National Federation of Independent Business (NFIB)/Texas, the state’s leading small business association, released its quadrennial Texas Problems and Priorities Survey
in conjunction with the NFIB national Problems and Priorities Survey
. These two surveys detail the top ten most burdensome problems for small business in Texas and nationally, demonstrating the vast differences in the Lone Star State’s economic climate versus that of, for instance, California.
“The top concerns of small business in Texas reflect the unique business environment here, but still touch on the federal government overreach impact on costs and uncertainty,” said NFIB/Texas Executive Director Will Newton. “As predicted in our last member ballot and substantiated in this survey, property taxes continue to be a significant problem for Texas small business. They wrestle with a pyramid of taxation that includes property, inventory, equipment, and franchise, not to mention federal, county, and other taxes on income and sales.”
The ten most burdensome problems for small-business owners in Texas are:
1. Cost of Health Insurance
2. Uncertainty over Economic Conditions
3. Uncertainty over Government Actions
4. Unreasonable Government Regulations
5. Property Taxes
6. Federal Taxes on Business Income
7. Tax Complexity
8. Frequent Changes in Federal Tax Laws and Rules
9. Locating Qualified Employees
10. Federal Paperwork
Texas’s top ten generally tracks that of the nation with two exceptions. “Federal Paperwork”—ranks 10th in Texas and 12th overall—and “State Taxes on Business Income”—ranks 32nd in Texas and 9th overall (See Table 1 in Texas Problems and Priorities Survey).
The severity among many of the survey’s business problems differ substantially between small-business owners in Texas and owners in the rest of the country as shown in Table 2. Texas small business owners are more burdened on average than owners in the rest of the country by three common problems: “Poor Sales,” “Credit Card Payment Processing Costs,” and “Competition from Large Businesses.” “State Taxes on Business Income” has the largest difference in rankings between Texas (32nd) and the rest of the country (9th). This large difference is explained by Texas’s business friendly tax environment.
The NFIB survey asks small business owners to weigh 75 issues on a scale of 1 (a critical problem) to 7 (not a problem). Then it ranks the issues from top to bottom by their average score. According to the data, 52 percent of small business owners rank the “cost of health insurance” as a critical problem. That figure is virtually unchanged from four years ago.
More than a third of small business owners (33 percent) identified “unreasonable government regulations” as a critical problem, placing it second in the rankings, up from the fifth position in 2012.
Tax-related issues represent 5 of top 10 most serious problems for small business owners. Nearly a third (29 percent) say “federal taxes on business income” is their biggest headache. Many others identify: “tax complexity; frequent changes in the tax code; property taxes; and state taxes on business income” as their top concerns.
The biggest change in the survey from previous years is “locating qualified employees.” In 2012, finding good workers ranked 32nd in the survey. This year it’s a serious problem for 12 percent of small business owners, placing it in the top 10. That could indicate a tight labor market, which is good news for workers who can command higher pay and better benefits. Businesses that can’t find good workers are at a disadvantage. Small firms can’t raise prices or increase sales to support higher labor costs.
Another fast climber in the survey this year is “minimum wage/living wage.” In the 2012 survey the issue placed near the bottom of concerns for small business owners. With a number of states and cities raising the mandatory minimum wage, in some cases to as much as $15 per hour, more small business owners now say it’s a big problem. The issue moved up 16 places, from 52 to 36, between 2012 and 2016.
Some serious problems in 2012 moved down in the rankings this year. In the last survey, for example, the “cost of natural gas” was the third worst problem. It tumbled this year to 34th place. “Electricity costs,” which ranked 12 in the last survey, dropped 7 places this year to 19.
NFIB/Texas has 21,000 dues-paying members representing a cross-section of the state’s economy from agriculture, construction, and manufacturing to wholesale, retail, and services. Additionally, NFIB/Texas membership is 96 percent comprised of businesses who have 40 employees or less and is the largest association advocating for small business in the Capitol.