New Study: "Uncertainty" Dominates Top 5 Small Business Concerns

Download Problems and Priorities 2012 from NFIB as a PDF

This is the eighth edition of Small Business Problems & Priorities. The first edition was published in 1982 followed by editions in 1986, 1991, 1996, 2000, 2004 and 2008. The volumes are among the NFIB Research Foundation’s most popular publications and therefore have become a staple. Current plans project a ninth edition to be published in the spring of 2016.

Small business owners prominently rank “Uncertainty Over Economic Conditions” and “Uncertainty Over Government Actions” as their second and fourth most serious problems in the quadrennial NFIB report, Problems & Priorities. The top problem remains "Cost of Health Insurance," which has historically been the No. 1 problem for small employers; 52% labeled it as "critical". Nearly 40% of those surveyed said that economic uncertainty is the most critical problem, followed by 35% who identified “Energy Costs, Except Electricity” as critical for their firms; another 35% of owners named "Uncertainty Over Government Actions" as their most critical issue.

The 10 most severe problems for small business owners (of the 75 business problems assessed) are in order:

1. Cost of Health Insurance [2008 rank = #1]

2. Uncertainty over Economic Conditions [new]

3. Cost of Natural Gas, Propane, Gasoline, Diesel, Fuel Oil [#2]

4. Uncertainty over Government Actions [new]

5. Unreasonable Government Regulations [#6]

6. Federal Taxes on Business Income [#3]

7. Tax Complexity [#5]

8. Frequent Changes in Federal Tax Laws and Rules [#15]

9. Property Taxes (real, inventory or personal property) [#4]

10. State Taxes on Business Income [#7]

Download the Study  Read the Press Release  See Infographics

Highlights from the study appear in the following charts.

The 10 least severe problems for small business owners of the 75 business problems assessed, beginning with the least severe and moving up the list are:

75. Exporting My Products/Services
74. Undocumented Workers
73. Access to High Speed Internet
72. Employee Turnover
71. Costs and Frequency of Lawsuits/Threatened Lawsuits
70. Using Social Media to Promote Business (Facebook, Twitter, etc.)
69. Winning Contracts from Federal/State/Local Governments
68. Competition from Imported Products
67. Protecting Intellectual Property
66. Credit Rating/Record Errors

Exporting, the least severe problem (75th) proves critical for 3% of small business owners, virtually unchanged from 2008. “Undocumented Workers” and “Access to High-Speed Internet” are both a critical problem for 7% of respondents.

Small business owners evaluate most problems in the 2012 survey as they did in 2008, the date of the last Problems and Priorities survey. The major changes that did occur are largely related to the recession and increased regulations. Among problems increasing in importance, “Environmental Regulations” topped the list rising by 20 positions from a rank of 47th in 2008 to 27th in 2012. “Obtaining Long-Term (5 years or more) Business Loans” trailed slightly moving up 17 positions from 73rd to 56th. “Obtaining Short-Term (less than 12 months or revolving) Business Loans” follows moving 14 positions from 72nd to 58th. And “Finding Out about Regulatory Requirements” increased 13 positions from a ranking of 38th in 2008 to its current 25th position. The largest decline in the ranking is “Interest Rates,” falling 30 positions from 32nd to 62nd. “Finding and Keeping Skilled Employees” and “Employee Turnover” both fell 21 positions from 17th to 38th for the former and 51st to 72nd for the latter.

The 75 problems evaluated are organized into 10 problem clusters. “Taxes” takes the top position as the most severe problem cluster in the 2012 survey. Five of the 10 most severe problems are included in this cluster. The most severe problem cluster in 2008 was “Costs.” The “Regulations” cluster comes in second followed by “Costs” and then “Finance” rounding out the top four.

The classifications most likely to yield significant differences among identifiable groups of small businesses are industry, employee size of business, and years of business ownership. Industry produces the most divergent evaluation of problems, though some similarities between industries do exist. The other classifications examined, for example legal form of business, exhibit fewer substantial differences among their components. It is important to note that when they differ, the differences are often functions of variations among groups in the aforementioned classifications.

The findings of this publication are based on the responses of 3,856 NFIB small business owners/members to a mail survey conducted from mid-January through April 2012. A sample of 23,000 members was drawn for a response rate of 17%. Owners evaluated 75 potential business problems individually and assessed their severity on a scale of “1” for a “Critical Problem” to “7” for “Not a Problem.” A mean (average) was calculated from the responses for each problem. Problems are ranked by mean score.

Download the Study  Read the Press Release

Infographics from the Study

See larger version - small business problems and priorities infographic series #1    See larger version - small business problems and priorities infographic series #2
Overview (left infographic) and problems of greatest concern (right infographic)


See larger version - small business problems and priorities infographic series #3    See larger version - small business problems and priorities infographic series #4
Change in ranks (left infographic) and most/least consensus (right infographic)


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