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What Recovery? Small Biz Owners Pessimistic About the Future

business owner . / Credit: Pessimism Image via Shutterstock

Small business owners may have weathered the storm of the recession, but that doesn't mean it will be smooth sailing for the rest of 2013. That's because small business owners are still worried about the effects that new taxes and changes to health care will have on their business.

A large part of that uncertainty comes from the feelings small business owners have about the Affordable Care Act. Forty-two percent of respondents say the ACA will increase health care costs of their business. As a result, 33 percent of respondents say they will make changes to their health care coverage that will negatively affect their employees. Nine percent of employers say they will drop health care coverage and pay the penalty.      

Additionally, small business owners will say they are less likely to give their workers a raise this year. A majority of employers, 83 percent, say they will not be giving a raise to account for the 2 percent increase in payroll taxes which began at the start of the year.  

Overall, 41 percent of small business owners say that government regulations will be the biggest impediment to growing the gross domestic product in 2013.  That number is up from 32 percent of small business owners who said so in 2012. 

"The sentiment among business owners is that government regulations are putting a stranglehold on businesses," said Jeff Stibel, chairman and CEO of Dun & Bradstreet Credibility Corp., who conducted the research with the Pepperdine University Graziadio School of Business and Management. "We are nearing an economic recovery and the last thing businesses need is government headwind."

Needless to say, those issues have caused small business owners to feel a bit pessimistic.  Overall, just 45 percent of small business owners were confident about their growth prospects in 2013, but that number was down from 54 percent who were optimistic about growth in 2012.  However, certain areas of the economy are bright spots for small business owners. Chief among them are the improving housing market and declining unemployment rate.   

"Small business owners, who are optimistic by nature, are still taking a highly cautious view of the economy and their personal business prospects," said John Paglia, associate professor of finance and founding director of the Pepperdine Private Capital Markets Project. "The 'foxhole mentality' among small business owners to dig in and stay low has the potential to slow the still- fragile recovery."

The research was based on the responses of 2,713 small business owners. 

Email David Mielach or follow him @D_M89. Follow us @bndarticlesFacebook or Google+.