New Study Finds Economic and Political Uncertainty Top Impediments to Small-Business Growth

WASHINGTON, D.C., Nov. 22, 2011 ? A new study examining impediments to growth in the small-business sector reveals that 72 percent of small-business owners would like to expand by adding employees within the next five years, but various impediments are currently standing in their way.

According to Growth - External Factors, a report prepared by the National Federation of Independent Business (NFIB) Research Foundation, uncertainty and weak sales are the two primary impediments to small-business growth.

"There is no question that small businesses are responsible for a significant portion of the job creation in our economy," said William J. Dennis, report author and senior fellow at the NFIB Research Foundation. "Their growth and success is often contingent upon a litany of factors beyond their control - but within the purview of policy-makers in Washington. Impediments to growth may not be easily overcome, but if we are ever to bridge the gap between desired and actual growth, government officials must look at the problems small businesses face. Understanding the challenges should help with the formulation of policies that would help them to thrive."

The study found that business uncertainty and weak sales?identified as the two primary impediments to small-business growth? are currently limiting the ability of many owners to expand. While economic concerns rank high in the minds of owners, a large number of small businesses also report that uncertainty is a significant factor in making business decisions. Not surprisingly, the single most important indicator that would renew small-business owner confidence in business conditions is increased sales in their businesses. This is a fact supported by NFIB's monthly Small-Business Optimism Index report, which has identified poor sales as the top business concern for small firms for 16 quarters running.

Other notable survey findings include :

• Uncertainty is a growth impediment impacting 61 percent of small employers; only 25 percent say uncertainty does not impact them. However, owners of the smallest firms and owners of the young firms were more likely to identify uncertainty as a concern than owners of larger small firms and more established firms. And while the majority of small employers who believe that uncertainty is a hurdle think of it as economic in nature (83 percent), a comparatively large number term their uncertainty as related to political questions. An extraordinary 51 percent who think uncertainty is an impediment to growth (38 percent of the small-employer population) blame the current political situation at least in part as obstructing their growth.
• While the adverse impact of regulation is often challenging to identify, 40 percent of small employers say that regulatory or legal issues are an impediment to growth. The complex labyrinth of regulations as opposed to a specific regulation or set of regulations was more often cited as an obstacle, with 63 percent of this group (31 percent of the population) reporting that a current investment or project was impacted by a regulatory matter. One-quarter of those who find regulations to be a burden either cancelled a project scheduled for the next six months or abandoned investment and/or project plans.
• Forty-one (41) percent reported the lack of finance as an impediment to growth and 19 percent ranked it a serious matter. Though 15 percent of small employers asserted that the lack of finance was their biggest obstacle to growth, 49 percent termed it a minor or no obstacle. More than half (53 percent) of small firm owners surveyed think that internally generated cash flows will be their most important source of financing desired investment over the next five years. Bank loans will be the second most common source. However, 33 percent of those identifying lack of finance as an impediment to growth say that existing financial obligations are "seriously constraining" their ability to finance desired business investment and another 44 percent say that it is constraining.
• With the unemployment rate near 10 percent, finding skilled workers is still a struggle for small-businesses. Sixty-one (61) percent of those surveyed (24 percent of the total population) said the lack of skilled employees is an impediment to growth and indicated that they would hire at least one additional employee at the current market wage rate in the next six months if they could find people with appropriate skills. Over 37 percent (9% of the population) would employ more than one.
• Just 15 percent of small-business owners cite the lack of a strong management or advisory team as an impediment to growth. Of the group currently possessing a management team, 47 percent are highly confident their current team can provide the necessary assistance to reach the firm's growth objectives in the next five years. Most citing this impediment want to add management employees rather than to change the ones they have.

The latest NFIB Small Business Poll, Growth - External Impediments, is available at http://www.nfib.com/growthstudy.

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Senator Chuck Grassley made the following comment about the Joint Select Committee on Deficit Reduction not reaching agreement on a ten-year proposal for at least $1.2 trillion in deficit reduction by November 23.

Senator Grassley submitted specific recommendations to the committee for spending reductions totaling hundreds of millions to even billions of dollars from administrative restructuring, reduction of duplicative and overlapping programs, and unnecessary and wasteful programs under the authority and jurisdiction of the Senate Committee on the Judiciary, where he serves as Ranking Member.  He also made recommendations to the committee for the Grassley-Kohl legislation which would save $4.8 billion in federal government spending on prescription drugs, including through Medicare and Medicaid, by stopping deals between name-brand and generic drug makers that keep less expensive drugs off the market.  Senator Grassley urged the committee to adopt caps on farm payments, for a savings of $1.5 billion, and he backed a goal of saving $23 billion in spending from programs that fall under the jurisdiction of the Senate Committee on Agriculture.

Grassley comment:

"Even though I didn't vote for the bill that created the super committee, I hoped it would succeed in reducing government spending and signal that Washington is serious about getting our fiscal house in order.  During the last two years alone, federal spending has increased 22 percent, not even counting the failed $800 billion stimulus program.  Out-of-control deficit spending and a $15 trillion national debt inhibit the ability of the economy to grow and create private-sector jobs.  It's a moral issue, too, because it's wrong to leave a legacy of debt for the next generation.

"Going forward, entitlement reforms are needed not only for the federal budget, but also to sustain the programs themselves, and Congress and the President need to stay focused on reducing spending.  Tax increases aren't the solution because we know that money from tax increases isn't used to reduce the deficit.  For the last 65 years, every new dollar in tax increases has resulted in Congress' spending $1.17.

"The President should have been engaged and at least have offered a credible deficit reduction plan.  In addition, the majority leadership of the Senate continues to do nothing about the budget challenges, despite the urgency."

Nine Iowa Women of Innovation were honored last Thursday evening by the Technology Association of Iowa at the Hy-Vee Conference Center in West Des Moines.  Honorees included entrepreneurs, executives, college professors, and two students who each received $2,500 scholarships.  Betty Griffin, Curriculum and Instruction Specialist for Davenport Community Schools, and Pavane Gorrepati, senior at Rivermont Collegiate in Bettendorf, were among the nine winners.

The Iowa Women of Innovation awards celebrate female leaders in science, technology, engineering, and math.  Nominations were submitted from communities across the state and finalists represented a range of backgrounds: teachers, researchers, technologists, and CEOs, among other titles.  Finalists also include high school, undergraduate, and graduate students who have demonstrated extraordinary achievements in technology.

For a complete list of finalists and winners, visit www.technologyiowa.org.

2011 Women of Innovation Award Winners:

Research Innovation and Leadership: Dr. Byrony Bonning, a professor at Iowa State University's department of entomology.  Bonning, a nationally and internationally recognized scholar, is the founding director of the ISU Virus-Insect Interactions Initiative.  Her research has resulted in five patents that have attracted industrial support.

Academic Innovation and Leadership in Secondary Education:  Betty Griffin, curriculum and instruction specialist in the Davenport Community Schools. Griffin brought the Project Lead the Way (PLTW) program to Davenport, and developed a PLTW summer camp for 8th grade students.  She helped create a scholarship fund to promote college credit for high school students. 

Academic Innovation and Leadership in Post-Secondary Education:  Dr. Sarah Larsen, a professor of chemistry at the University of Iowa.  Larsen's internationally-recognized research program studies nanomaterials, and has advanced the understanding of how porous particles can be used in environmental protection, catalysis, drug delivery and biomedical imaging.

Entrepreneurial Innovation and Leadership:  Dr. Jennifer Nieweg of Des Moines, co-founder of Catilin. Niewig's company develops cost-efficient catalysts for the production of bio-fuels.  Recently, Catilin merged with a multinational company, Albemarle, which develops, manufactures, and markets complex chemicals worldwide.

Non-Profit/Government Agency: Toni Tassone of the Iowa Department of Corrections.  Tassone created the Iowa Corrections Offender Network (ICON), an offender case management system. ICON's first year return on investment is estimated at $2 million.

Small Business Innovation and Leadership:  Charise Flynn, Chief Operating Officer at Dwolla, a social payment network in Des Moines.  Flynn leads a team of 20, managing the company's fast-paced growth, implementing new processes and systems, and executing the company's vision.

Large Company Innovation and Leadership:  Kristin Runyan, Chief Information Officer and Vice President of Product Management for CDS Global in Des Moines.  Runyan leads the company's vision of diversifying its business, changing company culture, and transforming technology.

Collegiate Innovation and Leadership: Chloe Dedic, a senior in mechanical engineering at Iowa State University.  Dedic studies pollutant formation in devices used for clean power generation.  Thanks in part to her work, the mechanical engineering department was recently awarded a National Science Foundation grant.

Youth Innovation and Leadership:  Pavane Gorrepati, a senior at Rivermont Collegiate in Bettendorf. Gorrepati is the only student there who has completed six science classes in four years.  She earned a Borlaug-Ruan International Internship and has founded "Sending Seeds Overseas," which provides seeds for farmers in third-world countries.

Note: Rivermont Collegiate senior Meghana Pagadala was also a finalist in this category.

For additional information on Rivermont Collegiate, contact Brittany Marietta, Director of Admissions, at (563) 359-1366 ext. 302 or marietta@rvmt.org.

Q&A on Medicare open enrollment with U.S. Senator Chuck Grassley

Q:    What does open enrollment mean for seniors?

A:    The Medicare open enrollment period for 2012 is under way.  Any enrollee who wants to change plans needs to do so by December 7, 2011.   The annual enrollment period applies to Medicare Parts A and B, which is traditional Medicare; the alternative to Medicare Parts A and B, which is Medicare Advantage; and Medicare Part D, which is the prescription drug program added to Medicare in 2003.

During open enrollment, Medicare beneficiaries don't have to make changes if they don't want or need to.  They can switch from traditional Medicare to a Medicare Advantage plan, move from Medicare Advantage to traditional Medicare, or switch from one Medicare Advantage plan to another.  They can enroll in a Medicare prescription drug plan, drop Medicare prescription drug coverage, or switch from one drug plan to another.

Helpful consumer information is available at www.Medicare.gov/find-a-plan.

Q:    What happens if plans are discontinued?

A:    Most Medicare enrollees will not need to change plans, and most enrollees whose current coverage won't be available next year - whether it's Medicare Advantage or one of the Medicare drug benefit plans - will be enrolled automatically in a new plan, as spelled out in a Notice of Change that insurers were required to send beneficiaries in October.  However, automatic re-enrollment is not always the case, so it's important to read any paperwork you receive this fall.  You may need to re-enroll yourself.

Some insurance plans make changes to prescription drug plans.  It might be higher or lower costs, or the dropping or adding of medications.  Medicare beneficiaries should examine their plans for 2012 changes.  It's important to review your options every year for both financial and health needs.

For 2012, Medicare beneficiaries have plan options that offer enhanced coverage, including zero deductibles and coverage in the gap for generic drugs.  In Iowa, there are 33 Medicare prescription drug plans available for 2012.  These plans offer additional options, such as coverage in the standard benefit's coverage gap and a deductible below the standard $310, including plans without a deductible.  For 2012, the lowest Medicare prescription drug plan available in Iowa for 2012 is $15.10 per month.  Overall, drug plans have seen a slight decrease in premiums for 2012.  I co-authored the legislation that created the Medicare prescription drug program.  Competition among insurers was built into the program design to keep costs low for enrollees, and the program has delivered consistently better-than-expected results in keeping premiums low and affordable.  Beneficiary satisfaction also is high, with 95 percent of enrollees saying their Part D plan works well, and 94 percent saying it's easy to use, in a survey conducted this year.

Q:    What kind of help is available to sort through enrollment questions?

A:    Many states, including Iowa, have set up Senior Health Insurance Information Programs.  Iowa's program provides confidential guidance to individuals, and it's free of charge.  Those who have questions about plan options or unresolved issues with plans should call the Senior Health Insurance Information Program, or SHIIP, at 1-800-351-4664.