This time of year, surveys regarding business growth or decline continue to pour out from governmental agencies, academic institutions, and various think tanks from around the country. While there are several well-respected entities who regularly publish relevant statistics on our economy, some recently published information is more disturbing with regard to small business.
Most polls and surveys indicate and support small business as one of the main drivers of our economy. Yet, in a recent report by the Census Bureau, small business deaths are exceeding business births, for the first time since the Bureau has been keeping records (thirty years). Another survey by the National Small Business Association indicated only thirty-five percent of business owners were still optimistic about the direction of the economy.
Specifically, what are all of these surveys and polls telling us? Basically, there are two major obstacles preventing continued growth by small business; workforce development and continued government regulation. The workforce development obstacle relates to an overall shortage in the supply of skilled workers, particularly in the area of manufacturing. Our state is fortunate to have a high rate of employment. But that makes it difficult to grow, if there is not an adequate supply of workers available for hire when your business needs them. Within the state of Indiana each of our local community workforce development offices are moving to try and resolve the supply shortage of skilled workers via increased vocational training and apprenticeships.
Consistent demand for more work coupled with a dwindling supply of skilled workers continues to dampen business growth. A key component then becomes how to develop skilled workers from unskilled workers within the state and developing the means of recruiting already skilled workers from geographic areas outside the state where there is an excess supply of them. It could also be a function within our state, that more and more people are getting a college education, therefore not pursuing a skilled trade. With all of the outstanding universities in our state, that scenario could easily be the case. Our state could be transitioning from a manufacturing based economy to a more service-based economy.
With more college graduates entering the workforce every year, along with the growth of the service sector portion of the economy, that scenario also seems very plausible. If unskilled manufacturing jobs are going (or have already headed) overseas, that could account for the decline in demand for those types of jobs. People who are not college bound need to be encouraged to pursue skilled trades.
Increased government regulation creates multiple obstacles on the runway of business growth. Businesses are struggling with the implementation of mandatory healthcare. They are having to deal with new taxes (i.e. the surcharge tax as part of the Affordable Care Act) and continued environmental controls.
Government requirements over the last decade have become more stringent, particularly in the area of healthcare. The advent of the Affordable Care Act brought the annual requirement of employers generating a Form 1095-C verification of Employer Provided Health Insurance Offer and Coverage. Basically, according to the IRS website, the health care law has benefits as well as requirements for employers. Irrespective of the number of employees your company has (unless you don’t have any), it is required to provide some form of healthcare coverage. While having healthcare is certainly a wonderful benefit for everyone, companies are faced with an added obstacle to overcome.
Many companies, especially construction companies, face the added burdens of local permitting requirements. Some city and/or county ordinances are cumbersome and outdated. Communities with elected officials who are addressing these issues will most certainly find themselves in a far better position for improved economic development than those who don’t.
As a business owner or manager, there is no question you will be exposed to many obstacles when growing your company. Strive to minimize the ones you can, but be prepared to have to live with them, as best as you can, strive to find lawmakers who are willing to remove cumbersome laws or ordinances instead of continuing to add more of them.
Remember, small companies can become big companies. Big companies almost always start off small. They find a niche, and continue to expand. The fewer obstacles that are placed in the way of their growth, the better chance they will have for growing into companies that hire more people and provide more economic stability in our region, state, and country.
Dan Arens is an Indiana-based business growth advisor.