Americans are generally optimistic about the future, and small business owners are usually more positive than others about what lies ahead. Running a small business comes with a lot of pressures and their courage and positive outlook is part of what keeps small businesses owners moving forward in the face of adversity. True to form, most U.S. small business owners (51%) were optimistic about the year ahead in the 6th annual Hiscox Small Business Insurance DNA of an Entrepreneur report. U.S. optimism outpaced that of small business owners in the U.K. and Europe, as it has for every year of the survey. However, these same business owners overwhelmingly see government as an obstacle to their success and are hoping for changes in taxes and regulations that will make their lives easier.
Will small business owners vote for new blood or seek to continue riding the momentum of an economy they see heading in the right direction as we approach the 2014 midterm elections?
Government still a challenge
Small business owners are very concerned about excessive taxation and government regulation. Sixty-one percent reported that government regulation was a major burden to setting up a small business and 66% said that the U.S. tax system does not favor people wanting to set up their own business. Politicians love to talk about how small businesses drive economic growth, but government seems to keep making it harder for them to thrive. Will the generally more pro-business stance of the Republican party resonate with small business owners at the ballot box during the midterm elections in November?
Small business owners clearly think that elections matter – 74% said that national elections were important to their business in this year’s survey. That figure is even higher in some industries with nearly everyone in the IT/media/telecommunications (86%) and manufacturing (87%) sectors citing national elections as important. Those in manufacturing now spend 161 minutes a week dealing with government regulation, up 62% since last year. This would also support the notion that small business owners will vote for Republicans this cycle, hoping they’ll remove some regulations on small business if they win a majority in Congress.
The Small Business State of Mind
It’s helpful to look at small business sentiment across the U.S., but elections aren’t won nationally, they’re won in states and electoral districts. Looking at the survey results at a more local level gives even more insight into the pulse of the U.S. small business community, for example:
California small business owners were some of the most optimistic for the year ahead (64%) even though they spent nearly twice as much time on government regulations (102 minutes/week) compared with their Texas counterparts. But, you shouldn’t bet money that excessive government regulation will to turn this historically blue state red any time soon.
Texas small business owners placed a higher premium on the outcome of state and local elections than many other states. Texas laws are notoriously employer friendly and the state led the nation in job growth last year. Watch out for the end of the good times, though. Small business optimism in Texas plunged this year to 56%, still higher than the national average but down sharply from the 74% of Texas small business owners that were optimistic last year.
What can the government do?
Small business owners are pretty vocal about anything that they see negatively affecting their business and they have a few specific suggestions about what Washington, D.C. can do to help them. Their top three requests of government are reduced taxation, simpler and fewer accounting rules and increased small business lending from banks. They might be more likely to get reduced taxation and simplified accounting with more Republicans in Congress and a Republican Senate majority, but that wouldn’t necessarily help the 65% of small business owners who said finding funding for a new business remains difficult.
The predicted outcome?
The President’s approval rating is low, really low, the U.S. economy is growing faster than it has in 8 years and small businesses are still struggling with taxes, regulations and funding. The biggest question is whether small businesses will credit Obama for an economy that is now ahead of where we were when the recession hit in 2008 or blame him for the excruciatingly slow, and uneven, recovery. The grass is always greener on the other side of the street, and Americans traditionally like to switch it up in midterm elections; so look for small business owners to optimistically vote Republican in the hopes of addressing some of their biggest concerns. Just don’t bet on many new laws being passed, whatever the outcome.
Hunter Hoffmann is Head of US Communications at Hiscox Small Business Insurance and is responsible for media relations, social media, internal communications and executive messaging. Hunter lives in New York City with his wife and two sons – Walker and Otis. In his spare time, he moonlights as Chief Marketing Officer and deliveryman for Junior’s Fresh, a fresh baby and toddler food delivery service and pre-school meal provider in New York City founded by his wife, Michelle.