Small Business Uncertainty Crushes Job Creation

Thursday, 28 Mar 2013 07:39 AM

By Neal Asbury

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If you want to know one of the biggest reasons there are no jobs, it starts with the plight of our small businesses, which account for some 80 percent of all new jobs. The latest economic figures indicate that since February 2010, the number of firms with fewer than 20 employees has grown a scant 3.6 percent. Employment growth is not possible with this sort of statistic.

The dismal growth in entrepreneurship not only impacts employment, it prevents innovation and new product introductions. When small businesses are unable to form, communities lose their life blood of revenue, creativity and opportunity.

Are things likely to turn around soon? Not if we have an administration that saddles small businesses with excessive taxes, countless regulations, unaffordable healthcare, rising energy costs and dwindling access to capital.

Is it any wonder that the latest National Federation of Independent Business’ (NFIB) Optimism Index finds that the percentage of small businesses expecting higher earnings is down 26 percent or that the percentage of businesses expecting the economy to improve has dropped to 28 percent?

And it shouldn’t surprise anyone that the percentage of small businesses that expect to increase employment is at a mere 4 percent. At that rate, the 26 million Americans that are unemployed or underemployed are going to wait a long, long time unless small business and entrepreneurs get the support they need to hire again.

More NFIB data reveals that “Weak sales is still the top business problem for 18 percent of owners. The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past three months was unchanged in February, at a negative 9 percent. There are still far more owners reporting declining sales than reporting positive sales trends.”

The U.S Wells Fargo/Gallup Small Business Index found “less overall hiring activity and essentially no improvement in small business job growth over the past two years. Small business owners on average say they let go slightly more employees than they hired in 2012.”

Some 85 percent of small business owners surveyed in another Gallup study indicated they aren’t hiring because they don’t need additional employees; worry about weak business conditions, including revenues; cash flow; and the overall U.S. economy. Additionally, nearly half of small business owners point to potential healthcare costs (48 percent) and government regulations (46 percent) as reasons. One in four are not hiring because they worry they may not be in business in 12 months.

Writing for The New York Times, Ami Kassar, CEO of small business planning and lending firm MultiFunding, put small business challenges in perspective. “Despite the growth of alternative financing, we have heard little from Washington about the challenges small business owners face when borrowing money. For reasons I still don’t understand, access to capital for small businesses was pretty much a nonissue in last year’s presidential campaign. When we do hear from Washington in 2013, I expect the conversation will be mostly about the SBA [Small Business Association], which is fine as far as it goes. I am all for the SBA, but as I have written previously, it represents a tiny piece of the overall puzzle — and should be thought of as such.”

So are they any solutions?

According to a survey by PayScale, 56 percent of companies overall said they want to see government support in the form of tax incentives to invest in educating and advancing their existing work force. These types of tax incentives are effective, according to PayScale, because they offer direct rewards for companies investing in their own employees.

Business owners also want to see an increase in national education spending — presumably to encourage higher graduation rates and post-secondary education — and retraining programs to update unemployed workers’ current skill sets. Thirty-four percent and 33 percent of businesses, respectively, favored these options.

The sad reality is that not enough displaced workers have the experience and skills required for today’s jobs. We need to invest in our work force by expanding participation in trade and technical schools.

As an entrepreneur myself, with a work force of some 200 workers, I can personally attest to the lack of trained workers with technical skills.

But most of all, we need an administration that spends less time on rhetoric and more time supporting small business with a real plan and the resolve to carry it through. Good-paying jobs won’t come back until small business can participate fully in this economy.

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