14 3.40 1.95 22.5 8.8 14 Federal Paperwork 15 3.44 1.88 18.3 8.6 18 State/Local Paperwork 16 3.53 1.93 19.3 9.7 21 Projecting Future Sales Changes 17 3.54 1.76 14.1 7.6 20 Workers’ Compensation 18 3.65 2.03 18.0 14.8 (modified)10 Fixed Costs Too High 19 3.65 1.83 14.9 9.0 16 Dealing with IRS/State Tax Agencies 20 3.68 1.92 16.2 10.4 27 Unemployment Compensation 21 3.72 2.08 18.0 16.5 26 Highly Variable Earnings (profits) 22 3.73 1.87 13.7 10.9 22 Cost and Availability of Liability Insurance 23 3.74 1.96 15.7 12.7 13 FICA (Social Security taxes) 24 3.75 1.91 13.8 13.2 19 Finding Out about Regulatory Requirements 25 3.78 1.91 13.2 12.9 38 Poor Sales 26 3.83 2.04 18.4 13.5 35 Environmental Regulations 27 3.89 2.11 16.8 18.4 47 Cost of Government Required Equipment/Procedures 28 3.90 2.04 15.8 16.2 39 Real Estate Values 29 3.93 2.05 16.1 16.0 new Health/Safety Regulations 30 3.93 2.03 15.0 16.5 40 Competition from Large Businesses 31 3.94 2.03 14.3 16.7 29 Locating Qualified Employees 32 4.02 2.08 14.7 19.3 12 Telephone Costs and Service 33 4.05 1.76 8.3 11.1 24 Cost of Outside Business Services, e.g., Accountants, Lawyers, Consultants 34 4.05 1.78 8.4 12.3 25 Controlling My Own Time 35 4.15 1.98 11.7 17.9 23 Time Spent Shopping for Health Insurance 36 4.15 2.03 12.5 19.2 new Ability to Cost-Effectively Advertise 37 4.15 1.96 10.4 17.5 28 Finding and Keeping Skilled Employees 38 4.18 2.04 12.5 18.9 17 Physical Facilities Costs, such as Rent/Mortgage/Maintenance 39 4.21 1.88 9.6 15.2 33 Pricing My Goods/Services 40 4.21 1.91 9.0 17.2 30 Keeping Up on Business and Market Developments 41 4.22 1.74 6.8 12.6 44 Estate Tax 42 4.23 2.31 18.5 28.2 (modified)34 Reducing Energy Use in a Cost-Effective Manner 43 4.25 1.79 8.3 14.1 31 Obtaining Licenses, Permits, etc. 44 4.25 1.98 10.6 18.8 (modified)37 Hiring/Firing/Employment Regulations 45 4.28 2.00 10.1 20.7 42 www.nfib.com/pnp2012 13 Small Business Problems & Prioritiest able 1 Continued m S ea S ure of Small BS u SS ine ProBlem i mPC ortan e Percent Standard Percent “Not a 2008 Problem Rank Mean Deviation “Critical” Problem” Rank Delinquent Accounts/Late Payments 46 4.30 2.02 10.5 19.9 (modified)45 Sales Too Dependent on Health of One Business or Industry 47 4.33 2.00 10.7 21.0 43 Locating Business Help When Needed 48 4.43 1.88 7.9 18.5 36 Training Employees 49 4.55 1.84 5.6 20.6 41 Using Computer(s), the Internet or New Technology Effectively 50 4.56 1.92 7.6 22.4 48 Rules on Retirement Plans 51 4.64 1.96 7.7 25.5 52 Minimum Wage/“Living” Wage 52 4.73 2.01 8.6 28.8 53 Anti-Competitive Practices, e.g., Price Fixing 53 4.76 1.94 8.2 26.2 59 Zoning/Land Use Regulations 54 4.77 2.02 8.8 29.4 54 Handling Business Growth 55 4.78 1.77 4.3 23.5 49 Obtaining Long-Term (5 years or more) Business Loans 56 4.81 2.13 11.5 33.5 73 Bad Debts (not delinquencies) and/or Bankruptcies 57 4.83 1.95 7.0 27.8 56 Obtaining Short-Term (less than 12 months or revolving) Business Loans 58 4.86 2.12 10.8 34.3 72 Traffic, Highways, Roads, Bridges 59 4.90 1.97 7.4 31.4 58 Crime, including Identity Theft, Shoplifting, etc. 60 4.96 1.88 6.2 28.6 57 Solid and Hazardous Waste Disposal 61 4.96 1.96 6.2 33.1 64 Interest Rates 62 4.99 1.94 7.4 31.0 32 Cyber Crime (viruses, hacking, etc.) 63 5.00 1.86 5.5 29.2 new Mandatory Family or Sick Leave 64 5.04 1.97 7.8 35.1 60 Competition from Internet Businesses 65 5.10 2.00 7.3 36.9 69 Credit Rating/Record Errors 66 5.10 1.89 5.3 33.9 67 Protecting Intellectual Property 67 5.10 1.84 4.7 33.8 62 Competition from Imported Products 68 5.14 2.09 9.3 41.9 66 Winning Contracts from Federal/ State/Local Governments 69 5.19 2.04 7.5 43.6 71 Using Social Media to Promote Business (Facebook, Twitter, etc.) 70 5.19 1.83 4.4 36.8 new Costs and Frequency of Lawsuits/ Threatened Lawsuits 71 5.20 2.00 7.9 38.9 (modified)65 Employee Turnover 72 5.35 1.80 4.0 38.7 51 Access to High-Speed Internet 73 5.49 1.98 7.0 51.3 74 Undocumented Workers 74 5.67 1.90 6.5 55.2 (modified)70 Exporting My Products/Services 75 5.97 1.60 2.5 60.3 75 www.nfib.com/pnp2012 14 Small Business Problems & Prioritieso ther PB ro lemS of i S ntere t The 2012 edition of Problems and Priorities includes a number of notable swings in issue im- portance from 2008 that reflect dramatic changes in the economy and shifts in government priorities that affect small businesses. Of those problems that fell furthest in the ranking, all are related to the economic downturn. nd nd “Interest Rates” leads as it fell 30 positions from 32 to 62 . While not many owners find it a critical problem in either edition (10 percent in 2008 and 7 percent in 2012) the percent who find it not a problem rose dramatically from 14 percent to 31 percent. NFIB’s Small Busi- ness Economic Trends survey shows that interest rates for short-term loans fell 2 percentage 16 points over the last four years. Interest rates are currently at record lows and the Federal 17 Reserve has said that it will likely continue this policy through the end of 2014. If there is a bright-side to the current economy, the cost of borrowing might be it. Three employment-related problems follow, each moving between 20 to 21 positions down the ranking. “Finding and Keeping Skilled Employees” and “Employee Turnover” both th th st nd fell 21 positions in the ranking from 17 to 38 for the former and 51 to 72 for the latter. th nd “Locating Qualified Employees” fell 20 positions from 12 to 32 . The recession resulted in large lay-offs of skilled employees, increasing the pool of qualified candidates for those busi- nesses with job openings. If the recovery continues on its current path, owners will soon need to hire more employees to keep up with demand which in-turn will increase the burden of these employee-related problems. t able 2 l arGS e t CG han eS in PB ro lem r G ankin , 2008 to 2012 More Difficult in 2012 Ranks Changed Environmental Regulations 20 Obtaining Long-Term (5 years or more) Business Loans 17 Obtaining Short-Term (less than 12 months or revolving) Business Loans 14 Finding Out about Regulatory Requirements 13 Cost of Government Required Equipment/Procedures 11 Health/Safety Regulations 10 Poor Sales 9 Dealing with IRS/State Tax Agencies 7 Frequent Changes in Federal Tax Laws and Rules 7 Anti-Competitive Practices, e.g., Price Fixing 6 Less Difficult in 2012 Ranks Changed Interest Rates 30 Finding and Keeping Skilled Employees 21 Employee Turnover 21 Locating Qualified Employees 20 Locating Business Help When Needed 12 Reducing Energy Use in a Cost-Effective Manner 12 Controlling My Own Time 12 Pricing My Goods/Services 10 Cost and Availability of Liability Insurance 10 Cost of Outside Business Services, e.g., Accountants, Lawyers, Consultants 9 16 Small Business Economic Trends, op. cit. 17 http://www.federalreserve.gov/mediacenter/files/FOMCpresconf20120425.pdf downloaded 05/07/12. www.nfib.com/pnp2012 15 Small Business Problems & Priorities“Environmental Regulations” leads the list of those problems moving up the ranking with th th a 20 percentage point climb from the 47 to 27 position. Small-business owners clearly felt the change in regulatory policy over the last four years. The severity of this problem differs greatly by industry, but across the board, all industries rank this issue as more severe than four years ago and find it more critical. The most dramatic increase in severity occurred in the nd th transportation/warehousing industry category, increasing from 42 to 15 in the ranking. Ten (10) percent in this industry find it critical in 2008 compared to 29 percent in 2012. Access to both short-and long-term credit follow as the second and third largest movers up the ranking. “Obtaining Long-Term (5 years or more) Business Loans” rose 17 positions rd th from 73 to 56 . While the percent who find it not a problem increased slightly, the percent who find it critical more than doubled from 5 to 12 percent. “Obtaining Short-Term (less nd th than 12 months or revolving) Business Loans” rose 14 positions from a ranking of 72 to 58 . Again, the percent who find this issue not a problem are similar in both the 2008 and 2012 editions but the percent who find it critical more than doubled from 5 to 11 percent. Before the September 2008 market crash, obtaining credit was relatively easy with few concerned over lending risks. After the fall of Lehman Brothers, everything changed and banks became more conservative with lending practices. Coupled with more small-business owners seeking loans under distressed circumstances, overall access increased in problem severity. More con- servative lending practices will likely persist as government agencies continue to implement regulations related to Dodd-Frank in an effort to stem the risks of “too big to fail” banks. Three other regulatory problems also moved swiftly up the ranking in severity. “Finding th th Out about Regulatory Requirements” moved 13 positions from 38 in 2008 to 25 . “Cost th th of Government Required Equipment/Procedures” moved 11 positions from 39 to 28 and th th “Health/Safety Regulations” moved 10 positions from a ranking of 40 to 30 . The Environ- mental Protection Agency and Department of Labor have both increased efforts to regulate the private sector and their efforts are clearly felt by the small-business community. CS on S en uS on PB ro lem d iffiCulty The standard deviation, a measure of the difference from the statistical average or mean, is used in Table 3 to determine which problems are agreed upon by small-business owners and which problems are not. The smaller the standard deviation, the greater the consensus. This table lists the top 10 problems with most consensus and the top 10 problems with least consensus. a . PB ro lem a S rea of GS terea t CS on enSS u The problems that yield the greatest consensus generally appear near the top and bottom of the ranking. Eight problems in this category are the same as in 2008 and two are new to the list. “Uncertainty over Economic Conditions” tops the list as the problem with the most con- sensus among small-business owners with a standard deviation of 1.6. Small-business owners are generally aligned in how they assess the economy and its fragility. Economic uncertainty affects the general population equally regardless of industry, size or sales volume. Only 3 per- cent of small-business owners find it not a problem, less than any other problem. The vast majority of small-business owners also agree on the severity of “Exporting My th Products/Services.” This problem ranks last, 75 of 75 small-business problems. Few small- business owners sell to customers outside the United States. Those who do generally sell to customers seeking out a particular product or service and find the business by word-of-mouth or online. International sales often end up being a more passive activity than owners actively pursuing outside markets. Only 3 percent of small-business owners find this problem critical, an identical degree of agreement as with “Uncertainty over Economic Conditions,” but on the other end of the scale. www.nfib.com/pnp2012 16 Small Business Problems & Prioritiest able 3 PB ro lem r ank By CS on S en S u on PB ro lem i P m C ortan e Standard Standard Deviation Problem Greatest Consensus Deviation Rank Rank Uncertainty over Economic Conditions 1.57 1 2 Exporting My Products/Services 1.60 2 75 Cost of Health Insurance 1.73 3 1 Cost of Supplies/Inventories 1.74 4 11 Keeping Up on Business and Market Developments 1.74 5 41 Projecting Future Sales Changes 1.76 6 17 Telephone Costs and Service 1.76 7 33 Electricity Costs (rates) 1.77 8 12 Handling Business Growth 1.77 9 55 Cost of Outside Business Services, e.g., Accountants, Lawyers, Consultants 1.78 10 34 Standard Standard Deviation Problem Least Consensus Deviation Rank Rank Estate Tax 2.31 75 42 Obtaining Long-Term (5 years or more) Business Loans 2.13 74 56 Obtaining Short-Term (less than 12 months or revolving) Business Loans 2.12 73 58 Environmental Regulations 2.11 72 27 Competition from Imported Products 2.09 71 68 Locating Qualified Employees 2.08 70 32 Unemployment Compensation 2.08 70 21 Real Estate Values 2.05 68 29 Finding and Keeping Skilled Employees 2.04 67 38 Poor Sales 2.04 67 26 “Cost of Health Insurance” is another area of high consensus. The rising cost of health insurance affects non-offering and offering firms alike. Offering firms often incur steep yearly premium increases and most non-offering firms do not offer because of costs. Business owners generally agree on the severity of several operating cost areas. “Cost of Supplies/Inventories” leads this group as the fifth ranked problem of greatest consensus. “Telephone Costs and Services” follows with a ranking of seventh. “Electricity Costs (rates)” ranks next in eighth place and “Cost of Outside Business Services, e.g., Accounting, Lawyers, Consultants” rounds out the top 10. All of these operating cost-related problems have a stan- dard deviation between 1.7 and 1.8. B. PB ro lem a S rea of l S ea t ConSS en S u The top 10 problems yielding the least consensus of the 75 problems generally appear in the middle of the overall ranking. Five of those in this category are new to the list and five are the same as in 2008. The problem with greatest disagreement in severity is “Estate Tax.” This problem has nd held the top position for least consensus since 1996. The estate tax ranks 42 , in the middle of the ranking, but nearly half of respondents find its severity on opposite ends of the scale. www.nfib.com/pnp2012 17 Small Business Problems & PrioritiesNineteen (19) percent of small-business owners find it a critical issue and 28 percent find it not a problem. The difference is largely due to three variables: size, age and industry. The size and age of a business are often associated with each other. Most new businesses begin small and over time grow as they become more established. As the business grows and owners move closer to retirement, estate tax planning becomes more a priority, especially in capital inten- sive industries. “Obtaining Long-Term (5 years or more) Business Loans” and “Obtaining Short-Term (less than 12 months) Business Loans” rank second and third respectively in the least con- sensus category. Twelve (12) percent of small-business owners find obtaining a long-term business loan a critical problem compared to 34 percent who do not find it a problem. The disparity is about the same for obtaining short-term loans as 11 percent find it critical and 34 percent do not. Most small-business owners have no interest in borrowing as the recession has reduced business growth opportunities and capital expenditures. Those who do have borrow- ing needs are up against more conservative lending practices by the banks. “Environmental Regulations” ranks fourth in this category. This problem affects specific industries much more than others. As shown in Table 8, a larger percentage of owners in ag- riculture, transportation/warehousing and manufacturing industries find this problem critical compared to those in more service and professional-related industries. However, all industry categories find this problem more severe than in 2008. All three levels of government de- termine the degree to which environmental regulations affect small businesses and enforce- ment levels. The Environmental Protection Agency, along with many state and local agencies dramatically increased efforts to promote “green” initiatives including higher fuel efficiency standards over the last four years. “Competition from Imported Products” is the fifth-ranked problem with least consensus. Industry classification is again the main dividing factor in assessing this problem. The agricul- st th ture and manufacturing industries rank this problem 41 and 40 respectively. Fourteen (14) percent in agriculture find it critical and 18 percent in manufacturing. Otherwise, 41 percent of owners in the general population do not find it a problem at all. ProBlem CS lu terS Small-business problems generally fall within one of 10 generic problem clusters. Each cluster contains all of the survey’s problems related to that topic. The assignment of problems into an individual cluster is arbitrary and several problems fit into more than one. For example, “The Cost of Health Insurance” appears in both the “Cost” cluster and in the “Employees” cluster because it is a business expense and an employee benefit. The 10 problem clusters in Table 4 are listed in order of importance. The importance of the clusters is based on average overall ranks of the cluster’s assigned problems. The clusters appear in descending order of importance as follows: 1. Taxes 2. Regulations 3. Costs 4. Finance 5. Employees 6. Information 7. Management 8. Competition 9. Technology www.nfib.com/pnp2012 18 Small Business Problems & Prioritiest able 4 i P m ortanCe of Small BuSSS ine PB ro lem By PB ro lem CS lu ter % “Critical” Problem Rank Mean Problem Competitors/Competition/Markets Uncertainty over Economic Conditions 2 2.40 38.3 Projecting Future Sales Changes 17 3.54 14.1 Poor Sales 26 3.83 18.4 Competition from Large Businesses 31 3.94 14.3 Keeping Up on Business and Market Developments 41 4.22 6.8 Sales Too Dependent on Health of One Business or Industry 47 4.33 10.7 Anti-Competitive Practices, e.g., Price Fixing 53 4.76 8.2 Competition from Internet Businesses 65 5.10 7.3 Protecting Intellectual Property 67 5.10 4.7 Competition from Imported Products 68 5.14 9.3 Winning Contracts from Federal/State/ Local Governments 69 5.19 7.5 Exporting My Products/Services 75 5.97 2.5 Costs Cost of Health Insurance 1 2.18 52.3 Cost of Natural Gas, Propane, Gasoline, Diesel, Fuel Oil 3 2.72 34.8 Cost of Supplies/Inventories 11 3.35 16.3 Electricity Costs (rates) 12 3.38 17.3 Workers’ Compensation 18 3.65 18.0 Fixed Costs Too High 19 3.65 14.9 Unemployment Compensation 21 3.72 18.0 Cost and Availability of Liability Insurance 23 3.74 15.7 Cost of Government Required Equipment/Procedures 28 3.90 15.8 Telephone Costs and Service 33 4.05 8.3 Cost of Outside Business Services, e.g., Accountants, Lawyers, Consultants 34 4.05 8.4 Ability to Cost-Effectively Advertise 37 4.15 10.4 Physical Facilities Costs, such as Rent/Mortgage/ Maintenance 39 4.21 9.6 Reducing Energy Use in a Cost-Effective Manner 43 4.25 8.3 Delinquent Accounts/Late Payments 46 4.30 10.5 Minimum Wage/“Living” Wage 52 4.73 8.6 Bad Debts (not delinquencies) and/or Bankruptcies 57 4.83 7.0 Crime, including Identity Theft, Shoplifting, etc. 60 4.96 6.2 Interest Rates 62 4.99 7.4 Costs and Frequency of Lawsuits/Threatened Lawsuits 71 5.20 7.9 www.nfib.com/pnp2012 19 Small Business Problems & Prioritiest able 4 Continued i mPC ortan e of Small BS u ineSS PB ro lem By PB ro lem CS lu ter % “Critical” Problem Rank Mean Problem Employees Cost of Health Insurance 1 2.18 52.3 Workers’ Compensation 18 3.65 18.0 Unemployment Compensation 21 3.72 18.0 FICA (Social Security taxes) 24 3.75 13.8 Health/Safety Regulations 30 3.93 15.0 Locating Qualified Employees 32 4.02 14.7 Finding and Keeping Skilled Employees 38 4.18 12.5 Hiring/Firing/Employment Regulations 45 4.28 10.1 Training Employees 49 4.55 5.6 Minimum Wage/“Living” Wage 52 4.73 8.6 Mandatory Family or Sick Leave 64 5.04 7.8 Employee Turnover 72 5.35 4.0 Undocumented Workers 74 5.67 6.5 Finance Frequent Changes in Federal Tax Laws and Rules 8 3.15 24.0 Cash Flow 13 3.38 17.6 Poor Earnings (profits) 14 3.40 22.5 Highly Variable Earnings (profits) 22 3.73 13.7 Real Estate Values 29 3.93 16.1 Delinquent Accounts/Late Payments 46 4.30 10.5 Obtaining Long-Term (5 years or more) Business Loans 56 4.81 11.5 Bad Debts (not delinquencies) and/or Bankruptcies 57 4.83 7.0 Obtaining Short-Term (less than 12 months or revolving) Business Loans 58 4.86 10.8 Interest Rates 62 4.99 7.4 Credit Rating/Record Errors 66 5.10 5.3 Information Projecting Future Sales Changes 17 3.54 14.1 Finding Out about Regulatory Requirements 25 3.78 13.2 Cost of Outside Business Services, e.g., Accountants, Lawyers, Consultants 34 4.05 8.4 Time Spent Shopping for Health Insurance 36 4.15 12.5 Keeping Up on Business and Market Developments 41 4.22 6.8 Obtaining Licenses, Permits, etc. 44 4.25 10.6 Locating Business Help When Needed 48 4.43 7.9 Using Computer(s), the Internet or New Technology Effectively 50 4.56 7.6 Credit Rating/Record Errors 66 5.10 5.3 www.nfib.com/pnp2012 20 Small Business Problems & Prioritiest able 4 Continued i P m C ortan e of Small BuSSS ine PB ro lem By PB ro lem CluSter % “Critical” Problem Rank Mean Problem Management Cash Flow 13 3.38 17.6 Projecting Future Sales Changes 17 3.54 14.1 Fixed Costs Too High 19 3.65 14.9 Poor Sales 26 3.83 18.4 Controlling My Own Time 35 4.15 11.7 Ability to Cost-Effectively Advertise 37 4.15 10.4 Pricing My Goods/Services 40 4.21 9.0 Keeping Up on Business and Market Developments 41 4.22 6.8 Delinquent Accounts/Late Payments 46 4.30 10.5 Sales Too Dependent on Health of One Business or Industry 47 4.33 10.7 Locating Business Help When Needed 48 4.43 7.9 Training Employees 49 4.55 5.6 Using Computer(s), the Internet or New Technology Effectively 50 4.56 7.6 Handling Business Growth 55 4.78 4.3 Bad Debts (not delinquencies) and/or Bankruptcies 57 4.83 7.0 Protecting Intellectual Property 67 5.10 4.7 Public Services/Responsibility Finding Out about Regulatory Requirements 25 3.78 13.2 Obtaining Licenses, Permits, etc. 44 4.25 10.6 Anti-Competitive Practices, e.g., Price Fixing 53 4.76 8.2 Traffic, Highways, Roads, Bridges 59 4.90 7.4 Crime, including Identity Theft, Shoplifting, etc. 60 4.96 6.2 Cyber Crime (viruses, hacking, etc.) 63 5.00 5.5 Protecting Intellectual Property 67 5.10 4.7 Winning Contracts from Federal/State/Local Governments 69 5.19 7.5 Regulations Uncertainty over Government Actions 4 2.73 35.1 Unreasonable Government Regulations 5 2.76 34.1 Frequent Changes in Federal Tax Laws and Rules 8 3.15 24.0 Federal Paperwork 15 3.44 18.3 State/Local Paperwork 16 3.53 19.3 Dealing with IRS/State Tax Agencies 20 3.68 16.2 Finding Out about Regulatory Requirements 25 3.78 13.2 Environmental Regulations 27 3.89 16.8 Cost of Government Required Equipment/Procedures 28 3.90 15.8 Health/Safety Regulations 30 3.93 15.0 Obtaining Licenses, Permits, etc. 44 4.25 10.6 Hiring/Firing/Employment Regulations 45 4.28 10.1 Rules on Retirement Plans 51 4.64 7.7 Zoning/Land Use Regulations 54 4.77 8.8 Solid and Hazardous Waste Disposal 61 4.96 6.2 Undocumented Workers 74 5.67 6.5 www.nfib.com/pnp2012 21 Small Business Problems & Prioritiest able 4 Continued i P m ortanCe of Small BS u ineSS PB ro lem By ProBlem CS lu ter % “Critical” Problem Rank Mean Problem Taxes Federal Taxes on Business Income 6 2.86 29.5 Tax Complexity 7 2.92 28.8 Frequent Changes in Federal Tax Laws and Rules 8 3.15 24.0 Property Taxes (real, inventory or personal property) 9 3.18 24.4 State Taxes on Business Income 10 3.21 23.8 Federal Paperwork 15 3.44 18.3 State/Local Paperwork 16 3.53 19.3 Dealing with IRS/State Tax Agencies 20 3.68 16.2 Unemployment Compensation 21 3.72 18.0 FICA (Social Security Taxes) 24 3.75 13.8 Estate Tax 42 4.23 18.5 Rules on Retirement Plans 51 4.64 7.7 Technology Telephone Costs and Service 33 4.05 8.3 Keeping Up on Business and Market Developments 41 4.22 6.8 Using Computer(s), the Internet or New Technology Effectively 50 4.56 7.6 Protecting Intellectual Property 67 5.10 4.7 Competition from Internet Businesses 65 5.10 7.3 Access to High-Speed Internet 73 5.49 7.0 The cluster achieving the most attention is “Taxes,” a change from 2008 when the top cluster was “Costs.” Five of the top 10 small-business problems appear in this cluster which include: “Federal Taxes on Business Income,” “Tax Complexity,” “Frequent Changes in Fed- eral Tax Laws and Rules,” “Property Taxes,” and “State Taxes on Business Income.” This rise in importance reflects the pressure on small-business owners to comply with more complex and costly federal and state tax systems. “Regulations” is the second most important problem cluster. The paperwork, costs and compliance of frequently changing regulations are serious problems for a large number of small-business owners. The top ranked items in this category are: “Uncertainty over Govern- ment Actions,” “Unreasonable Government Regulations,” “Frequent Changes in Federal Tax Laws and Rules,” “Federal Paperwork,” and “State/Local Paperwork.” All of these problems represent the owner’s time and out-of-pocket-costs. The first three problems listed fall within the top 10 most severe problems. The cluster “Costs” fell in importance from 2008 mostly due to the easing of interest nd rates. “Interest Rates” fell 30 points in the ranking from 32 in 2008 to its current position of nd 62 . The “Cost and Availability of Liability Insurance” also eased in severity moving 10 posi- th rd tions from 13 to 23 . “Cost of Health Insurance” though kept it from sliding further as it remains the most severe business problem for small-business owners. “Finance” is fourth on the list in cluster importance. This cluster moved up two positions from 2008. Although “Interest Rates” fell 30 points in the overall ranking, “Frequent Changes in Federal Tax Laws and Rules,” “Obtaining Long-Term (5 years or more) Business Loans” and “Obtaining Short-Term (less than 12 months or revolving) Business Loans” moved up the ranking a combined 38 positions. The “Employees” cluster lost importance over the last four years falling from second to fifth position. The recession forced many small-business owners to reduce their number of www.nfib.com/pnp2012 22 Small Business Problems & Prioritiesemployees due to weak sales and it also reduced the number of owners hiring. This shift in the labor market temporarily eased the severity of employment-related problems. As the recovery continues, these problems will likely become more important to owners as the labor market becomes more competitive. The “Information” cluster ranks sixth out of 10 business clusters, a two-position increase from 2008. Most of the problems in this category moved only slightly in rank between 2008 and 2012 with the exception of “Finding Out about Regulatory Requirements.” This problem th th moved from 38 position in 2008 to its current 25 ranking. Locating information about regulatory requirements is increasingly difficult for small-business owners as the number of regulations has increased over the past four years. Small-business owners are spending more of their time trying to navigate agency websites and other resources to figure out which regula- tions affect their business and how to comply with them. “Management” is the seventh-ranked cluster. Ten (10) of the 16 problems in this category rank in the bottom half of the listed 75 problems. Only three problems are in the top 20. These include “Cash Flow,” “Projecting Future Sales Changes” and “Fixed Costs Too High” th th th which rank 13 , 17 and 19 respectively. The “Competitors/Competition/Markets” cluster fell two positions in cluster impor- tance from sixth in 2008 to eighth. Problems in this cluster are some of the least severe on the list for small-business owners with the exception of “Uncertainty over Economic th Conditions” and “Projecting Future Sales Changes” which rank second and 17 in the list th th of 75 problems. Five of the problems in this category range from 65 to 75 position. Most small-business owners ranked these problems low because they either do not engage in these activities or are not affected by these markets which include: “Exporting My Prod- ucts/Services,” “Winning Contracts from Federal/State/Local Government,” “Competi- tion from Imported Products,” “Protecting Intellectual Property,” and “Competition from Internet Businesses.” rd In ninth place is “Technology.” No problem in this category ranks higher than 33 and fewer than 9 percent of owners find any of these issues critical. “Telephone Costs and Ser- rd vices” leads as the most severe problem in the cluster. It ranks 33 overall and is critical for 8 percent of small-business owners. Small-business owners seem to have most of their technol- ogy needs met and have adequate skills to use them. The cluster of least importance is “Public Service/Responsibilities.” Problems in this cat- egory are more annoyances than problems. Only a small percentage of owners find any to be a critical problem in running their business. Problems that do affect the owner’s time and mar- ginal costs include: “Obtaining Licenses, Permits, etc.,” “Traffic, Highways, Road, Bridges,” and “Cyber Crime (viruses, hacking, etc.).” CG han S e in ProBlem r ankinGS o ver t ime The series of eight Problems and Priorities surveys span 30 years from 1982 to 2012. The U.S. economy has experienced a wide range of business conditions during this period which result in significant shifts in problem severity. Some problems became less and some more important over time due to business cycles, technology and general changes in the economy. Four of the eight surveys were either conducted during or directly following an economic recession. NFIB conducted the first publication in 1982, at the end of the century’s second most severe recession at that time. The 1991 survey found itself in a similar position but five months after a more modest recession. The 2008 survey was conducted at the beginning of the most recent recession and the 2012 survey was conducted almost three years into its recovery. The 2008 and 2012 surveys are notable in that they occurred during and in the wake of the most severe recession since the Great Depression. The four remaining surveys conducted in 1986, 1996, 2000 and 2004 occurred in rela- tively strong economies. The shifts in problem rankings over time provide insight into how owners react to business cycles. While the timing of the surveys is not in exact step with the major shifts in the economy, they are close enough to make some general observations on the changes in owners’ assessments during the various business cycles. www.nfib.com/pnp2012 23 Small Business Problems & Prioritiesand able t in lem ro ine u mall of rder o ank rr www.nfib.com/pnp2012 24 Small Business Problems & Priorities 5 S BSSS PBS 2012, 2008, 2004, 2000, 1996, 1991, 1986 1982 2012 2008 2004 2000 1996 1991 1986 1982 (January/April) (January/March) (January/February) (February/March) (May/June) (October/November) (January) (November) Cost of Health Cost of Health Cost of Health Cost of Health Cost of Health Cost of Health Cost of Health 1 Interest Rates Insurance Insurance Insurance Insurance Insurance Insurance Insurance Cost of Natural Uncertainty Cost and Cost and Gas, Propane, Federal Taxes on Federal Taxes on Federal Taxes on Cost of Liability 2 over Economic Availability of Availability of Gasoline, Diesel, Business Income Business Income Business Income Insurance Conditions Liability Insurance Liability Insurance Fuel Oil Cost of Natural Workers’ Workers’ Cost of Natural Gas, Propane, Federal Taxes on Locating Qualified 3 Compensation Compensation Cash Flow Cash Flow Gas, Gasoline, Gasoline, Diesel, Business Income Employees Costs Costs Fuel Oil Fuel Oil Cost of Natural Uncertainty over Property Taxes Unreasonable Unreasonable Workers’ Gas, Propane, Federal Taxes on Telephone 4 Government (Real, Inventory or Government Government Compensation Gasoline, Diesel, Business Income Rates (Costs) Actions Personal Property) Regulations Regulations Costs Fuel Oil Unreasonable Cost and Federal Taxes on FICA (Social FICA (Social Telephone Costs 5 Government Tax Complexity Availability of Cash Flow Business Income Security) Taxes Security) Taxes and Service Regulations Liability Insurance Unreasonable Property Taxes Cost of Property Federal Taxes on State Taxes on Property Taxes/ FICA (Social Electricity 6 Government (Real, Personal, and Casualty Business Income Business Income Rent Costs Security) Taxes Costs (Rates) Regulations or Inventory) Insurance Rankand ontinued in able t lem ro ine u mall of rder o ank r www.nfib.com/pnp2012 5 C S BSSS PBS 2012, 2008, 2004, 2000, 1996, 1991, 1986 1982 2012 2008 2004 2000 1996 1991 1986 1982 (January/April) (January/March) (January/February) (February/March) (May/June) (October/November) (January) (November) Workers’ Workers’ State Taxes on State Taxes on Electricity Rates 7 Tax Complexity Cash Flow Compensation Federal Paperwork Compensation Business Income Business Income (Costs) Costs Costs Frequent Changes Cost of Supplies/ State Taxes on Federal Paperwork State Taxes on Unreasonable Payroll Taxes Payroll Taxes in Federal Tax Inventories Business Income Business Income Government 8 Laws and Rules Regulations Property Taxes Electricity Unreasonable Cash Flow Frequent Changes Property Taxes/ Federal Paperwork Poor Earnings 9 (real, inventory or Costs (Rates) Government in Federal Tax Rent Costs (profits) personal property) Regulations Laws and Rules State Taxes on Workers’ Electricity Cost of Natural Cash Flow Frequent Changes State Taxes on Projecting Future 10 Business Income Compensation Costs (Rates) Gas, Gasoline, in Federal Tax Laws Business Income Sales Changes Costs Fuel Oil Cost of Supplies/ Cash Flow Locating Qualified Frequent Changes Locating Qualified Federal Paperwork Interest Rates Federal Business 11 Inventories Employees in Federal Tax Employees Income Tax Laws and Rules Electricity Locating Qualified Poor Earnings State/Local Cost and Unemployment Frequent Changes Federal Paperwork 12 Costs (rates) Employees Paperwork Availability of Compensation in Federal Tax Laws Liability Insurance Cash Flow Cost and FICA (Social Cost and State/Local Poor Earnings Cost of Natural Highly Variable 13 Availability of Security Taxes) Availability of Paperwork (profits) Gas, Gasoline, Earnings (profits) Liability Insurance Liability Insurance Fuel Oil 25 Small Business Problems & Priorities Rank