There is no denying the impact that small businesses and the entrepreneur have on the economy and job creation. Small businesses are the heart and soul of this country they create approximately two-thirds of all new jobs, according to the Small Business Administration, and comprise more than 98% of all businesses in the United States.
As such, the opinion of small business on the state of the economy is not to be ignored, and the news is not good. Record levels of debt, excessive government spending, rising taxes and excessive regulations currently in place, affect the confidence of current business owners and future entrepreneurs. The lack of optimism and economic uncertainty not only caused businesses to close, it has also led to less investment, less hiring, and overall less spending by those businesses that are still operating. A recent Census report found the economy lost an estimated 225,000-275,000 small businesses between 2008 and 2010. These closures also caused a loss of 3 million jobs.
In fact, many pundits say there is an equivalent of well over a trillion dollars in potential businesses that are staying on the sidelines due to the uncertainty caused the current fiscal cliff that Congress has yet to address, and the perception of a non-business friendly Administration.
Recently, the President himself told business owners that if they own a business, “they didn’t build that”-that the government helped them. Instead of attacking prosperity, our elected officials should be attacking the impending tax burden and the growth of regulations. At the end of 2011 the Code of Federal Regulations was more than 169,000 pages long according to a report by the Boston Consulting Group. These numbers don’t even include the onslaught of the new rules and regulation brought on by the Affordable Care Act.
According the National Federation of Business (NFIB), the largest recognized advocate for small business, optimism amongst business owners fell to 86.5% during the worst of the recession and rose to 96.5% in February 2012. However, the optimism was short lived as it has now sunk to recessionary levels of 90.5% and NFIB doesn’t expect it rise.
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The consequences are far reaching. In addition to losing jobs, people lost their life savings, their homes, funds for their children’s education and the loss of much needed tax revenue in communities all over the country.
It is not surprising small business optimism continues to decline due current policies and the continued attacks on prosperity. Instead of rewarding the risk, creativity and prosperity that small businesses generate we have seen a government that is more interested in its own growth and power.
Rather than continue to grow government we need to start making investments in growing the confidence of the private sector and more important the small business community. This growth in confidence will lead to more spending and also help build stronger communities. I doubt anyone will disagree this is a result that we can all live with to get the heartbeat of America pumping again.
Michael L. Barrera, an attorney, is the Western States Regional Director for The LIBRE Initiative and formerly served as President & CEO of the United States Hispanic Chamber of Commerce and as the National Ombudsman for the U.S. Small Business Administration. Learn more about The LIBRE Initiative on their website at www.thelibreinitiative.com, their Facebook page "The LIBRE Initiative" or by following them on Twitter at @libreinitiative.