Key Takeaways from the 2017 NSBA Small Business Survey
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- On February 15, 2017
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The National Small Business Association (NSBA) is the nation’s first small-business advocacy organization and recently conducted a comprehensive survey on regulations and how they impact America’s small businesses. We wanted to share some of the highlights of the Survey for our small business owner community and share some of the latest updates on efforts at the federal level to reduce regulatory complexity to encourage business growth.
Three-in-four small firms say that federal tax code regulations are very or somewhat burdensome, and two-in-three say that the Affordable Care Act regulations are somewhat or very burdensome.
Forty-four percent of small firms’ report spending 40 hours or more each year dealing with new and existing FEDERAL regulations, and nearly one in-three spend more than 80 hours each year. When talking about STATE and LOCAL regulations, that number drops slightly to 30 percent who spend 40 hours or more each year.
Nearly half of small businesses report spending more than $5,000 annually in DIRECT costs and another $5,000 in INDIRECT costs to deal with FEDERAL regulations. When analyzing the costs of regulations at the STATE and LOCAL level, more than half of small businesses report spending more than $1,000 in DIRECT costs and another $1,000 in INDIRECT costs.
The average regulatory start-up cost – in other words, the cost of compliance in connection with starting a new business – is estimated to be $83,019 within the first year for a business.
These costs are leading many small businesses to consider alternative lending solutions to manage some of these costs.
While 90% of small businesses have not been fined for non-compliance, the average fine for those subject to such a penalty, the average cost of citations over five years was $30,651.
More than one-third have held off on business investment due to uncertainty on a PENDING regulation and 42 percent have held off due to uncertainty on the meaning or interpretation of an EXISTING regulation.
Seventy percent of small firms say that new regulations have a very or somewhat significant impact on their plans to grow or expand their business. More than half have held off on hiring a new employee due to regulatory burdens.
60 percent of small businesses surveyed said they believe the majority of regulations covering their industry are NOT necessary.
There may be some hope for small business owners, President Trump issued a new executive order on February 24, 2017 to create a process within the federal agencies for implementing his administration’s deregulatory agenda. Although this will not impact local or statewide regulations, it can provide a meaningful push in the direction of regulatory reform overall.