Today's release of the NFIB Small Business Optimism Index came in weaker than expected at a level of 93.5 vs. the estimate of 94.9, indicating that small businesses turned a little less confident during the month of June as interest rates rose sharply and equity prices ended a streak of seven straight months of gains. One aspect of the monthly report that we follow closely is the question where the NFIB asks members what is the single most important problem that they face in their business.
For several months now, we have been following the trend regarding how policies out of Washington (taxes and regulations) are increasingly becoming a problem for small businesses. For example, back in June we noted that 47% of all small business owners believe that policies out of the government are the biggest problem they face, and those two problems outnumber Poor Sales by a margin of nearly three to one!
This month the weight of Washington on small businesses lessened a bit as the combined problems of Taxes and/or Government Regulations accounted for 40% of all responses (down from 47% last month). However, even at that level these problems still outnumber Poor Sales (18%) by a margin of more than two to one. It used to be that when you started a business, the first question you asked yourself was "will the business generate enough revenues to be profitable?" These days, though, the first question many small business owners are asking themselves is "if I start this business, with all the taxes and red tape to contend with, is it even worth it?"