Small businesses are a major driving force of the US economy. Yet during the last few years, they have been handed the short end of the stick. The infamous economic downturn made it incredibly difficult for many to navigate, maintain sales and employment, and stay competitively sustainable. After years of uncertainty, this all-to-common situation for small business owners may gradually be coming to a close.
A recent study by The Hartford reveals new small business trends in 2013. The study surveyed 2,000 small businesses about how they are adjusting to the new economic climate, the risks they are taking, business success they are finding, and the impacts of the Affordable Care Act (ACA). This article provides a closer look at the risks, successes and impacts for small businesses.
The New Economic Climate
A lot has changed since 2012, at least in the minds of many small business owners. Many believe that the economy has experienced growth, and are confident that this growth will continue. But, how viable is the current growth of the economy?
The study finds there has been a decrease in the amount of small business owners who feel that slow economic growth is hindering their businesses’ success. In addition, they also feel that taxes, health care costs, and federal regulations are less of a risk to their small businesses’ than in 2012.
Although fewer small business owners feel as though these risks are as apparent as in 2012, the risks are still seen as a potential risk that could impact their bottom line.
83% of business owners see taxes as a major risk to profits.
44% of business owners see healthcare as a major risk because of its expense, and affording it is a difficulty for many.
29% of small business owners see slow economic growth as a major risk, as consumers and businesses are hesitant to spend money despite the economic uptick.
With the economy performing at a slow and modest growth, the amount of risk being taken by small business owners has remained roughly the same. This should not be surprising as many small businesses are still trying to maintain revenue and profits from the last few years of downturn.
Many small business owners describe their risk taking as conservative compared to 2012, but feel confident about the national economy’s strength.
According to the study, there are a few reasons for the conservative approach to risk:
15% of small business owners say that they are “highly adverse to risk”.
13% of small business owners say that they are doing well and simply want to maintain the business.
On the flip side, there are a few reasons for a risky approach.
22% of small business owners say that the type of business in which they operate requires them to take risks.
11% of small business owners say they need to take on risk in order to make money.
Despite the slow growth of the economy, a majority of small business owners feel their small business has operated successfully during the last few years. For 2013, many credit the increase in demand for products and services as the driving factor for business success. In addition, fewer owners credited regulations, talent pools, and access to capital as a major driver for business success in 2013.
The Impact of the Affordable Care Act
The introduction of the Affordable Care Act (ACA) generated enormous amounts of questions and concerns for the business world. Carrying much of these questions and concerns were the small businesses themselves.
Now, a few years after the introduction of the ACA, most small business owners (68%) say they are at least aware and somewhat informed on the ACA. But, out of these informed business owners, they are somewhat split on whether the impact on their business is positive, negative, or is having little or no impact at all.
Many of those who are informed believe that the law will have a negative impact on their business due to the high costs, and those who feel this way, have plans to offset the negativity. The plans for many involve reducing hours for employees and slowing or stopping future hiring all together.
Overall, most small business owners feel optimistic about the economy yet cautiously moving forward. The amount of risk remains roughly the same for the majority of owners, and the ACA seems to be settling in among these business owners, whether it be negative or positive.Click here to read the full study.