It Was a Dark and Stormy Small-Business Outlook

May 5, 2011

Portfolio.com

J. Jennings Moss

Attitudes of small-business owners reveal a dark place, one that depicts a deteriorating business climate and one that's stymied by the political uncertainty in Washington, the U.S. Chamber of Commerce finds in a new survey released today.

"This is not about politics," said Bill Miller, the Chamber's senior vice president of political affairs and federation relations. "It's about policy and evaluating and understanding what's happening here in Washington."

In the survey—the first in what Chamber officials said would be a quarterly snapshot of small-business owners' opinions—73 percent of the 900 people asked said that the climate of the past two years had hindered their growth. Asked how they felt the next two years would go, responses were split practically into thirds, divided almost equally between those who believed they'd see improvement, those who thought it would get worse, and those who just didn't know what to think.

Those opinions come at a time when the economic recovery has sputtered, said Chamber economist Martin Regalia. Growth in the first quarter was 1.8 percent, an unwelcome figure considering that the economy has been growing slowly but steadily since the middle of 2009. That rate "is simply not fast enough to begin to fix some of the problems we've encountered during this very severe economic downturn," Regalia said.

Among the other results from the Chamber's survey, which was conducted by the polling firm Luntz Global in April:

79 percent of small-business owners said they wanted to have more certainty from
Washington, while 14 percent said they wanted more government assistance.
80 percent said the nation's debt and deficit have a negative impact on their businesses.
72 percent said the health reform law passed last year has made hiring more difficult.
70 percent said they did not plan to hire new workers next year, while 9 percent planned to continue with layoffs.
73 percent said they found regulations imposed by Washington to be unreasonable, while 63 percent said the same thing of state regulations.

Even though Chamber officials tried to cast the survey in nonpolitical terms, the survey did attempt to gauge respondents' views of who was to blame. The short answer here: just about everyone.

75 percent said President Barack Obama was standing in the way of growth and progress.
87 percent reached the same conclusion about Congress.
76 percent said they disapproved of the job Obama was doing on the economy.
48 percent said they blamed everyone collectively in Washington, rather than finger just Obama, former President George W. Bush, or Republicans in Congress.
Miller said the legislative agenda in the first half of Obama's term was so weighted against business with financial sector and health care reform measures that "some of the impacts of these in real terms for small business have not even been realized."

What would help reverse the negative attitudes would be if Washington was able to move forward on a plan to reduce the federal deficit and debt. On the latter, Miller didn't hesitate to say that the Chamber fully backed raising the debt ceiling, something many conservative Republicans don't want to do. "We have to allow our country to function, yet at the same time we have to institute policies that will get this situation under control," Miller said.

The Chamber's survey results largely fall in line with other recent polls of small-business owners, even if it took a more negative turn. A survey of more than 2,223 small-business owners done by The Business Journals, which like Portfolio.com is owned by American City Business Journals, found that American competitiveness was on the decline.

But The Business Journals report also found that after three years of sales declines, more small-business owners have started to see an increase in sales. "It's just stabilized," said Godfrey Phillips, vice president for research for The Business Journals. "Business certainly hasn't taken off, but the good part is it's not dropping any more," he said.

The next survey update from the Chamber will come in July, but officials said their efforts to reach a small-business audience wouldn't be confined to that. The organization, known more for its work as the voice of corporate America, is making a concerted push into the small business-space and is using social media like Facebook and Twitter (@USCCMiller and @uschamber) to broaden its reach. The goal: to more than double the Chamber's grassroots network this year, from 5.5 million to 12 million people.

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