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Summary of Findings NFIB and NAM

Survey of 800 Small Business Owners, Manufacturers, and Owners or C-Level Decision Makers

August 13-September 4, 2012

#12975

Glen Bolger, Partner Bill McInturff, Partner S

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Methodology
On behalf of the National Federation of Independent Businesses and the National Association of Manufacturers, Public Opinion Strategies conducted a survey of 800 small business owners and manufacturers, owners, or C-level decision makers at companies with between 2 and 499 employees. Of the 800 interviews, 453 were conducted among small business owners and 347 were conducted among manufacturers and owners or C-level decision makers. The interviews were conducted August 13-September 4, 2012. Half were conducted by telephone and half on the internet.
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Bottom Line
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Bottom Line
The data paints a bleak picture, with a majority of respondents saying in the last three years, the national economy is in a worse position for American small businesses and manufacturers. There is limited evidence these respondents see a respite in sight in terms of economic improvement ahead.
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Bottom Line
Two-thirds of these respondents say economic uncertainty in the market makes it hard for them to grow and hire more workers, for which they hold the Obama Administration or Congress responsible.

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Bottom Line
The theme of government being a barrier rather than a help is clear throughout this data. Two of the three biggest challenges facing small business owners and manufacturers are government spending and federal, state, and local taxes.
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Bottom Line
Throughout the open-ends and the data, these respondents express significant concern that the government regulatory environment is getting worse and is a significant burden on their business. The impact of the regulatory environment is clear, as respondents express concern about companies moving overseas, rising consumer prices, and job loss.
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Bottom Line
The frustration expressed in this survey can also be felt, as a majority say other foreign countries with growing economies, like China and India, are more supportive of their small businesses and manufacturers than the United States.

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Bottom Line
In this environment it may not be surprising, but is still concerning, that a majority of these respondents say that given what they know now and in the current economic climate for business, they would not start a business today.

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Attitudes About the Direction of the Country, the Economy, and the Challenges Facing America’s Businesses

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These respondents make it clear they believe the national economy has created a worse position for their businesses. This is especially true for the smallest companies.
Position of Economy for Small Businesses and Manufacturers Compared to Three Years Ago Total Better Total Worse 24% 55% Revenue <$100K Revenue $100K-$500K Revenue $500K-$1 mil. Better Worse

Much Worse 35%

Much Better 6% Somewhat Better 18%

Somewhat Worse 20%

About the Revenue > $1 mil. Same 20% Don’t Know 1%

19% 22% 25% 26%

63% 56% 55% 53%

Compared to three years ago…Would you say the national economy is in a better or worse position for American small businesses and manufacturers to succeed, or is it in about the same position?

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Small business owners and especially manufacturers say there is too much economic uncertainty for their companies to expand.
My company is now operating from the standpoint that there is enough economic opportunity in the market today to expand, grow, or hire new workers. …or… There is too much economic uncertainty in the market today for my company to expand, grow, or hire new workers.
Enough Opportunity 32% Too Much Uncertainty 67% -29% 64% 35% Don’t Know 1% -43% 71% 28%

Small Businesses

Manufacturers

Thinking some more about your company, I am going to read you two statements and please tell me which one comes closest to your opinion.

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The actions taken by the Obama Administration or Congress have increased the level of economic uncertainty.
And, have the federal regulations and decisions issued by President Obama’s administration or laws passed by Congress increased or decreased the level of economic uncertainty facing your company?
Among respondents who say there is too much uncertainty to expand Increased Level of Economic Uncertainty

Among all respondents

Decreased Level of Economic Uncertainty

68% 27%
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45% 18%
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The cost of health insurance and government spending are top challenges facing small business owners and manufacturers.
Top Challenges Facing Your Business %8-10 Health insurance costs Government spending Federal, state, and local taxes Energy costs Lack of available capital Regulatory costs Labor costs Employee benefit costs (excluding health care) Lack of skilled workers Foreign competition 56% 54% 49% 39% 36% 36% 30% 30% 28% 25% Mean Score 7.1 7.0 6.9 6.3 5.9 5.9 5.8 5.7 5.1 4.4

Now, I would like to read you a list of factors that some companies are concerned about. For each one, please rate how significant a challenge it is for your business using a scale from 1 to 10, where one means that it is not at all a significant challenge for your business and where ten means it is a very significant challenge. You can choose any number between one and ten depending on how strongly you feel about it.

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Measuring the Impact of Today’s Environment on These Business Owners and Senior Executives

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About one in four small business owners and manufacturers report considering or cancelling a planned capital investment, laying off employees, and using their own personal savings.
Sacrifices Made or Considered %Yes Cancelling a planned capital investment or expansion Laying off workers Putting my own savings in to remain open Dropping employee health care plans Borrowing to remain open Closing a business or businesses Personally taken a pay cut

26% 24% 23% 11% 11% 6% 6%
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[Asked of those who report having made financial sacrifices] And, what sacrifices have you made, or considered making?

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A majority of respondents say they would not start a new business today. Surprisingly, this percentage is higher among those whose companies have higher sales revenues.
%No Small businesses No, Would Not Start Business Today 55% Yes, Would Start Business Today 45% Manufacturer Revenue <$100K Revenue $100K-$500K Revenue $500K-$1 mil. Revenue > $1 mil.

51% 59% 49% 57% 56% 55%
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Still thinking about your business, given what you know now and in the current economic climate for businesses, would you start a business today?

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Manufacturers told us the reasons they would not start a business today.

 Regulations at the federal, state, and local levels are too numerous and too costly;  The economy is not doing well, and small business owners face uncertainty as to whether or not it will improve soon;  Taxes are too high; and,  The costs of many factors, including health care, fuel, and workers’ compensation have skyrocketed.
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Small business owners also told us why they would not start a business today.

Burdensome regulations; An economy with high uncertainty and low disposable income; High taxes; and Higher costs of health care, fuel, and other necessities.
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Attitudes About Regulation
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These respondents, especially from the smaller businesses, report a worsening of the relationship between small businesses and federal regulators.
Better 13%

Would you say that the efforts of federal regulatory agencies to work with small businesses are getting better or getting worse?

Worse 55%

About the Same 26% Don’t Know 6%

-44% 55%

-44% 57%

-21% 42%

-24% 48% 24%

11% 2-5 Employees

13% 6-20 Employees

21%

21-99 Employees

100+ Employees 21

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Small business owners and manufacturers say that small businesses and consumers are hurt most by new federal regulations.
Hurt Most by New Federal Regulations

Small Businesses Consumers Workers Large Businesses Labor Unions The Federal Government Attorneys or Lawyers
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60% 32% 26% 10% 4% 3% 2%
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And whom do you think is hurt the MOST by new federal regulations?

These respondents say the most likely results of new regulations would be negative and would impact jobs and increase prices.
Most Likely Result of the Passage of New Federal Regulations
Total Small Business Manufacturers

More businesses closing or moving overseas Higher prices for US goods and services Job losses Better wages and opportunities for US workers Greater consumer protections Additional health, safety, and environmental benefits

27% 24% 23% 7% 6% 6%

30% 24% 25% 22% 19% 28% 7% 6% 6% 8% 7% 5%
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And, which of the following do you believe will be the most likely to occur if many of the proposed legislative and regulatory actions impacting small businesses and manufacturing coming out of Washington, DC, go into effect?

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China, India, and a View of America’s Competition
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Foreign competitors are not perceived to be as significant a negative influence as the United States’ own regulations and taxes.
Thinking again about your company, which of the following has the MOST negative impact on your company’s ability to compete in today’s market. Is it… Foreign competitors who receive subsidies and have access to lower operating costs and fewer regulations? …or… The United States’ own laws, regulations, rules, taxes, and fees that impose unnecessary costs and business impediments?

U.S. Regulations 62%

Foreign Competitors 32% Don’t Know 6%

-36% 65% 29%

-23% 59% 36%

Small Businesses
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Manufacturers 25

Small business owners and manufacturers say that developing countries are more supportive of their small businesses and manufacturers.
And would you say that foreign governments with growing economies like China and India are more supportive or less supportive of their small businesses and manufacturers than the United States? Total More Total Less 54% 30%
Much Less 11% Somewhat Less 19% Don’t Know 16%

+22% 54% 53%

+25%

Much More 29%

32%

28%

Somewhat More 25%

Small Businesses
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Manufacturers 26

Looking at the Issue of Health Care

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Two-thirds of respondents who offer their employees health insurance think the health care law will cause insurance costs to increase. More than one in five say they will consider dropping health insurance coverage for their employees.
Health Care Costs With ACA Among Employers Who Offer Insurance Decrease 10% Stay About the Same 22% Increase 67% Don’t Know 1% Changes Because of the ACA Among Employers Who Offer Insurance

59%

Consider making changes in view of the new health law

Among those who offer insurance Increasing the amount employees have to pay for their health care coverage Dropping coverage for employees

38% 21%
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With the federal health insurance law now in effect, do you expect your health care costs to increase, decrease, or stay about the same? | Which of the following changes, if any, is your company considering in view of the health law

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Attitudes About President Obama and the Obama Administration

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Respondents say President Obama’s recent executive and regulatory policies have hurt American small businesses and manufacturers.
Now I am going to read you two statements about President Obama’s recent executive and regulatory policies, and please tell me which one comes closest to your own opinion. President Obama’s executive branch and regulatory policies have helped American small businesses and manufacturers. …or… President Obama’s Executive Branch and regulatory policies have hurt American small businesses and manufacturers.

Total

Small Business Owners

Manufacturers

29% 31% 27% 69% 67% 71%
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Final Thoughts
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Appendix:
I. II. Additional Notes on Methodology Quotes from Small Business Owners and Manufacturers

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Additional Notes on Methodology
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Comparing this survey to government data.
This Survey Government and Other Data

Female-Owned Businesses Minority-Owned Businesses Northeast Midwest South West

33% 16% 22% 22% 34% 23%

29%1 15%2 22%3 23%3 32%3 24%3

1 2

National Women's Business Council, http://www.nwbc.gov/sites/default/files/women-owned%20businesses%20general.pdf US Census Bureau, http://www2.census.gov/econ/sbo/07/pums/2007_sbo_pums_users_guide.pdf 3 US Census Bureau, http://www2.census.gov/econ/susb/data/2006/us_state_totals_2006.xls

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Comparing this survey to government data.
Types of Women-Owned Businesses
This Survey Census Data1

Types of Minority-Owned Businesses
This Survey Census Data2

Retail Food Service Real Estate Service Construction Health Care Farming
1 2

15% 14% 7% 9% 7% 6% 7% 8% 5% 6% 5% n/a 5% n/a

Food Service Retail Software Engineering Real Estate Service

16% 18% 10% 15% 7% n/a 7% n/a 6% 3% 6% 8%

US Census Bureau, http://www.census.gov/compendia/statab/2012/tables/12s0769.pdf US Census Bureau, http://www.census.gov/compendia/statab/2012/tables/12s0770.pdf

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Comparing this survey to other national data.
Party Identification of Small Business Owners
This Survey National Data1

Republican Independent Democrat

46% 48% 16% 16% 36% 35%

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Based on national surveys conducted by Public Opinion Strategies over the past two years. A total of 5,600 interviews were conducted among registered voters using both landlines and cell phones using random digit dialing. The total number of selfdescribed small business owners was 633, or 11% of the interviews conducted.

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Quotes from Small Business Owners and Manufacturers
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Small business owners put a greater emphasis on two additional points.
Although a few manufacturers also mentioned these points, there was a stronger sense among small business owners that the capital needed to begin was simply not as readily available as it had been in the past. Many also noted a lack of qualified employees or other problems with new entrants into the work force.
“What I would like to see is...having kids better educated so that they can come out through vocational school or high school with the skills that are required in my industry.” —Small business owner

“Training is the key word. Training. Go to a trade school and vocational training in high school. It’s desperately needed.” —Small business owner

“A real lack of skilled workers.” —Small business owner

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What respondents told us about the economy and uncertainty:
“The current climate has sucked all the discretionary funds out of the American public…Everybody’s on edge because of the current economic climate.” —Manufacturer “We keep waiting for improvement in the economy where more people will come through the door.” —Small business owner “There is just too much uncertainty. The government is always looking over your shoulder instead of staying out of the way…With today’s business climate you put in too many hours for very little return. There is no certainty.” —Small business owner

“Not knowing how much taxes a small business has to pay…I wonder where this country is going on the federal level.” —Small business owner

“Just the complete lack of confidence in the future…Disposable income is something people don’t have…Not knowing what our taxes are going to be next year, or in the next two years. These are questions that I don’t know, nobody knows what the answer is. I don’t know if there is a future for my business.” —Manufacturer

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What respondents told us about taxes, regulations, and a lack of capital:
“Government regulations that retard development.” —Manufacturer “Basically, I would say access to capital and regulation. Banks have a ton of money, but they’re not loaning it to small businesses…The number of federal and state regulations…I think a lot of bureaucrats don’t realize that they’re adding to the cost of opening a small business.” —Small business owner

“There’s no money. Banks don’t loan money to start these things.” —Small business owner

“The cost of starting a business is ridiculous. The government regulations make it very difficult for us.” —Manufacturer

“Thanks to the rules and regulations, it is too hard and confusing to start one up.” —Small business owner

“Your tax rates, capital gains taxes, new federal programs that will cost employers money, the cost of healthcare, personal tax rates, lack of activity in the market, lack of demand…” —Small business owner

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PUBLIC OPINION STRATEGIES
214 N. Fayette St. Alexandria, VA 22314

Glen Bolger, Partner glen@pos.org 703.836.7655 Bill McInturff, Partner
bill@pos.org 703.836.7655
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