Study: Small businesses don’t think government regulation is a big problem

The Hartford Financial Services Group asked 2,000 small businesses to describe their biggest barriers to success and found that complaints about government regulations and taxes were quite low down on the list. The study asked the businesses to describe how successful they currently are (ranging from “not at all successful” to “extremely successful”). For the 75 percent of businesses that are still struggling to succeed, the two biggest barriers are the economy and customers who “have no money or are cautious to spend money.”

(The Hartford Group)

By contrast, just 9 percent of businesses who describe themselves as “moderately successful” cited government rules and regulations as a culprit, and that fell to 6.7 percent among those were “not at all or slightly successful.” Interestingly, the more successful a business is, the more likely it is that it will believe that government regulations are a problem. According to the study, small businesses who described themselves as “very or extremely successful” were most likely to have a bone to pick with the government, with 11.4 percent citing regulations and 9.4 percent citing high taxes as a barrier to success.

So based on this Hartford Study, when industry lobbyists, anti-regulation conservatives and others fault government regulations for slowing growth, they’re actually representing some of the most successful businesses in the country — not the ones who are struggling the most. Most economists don’t think that regulations are killing jobs, as my colleague Jia Lynn Yang recently reported. But since successful small businesses don’t have to worry as much about customers coming through the door, they seem more likely to go down the list and cite regulations as a problem. What’s more, businesses with deeper pockets may be in a better position to lobby and make their complaints heard in Washington.

*Update: Curiously, the Hartford Group itself exaggerates the significance of government regulations and taxes in its interpretation of its own study, as the New York Times points out. The firm writes in its press release: “According to the study, small business owners identify economic constraints, such as government rules, regulations and taxes, as the single biggest factor holding them back (37 percent).”. In fact, only 9 percent overall cited government regulations and rules as a major barrier, and only 2 percent overall cited taxes. The remaining 26 percent cited the other economic and demand-side factors mentioned above.