Despite Views On The Economy, Small Business Owners See Themselves As Largely Successful
Cite slow economic growth, taxes and uncertainty with federal regulations as risks
CEO McGee, speaking at Detroit Economic Club, calls for actions to spur small business growth and encourage hiring
HARTFORD, Conn.--(BUSINESS WIRE)-- The Hartford 2012 Small Business Success Study, released today, reveals that one-third (33 percent) of small business owners are optimistic that the national economy will strengthen this year, down from more than half (61 percent) reported in the company’s spring 2012 study. Despite their economic outlook, most small business owners believe their business is successful in 2012. Sixty-eight percent of owners stated they are moderately to extremely successful, largely consistent with 2011 results.
The second annual study found that slow economic growth (67 percent), taxes (59 percent) and uncertainty with federal regulations (56 percent) are viewed as major risks by small business owners. But owners report finding ways to take advantage of the slower economy by cutting costs (80 percent), strengthening existing client relationships (76 percent), prospecting for new clients (69 percent) and refining their business strategy (65 percent). Cost cutting actions include taking less money out of the business (68 percent), investing less in expansion (57 percent), reducing owner/partner compensation (52 percent) and hiring fewer employees (50 percent).
“Small businesses are the foundation of the American economy. If we can restore their confidence in the future, they can hire, add jobs and help fuel growth,” said Liam E. McGee, chairman, president and chief executive officer for The Hartford. “The good news is that there are solutions that can help eliminate uncertainty around the tax and regulatory environment, and encourage small businesses to hire. While many small business owners clearly have concerns, they are resilient and dedicated to doing the right things for their businesses and employees.”
Obstacles to Growth
Three in four small business owners (77 percent) say it is likely that their taxes will go up. If those expectations are met, owners say they will offset the impact by passing along costs to customers (66 percent), delaying expansion plans (58 percent), reducing personal investments in their business (55 percent) and stopping hiring (54 percent). Just three in 10 (28 percent) say they would cut existing staff.
The study finds that more than half of small business owners have not hired in the last 12 months (59 percent) and two-thirds do not intend to hire in the next 12 months (67 percent). About half of owners (52 percent) are simply trying to maintain their revenue and number of employees at the current level. Fewer than half (41 percent) of small businesses are focused on growth, a decline of 10 percentage points from 2011.
Interestingly, 33 percent of those surveyed do not take advantage of tax incentives or deductions, primarily because they don’t know what they are (37 percent) or they do not qualify (35 percent).
McGee Speaks at Detroit Economic Club
McGee is speaking about the study and its implications later today to approximately 200 attendees at the Detroit Economic Club.
In his remarks, McGee says that he is deeply impressed with the city’s resolve, resilience and revitalization efforts. “Your city is working to diversify its economy by catering to young entrepreneurs and seeing small businesses take root around the city, including a growing tech community,” said McGee. “Despite the difficulties confronting America, we can face reality with a sense of optimism. Entrepreneurs and small businesses do this every day.”
In The Hartford’s Small Business Success Study, Detroit owners report being more optimistic that the national economy will improve than the national average (53 percent in Detroit; 33 percent nationally) and are more focused on growing their businesses than maintaining them than their counterparts nationally (51 percent in Detroit; 41 percent nationally).
“I think it’s important to retain and apply the optimism that has historically defined America. At this fragile time in the nation’s recovery, it’s imperative that we do everything possible to help our entrepreneurs succeed, and to encourage more people to become entrepreneurs. Successful entrepreneurs and small businesses are the way out of the slow economy and toward renewal. They make our country great and are key to restoring the American dream,” added McGee.
Definition of Success: Profits and Passions
Study results show that passion and profitability are both essential to small business success, with greater emphasis on the bottom line this year than last. When asked what success means to them, owners note the following as important:
To make enough money to have a comfortable lifestyle
To increase the profitability of the business
To do something I feel passionate about or enjoy
To pay my employees enough money for them to have a comfortable lifestyle
To have the free time to do whatever I wish
To make a lot of money
With a focus on the bottom line, small business owners are assuming a more measured approach to their business. When asked to rate the overall level of risk they are currently taking, 73 percent indicate they are conservative, while 27 percent rate themselves as risk takers.
Nearly 30 years ago, The Hartford became the first insurer to have a business unit focused on small business. Today, The Hartford has more than one million small business insurance policies nationwide, across 96 percent of U.S. counties.
For more information on The Hartford 2012 Small Business Success Study, visit: www.thehartford.com/successstudy.
2012 Small Business Success Study Methodology
The Hartford Small Business Success Study was developed by The Hartford and fielded via telephone by Braun Research from Aug. 2 – 14, 2012. The nationally representative sample consisted of 2,004 small business owners of companies with fewer than 100 employees and annual revenue of $100,000 or more that have been in business for at least one year. There is a margin of error of +/-2.19% and results are reported at the 95 percent confidence level.
Small Business Pulse Methodology
The Hartford Small Business Pulse is a complementary survey to the annual Small Business Success Study. The survey was developed by The Hartford and fielded via telephone by Braun Research from February 29 — March 6, 2012. The nationally representative sample consisted of 1,004 small business owners of companies with fewer than 100 employees and have been in business for at least one year. The margin of error is +/-3.1 percent for the national sample, +/-4 percent for the male sample and +/-6 percent for the female sample with a 95 percent confidence level.
About The Hartford
The Hartford Financial Services Group Inc. (NYSE: HIG) is a leading provider of insurance and wealth management services for millions of consumers and businesses worldwide. The Hartford is consistently recognized for its superior service, its sustainability efforts and as one of the world’s most ethical companies. More information on the company and its financial performance is available at www.thehartford.com. Join us on Facebook at www.facebook.com/TheHartford. Follow us on Twitter at www.twitter.com/TheHartford.
Some of the statements in this release may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ. These important risks and uncertainties include those discussed in our Quarterly Reports on Form 10-Q, our 2011 Annual Report on Form 10-K and the other filings we make with the Securities and Exchange Commission. We assume no obligation to update this release, which speaks as of the date issued.
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