The top challenge will surprise you … only if you haven’t bothered to ask what challenges small businesses really face.
If you ask any small business owner “How’s business?” invariably they will respond: “Well, I can always use more customers.” So, if someone asked you what’s the greatest concern of small business owners, you could be forgiven for being wrong if you said they need more sales, because that’s what most people think—especially politicians.
Small business owners are actually pretty good at buying and selling—every company has been built to do those things. But operating a small business in the 21st century has become more complicated than ever before, which is why people who know small business know the best way to find out what’s really going on is to ask the owner what keeps them up at night.
One organization that knows how to ask the right questions is the National Federation of Independent Business. As you may know, the NFIB’s monthly Small Business Optimism Index has been the gold standard for such research for 43 years. They also have a quadrennial report that speaks directly to the question, “What keeps you up at night?” It’s the NFIB’s Small Business Problems and Priorities survey, and you may be shocked to learn that “more sales” came in at No. 45 out of 75 possible concerns in the 2016 report.
The 2,831 small business owners who responded to the survey told the NFIB that their greatest challenge isn’t competition (No. 31), or social media (No. 64), or online retailers (No. 61). What about poor profits? Nope, that’s No. 16. Even the most experienced observers of small business would feel safe in presuming that cash flow would be No. 1, but this primordial Main Street challenge is actually No. 25 on the list of top concerns.
If you listen to politicians, you’d think needing a loan is what makes small business owners wake up at 2 a.m. Surely you know better than to listen to politicians when it comes to small business, because needing a loan is almost last, at No. 70. That monthly NFIB index has reported that since 2007, established small businesses have been adhering to what I call “The Great Deleveraging.” They don’t want no stinkin’ loans.
So what is the No. 1 greatest small business challenge? Drum roll, please: The cost of healthcare.
No. 2 is oppressive government regulations. No. 3 is federal income tax on businesses. No. 4 is uncertain economic conditions. No. 5 is tax compliance complexity. And numbers six through nine are also all government related. This next point is very instructive: The first operating challenge to rank on the list is No. 10—finding qualified employees.
Let’s review: Nine of the top 10 greatest small business challenges are directly associated with government.
Some might say healthcare costs are not the government’s fault, but that would be Rip Van Duffus who just woke up from a seven-year nap and never heard of Obamacare. To be fair, let me hasten to add the cost of healthcare was a small business challenge prior to Obamacare. And this law did “bend the price curve,” as promised. Unfortunately, for the small business sector, Obamacare bent the cost curve up, not down.
Thanks to the NFIB Survey, President Trump and the 115th Congress can’t say they don’t know where to start helping small business owners. Indeed, they’re neck deep in the Obamacare “repeal and replace” debate right now. But here’s some breaking news: We polled our online audience about that issue and 94% said “Yes” to repeal and replace, but half said, “Take the time to do it right this time.”
There’s no doubt that 26 million American small business owners—with healthcare costs on their minds—had a significant impact on the November election. So my advice to the political class of all three parties—Democrats, Republicans and Trumpicans—is to take the time to get healthcare right this time. And then quickly start reducing the other eight non-operating challenges government is imposing on the most important job creators in America: the heroes of the Main Street economy—small businesses.