Survey of 1,100 small businesses reveals optimism for growth could be impacted by presidential election and challenges with the economy

U.S. small businesses are a little more hopeful this year.

According to the 2016 State of Small Business Report, 71 percent of them anticipate revenue growth this year – a 14 percent increase over 2015. Half of them are also planning to hire, up from 38 percent in 2015.

However, their optimism is tempered by a little pessimism about Uncle Sam.

U.S. small businesses are not happy with him.

Or his cousins in state and local government.

The report revealed half of small businesses believe government does not do enough to support them. Only 24 percent had a favorable opinion about government backing.

Why the hard feelings?

It could be that small businesses are facing challenges and uncertainties brought around by government actions.

The State of Small Business Report, which is conducted annually by Wasp Barcode Technologies, revealed the top four challenges facing small businesses in 2016 are hiring new employees (50 percent), increasing profit (45 percent), employee healthcare (43 percent) and growing revenue (43 percent). These challenges might not be easy to overcome because:

  • Hiring: Businesses are still trying to figure out how many people they can afford to hire in light of new reporting and financial requirements brought about by the Affordable Care Act and other government regulations. There’re also struggling with the nation’s workforce development efforts because, according to the NFIB Small Business Jobs Report, “85 percent of those hiring or trying to hire reported few or no qualified applicants for the positions they were trying to fill.”
  • Revenue: While 71 percent of small businesses anticipate increasing their revenue in 2016, research from U.S. Bancorp shows very few small businesses have been able to do so during the last five years. In 2015, only 28 percent of them reported an increase over the previous year.
  • Employee healthcare: Forty-three percent of U.S. small businesses cite employee healthcare as one of their top challenges for 2016, a 14 percent increase over 2015. The change comes as businesses are getting hit by dramatic rate and premium increases passed on by private insurance companies and the ACA mandating that employers with 50 or more provide coverage.

Small business’ views on the upcoming 2016 presidential election were a bit more upbeat. While most expected no change, 39 percent of them said a Republican win would have a positive impact on their business’ growth, while 34 said the same about a Democratic win.

Among the naysayers, 30 percent said a Democratic win would have a negative impact, while only 22 percent a Republican win would be damaging.

The State of Small Business Report examined more than just small business’ views on government. It surveyed more than 1,100 small business owners and senior executives about their views on the economy, growth, hiring, marketing practices and information technology.

Other key findings include

  • Confidence in economy has dropped. Small businesses have LESS confidence in the economy than they did in 2015. (Twenty-five percent say their confidence is worse for 2016 – compared to 21 percent in 2015 – and 44 percent say their confidence is better for 2016 – compared to 47 percent in 2015.)
  • Small businesses need to outsource some jobs. Graphic design and website design are the services outsourced the most by small businesses (54 percent). Other frequently outsourced tasks include:
    • Tax preparation (44 percent)
    • Payroll (38 percent)
    • Legal (35 percent)

About the 2016 State of Small Business Report

The 2016 State of Small Business Report research is based on a random online sample of 1,102 U.S. small business owners/managers with companies with five to 499 employees. The anonymous survey was conducted via the Internet from December 9-14, 2015. The survey has a margin of error of +/- 2.87 at the 95% level of confidence. Sikora Associates provided statistical analysis.