The latest Department of Labor report on job creation gave the nation a much needed boost in optimism and a possible signal that the nation is finally poised for accelerated economic growth. But many business analysts believe good times are not nearly as close as many hope. Pepperdine University, in partnership with Dun & Bradstreet Credibility Corp., recently released the findings from its 2012 Economic Forecast Survey and these results paint a different and more cautious picture.
According to the study (Private Capital Markets Project), 47% of small businesses (under $5 million) are not planning to hire any new employees for 2012. 34% of small businesses claimed they will only hire between 1-2 employees. Historically, small businesses are “net jobs” creators, so what does it mean when over ¾ of businesses polled say they do not anticipate any significant hiring? Take a look at what business owners say is preventing them from growing and hiring.
Although access to capital declined by 14 percentage points between 2011 and 2012 as a reason companies are not hiring, it is still ranked the number one policy change that business owners say could help spur job growth. When asked what would be the “Best Policy to Help Spur U.S. Job Creation by Size,” 32% of businesses with revenues of $5 million or less cited access to capital as the most important issue. However, regulatory reform, at 27% was not too far behind. Although, complex tax policies, uncertainty in new healthcare costs as well as state and local regulations pose challenges for small businesses, it is still access to capital that many cite as their biggest hurdle to overcome. According to the research, until access to capital improves, many small businesses say they will put their hiring plans on hold for 2012.
In contrast, larger companies, (revenues $5-100M) placed less of an emphasis on the access to capital issue, and more on regulatory and tax issues as their main challenges for growth. 32% of businesses with $5 – $100 million in revenues consider government regulations and taxes as the main “Impediment to US GDP growth.” Generally, economic and regulatory issues are of greater concern for larger companies than access to capital. For instance, environmental regulations and laws have been cited by cement companies as not only impediments to growth but even a threat to existing jobs with the potential loss of 13,000 jobs as a result of cement plants shutting down. This is a great example of where constrictions to growth in a larger industry can threaten the growth and job creating potential in a secondary industry as well.
The encouraging recent jobs reports from Washington may be a cause for optimism at a needed moment. However, based upon the results of the research conducted by Pepperdine University & Dun & Bradstreet Credibility Corp., tough times may be very much ahead. For small businesses, access to capital is still a major concern while larger companies are claiming current and possible future regulatory and tax policies may hinder their growth.
Looking for more insight on how you can grow your business on a limited budget? Check out these strategies for increasing when you can no longer slash budgets and our list of sources of funding to grow your business.