Small businesses: 'Washington is worse than Wall Street'

As small business owners struggle to solve many of their challenges going into 2012, they blame politicians as the major obstacle to growth, a new survey says. And they don't care which political party delivers solutions to help the bottom line.

The stalled economy has hit the small-business sector hard, especially with decreased access to loans. But nearly two times as many small business owners said that elected officials in Washington are responsible for their business challenges versus those who felt Wall Street is the main culprit. Many of the owners cited concerns about high taxes, lack of job creation, and health care.

"The partisan environment in Washington is making it incredibly difficult, if not impossible, for legislators to help small businesses," said John Arensmeyer, founder and CEO of the advocacy group Small Business Majority. "Small business owners recognize this."

One business owner summed up his sentiment this way: "We need to see signs of intelligent life within the Beltway."

The survey of 250 small-business owners was conducted by Yahoo! Small Business and Ipsos  MediaCT as part of a quarterly effort to measure concerns that will affect the 2012 election.

Business owners feel squeezed

Economic uncertainty and lack of growth have become critical issues for most small businesses. One-third of respondents said the economic climate of the past few years has prevented them from investing in their business for growth, which results in fewer new jobs.

Arensmeyer said lawmakers need to make it easier for small businesses to get credit, but he also stressed the payroll tax cut provisions that are part of the president's American Jobs Act. He said they would cut payroll taxes in half for the first $5 million in a company's wage costs, which would directly help the 98% of U.S. firms that have payrolls of less than $5 million.

Regulations on businesses -- from labor issues to tax reporting -- were also a concern. Federal regulations were cited by 30% of respondents as the biggest negative factor, compared with state, local, or other regulations.

"A consolidation of the tax code would be amazing," said one business owner. "I am so freaking bogged down in paperwork, even with an accountant on retainer, that it takes away the enjoyment of being my own boss."

Entrepreneurship as a last resort

For some, the lack of jobs actually led them to start a business, as 9% of survey respondents claimed to be "accidental entrepreneurs." Scott Gerber, founder of the Young Entrepreneur Council, said this trend has been on the rise since 2008.

"Necessity and desperation will cause more and more people to take on some form of entrepreneurship in order to create their own jobs," he said. "But 'entrepreneurship as a means to generate an income' is certainly one outcome that, if properly supported and nurtured through a variety of private and public sector means, can result in a positive for both individuals and the global economy."

Kristie L. Arslan, president and CEO of the National Association for the Self-Employed, said the trend should effect change in policy. "With the high unemployment rate we are facing in our nation, we want lawmakers to work with us to launch a National Self-Employment Initiative to encourage unemployed Americans to consider starting their own business and encourage all Americans, young and old, to consider self-employment a viable career option."

Independents dominate small-business vote

Independents make up a significant bloc of small-business voters, including 30% of survey respondents. Another 30% were Democrats, 26% Republicans, and 14% had some other affiliation. Politicians will have to reach beyond party lines to persuade this group of voters of their policy plans for economic growth.

"This should be a wake-up call to members of all parties," said Arensmeyer, noting that Small Business Majority has noticed a similar trend in its polling. "Small business owners are a pragmatic, bottom-line oriented group. They care less about whether it's a Republican or Democratic idea, but whether it's a smart business idea that will be good for their business and good for the economy."

Boomers have the entrepreneurial flair

Starting a business isn't just an activity for young, scrappy dreamers; almost a third of the respondents (29%) are between the ages of 55 and 75. Such entrepreneurs are more experienced in weathering economic downturns, and some studies suggest this is a growing segment of small business owners.

"There's definitely a boom in boomer entrepreneurship," said David Bank, vice president at Civic Ventures, a San Francisco think tank focused on boomer, work, and social purpose. "Boomers have the career and life experience to be able to identify and execute on promising opportunities, and many have the assets to get started.

"And of course, the lingering recession, the shortage of jobs, and the realities of age discrimination make starting your own business an even more compelling option," he added.

As the 2012 election gets into high gear, advocates of small business are focusing on issues that include health care, loans, jobs, tax policy, and energy costs, among other challenges. Arensmeyer concluded, "The solutions to the country's economic problems start with small businesses."

What do you think is the biggest issue facing small businesses that should be a priority for politicians? Join the #SmallBizVote conversation on Twitter.

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