A survey of small business owners found that they are less optimistic in the Hartford area about the local economy than their peers in other parts of the country.
Just 35 percent of the 300 Hartford-area small business owners surveyed expressed confidence that the local economy would improve in the next six months, compared to 48 percent nationally, according to a survey conducted by The Hartford.
Liam McGee, The Hartford’s President and CEO, told a group of business executives Friday morning that the “irony of that statistic, which is not a good one, is that notwithstanding, more Hartford-area small business owners are hiring than their peers across the country.”
In metro Hartford, 44 percent have hired in the past 12 months compared to 36 percent nationally.
The two most cited reasons for not hiring is “they can’t afford to, or their business is not growing,” McGee said.
So what can government do to help?
He said federal, state, and local governments can provide a sense of certainty from tax policy to regulatory costs so that business can execute and plan. He applauded the Small Business Express program, which makes small grants and loans available to businesses, and the ongoing review designed to remove onerous state regulations.
Gov. Dannel P. Malloy, who was introduced by McGee at the MetroHartford Alliance breakfast, said he thinks there’s too much regulation in Connecticut.
“I think we have a lot of outmoded, outdated regulation. I think a lot of it is duplicative of federal regulation,” Malloy said.
He said the plan is to eliminate some of the regulations as soon as the General Assembly reconvenes in February.
He also bragged about the grants and loans his administration has made to more than 900 businesses in the past two years. He said he suspects that’s why businesses in Hartford are hiring.
“We are getting more money in the hands of small businesses to plan for expansion,” Malloy said. “That program is still open. We are still investing in small business.”
As for tax policy, Malloy said he wants the state to have a better tax policy and is “anxious” to see real growth in the economy that lets the state reshape its tax policy. But he admitted that is “difficult to do when you’re having relatively hard times.” However, “I will give you the following report: things are in fact getting better.”
He said the revenues are coming into the state as expected and the state is seeking growth in the economy and employment. He said as employment increases it will give him some space to develop better term tax policy.
“A lot of our tax policy was developed at a different time, for a different economy, and what I really look forward to is lowering taxes,” Malloy said. “But I think as we do that I think we need to make sure we do that in such a way as it’s promoting job growth and economic growth in our state.”
He suggested one of those things might be treating small business different than big business under the tax code.
McGee said the survey findings explain why the United States has had such a tepid job recovery. He pointed out that it could become a vicious cycle because businesses are reluctant to hire until they see more demand and consumers are reluctant to spend much more because businesses are not hiring.
“Entrepreneurs are optimists. They love what they do, and for the most part they don’t do it for money,” McGee said. “They do it because they’re passionate about their product or service.”
But conservative risk taking is on the rise. Despite some optimism for the general economy a larger percentage of small business owners now described themselves as “very conservative or somewhat conservative in their risk taking,” McGee said.
Conservative risk taking rose 6 points over last year’s survey from 73 to 79 percent. In metro Hartford, 74 percent call themselves conservative risk takers.
McGee said data from national focus groups conducted to supplement the survey shows many entrepreneurs “still have deep scars from the Great Recession.” While they were able to keep their businesses going, they struggled with muted demand and cash-flow problems.
“They do not want to get out front and be wrong,” McGee said. But he said that should be a concern for everybody because without risk taking and failure, there is little innovation.
“Without a willingness to take risks, economic progress will be modest at best,” he said.