Despite the slow economic recovery and challenges that range from federal regulations to hiring and sustaining qualified staff, the glass is half full for up to 70% of the small business owners, including special servicers, real estate brokers and mortgage technology vendors surveyed by The Hartford Financial Services Group Inc.
According to the Hartford, Conn., based provider of insurance and wealth management services most small business owners maintain a positive outlook in the face of adversity.
Fifty-one percent of the 2,000 small business owners surveyed nationwide expect to be “very successful in the next two years,” compared to 6% who predict they will fail to achieve success in that timeframe. And confidence in their ability to stay in business appears to be a major factor leading to that expectation in spite of the current economic challenges.
In the new reality these business owners are struggling to manage higher operational costs and lower margins along with overall market uncertainty. The national economy continues to add barriers to success for 57% of small business owners by directly affecting their ability to finance their business. Obstacles to success are financial for 36% of small business owners who said that obtaining a loan or other capital is very or extremely difficult, while 55% said “it is at least moderately difficult to obtain a loan or capital.”
Liam E. McGee, the group’s chairman, president and CEO, says the study gives a glimpse into “how well equipped” are the nation’s small businesses in their efforts to maximize future success, given that they “are the U.S. economy’s primary job creators” and indicators of potential economic and behavioral changes.
The study shows participants expect to be successful in the next two years, even in a tough economy, “because profits aren’t always the definition of success.”
Up to 82% of the participants said “doing something they feel passionate about and enjoy” is a priority to them and the most important benefit of their business.
Nonetheless, up to 77% of these small business owners are realistic enough to acknowledge that increasing profitability of the business year over year is very important. Only 18% ranked profit as “the most important factor in defining success.”
Contrary to popular belief these findings show not all small business owners focus on maximizing profitability. While at 90% the overwhelming majority indicate they enjoy owning their business, growth “is not a shared goal among all small business owners.”
Only 52% do consider themselves to be “growth-oriented,” compared to 48% who describe themselves as “maintenance-oriented” and are comfortable running their business at its current size.
A more common goal is that of “achieving a comfortable lifestyle” for themselves 79% and their employees 72%.
As expected up to 81% want to stay deeply involved in the operation of their business as they battle federal regulation challenges and competition in recruiting the best talent—which are listed as two major factors “that are negatively impacting their bottom line.”
Despite high unemployment rates, finding qualified talent is a challenge for 59% of small business owners. Nearly two out of five respondents, or 38%, said, “it is not easy” to hire qualified employees, while 17% find it very or extremely easy.
According to the study, 37% of the small business owners surveyed identify economic constraints, such as government rules, regulations and taxes, as the single biggest factor holding them back. It also suggests that “uncertainty about how public policy could potentially stunt the future growth of business” is getting in the way of their future plans.
As a result small business owners tend to “overlook long-term planning goals” and focus on short-term business needs. Only 35% said they have a formal, written business plan for the future.
Current hardships may alter how they vote in 2012 with 41% of respondents stating that “how their business is doing influences their vote.” Two-thirds, or 68%, said their business success is a consideration when voting, “Particularly if certain policies directly impact their business.”
The study combined telephone and online feedback from July 23 to Sept. 21, 2011 from a nationally representative sample 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.