Many small business owners will tell you that regulatory concerns hamper their plans to hire and expand. But according to a new survey, where they really run into difficulty is pinpointing exactly which regulations are responsible for their problems.
Echoing the results of several recent studies, four out of 10 small employers (between one and 25 employees) say regulatory and legal problems are impeding the growth of their businesses, according to the latest National Small Business Poll released Tuesday by the National Federation of Independent Business. More specifically, 82 percent of them said the obstacles stemmed from government regulations.
But here’s the real kicker: Of those who said regulations were a major growth impediment, only 36 percent identified a specific regulation or set of regulations that was responsible for their problems. Most of them (57.6 percent) instead blamed “a regulatory thicket” of rules — many of which they are not even aware of — for impeding their growth.
“Business owners tell us they have a regulatory problem, so we ask what it is,” William Dennis, NFIB senior research fellow, said in an interview. “They tell us, ‘Well, it’s really the whole regulatory thing’ — but what does that really mean?”
Dennis, who authored the report, explained that business owners’ hesitance or inability to determine which regulations impede their progress makes it difficult for the government and small business advocacy groups to attack their concerns.
“We were trying to find out whether there was a particular regulation or a particular set of regulations that are bothering [small business owners], because if it’s one, we can at least get at it and work on the problem,” he said. “But when they tell us it’s the whole thing, that makes it very hard to pursue solutions.”
Nevertheless, business owners shouldn’t necessarily be faulted for not knowing which regulations plague their companies. Dennis says many are understandably consumed by day-to-day tasks and don’t have time to keep track of complicated and constantly changing regulations.
“Even when you are making a bona fide effort to understand the rules, these things can get very technical,” he said. “There’s a whole series of compliances and regulations coming at your from various directions, and it can be very overwhelming.”
Among other findings in the report:
• Nearly three out of four small business owners would like to expand by adding employees in the next five years, but most of them cite obstacles that stand in the way of hiring.
• Sixty-one percent of respondents listed “uncertainty” as an impediment to business growth (tied for the highest percentage for any option), with 83 percent of those business owners saying the uncertainty to which they referred was economic in nature.
• Sixty-one percent also said the lack of skilled employees is an impediment to growth and indicated they would hire at least one employee at the current market wage rate if they could find candidates with the required skills.