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Owners of small and midsize businesses say rising inflation, the trade deficit and the collapse of the dollar, and energy shortages are the three issues that pose the greatest threats to their success, according to a new national survey, the Interland Spring 2005 Business Barometer. The survey also found that "the Middle East and terrorism" now rank near the bottom of a long list of concerns, despite the ongoing conflict in Iraq.
"Fears of terrorism were noted by only 11% of respondents, even below a catchall category of 'other' that got 13%," says John Lally, a vice-president at Atlanta-based Interland, an online sales and marketing firm that sponsors the national survey twice yearly. "That's way down compared to our last couple of surveys." The results did not indicate whether U.S. business owners feel safer overall, or whether the intensity of concern about terrorism has simply faded due to the passage of time since 2001.
SHORT ON TORT. Interland polled 1,032 business owners with 500 or fewer employees and revenues ranging from $250,000 to more than $5 million. Sixty-eight percent of respondents have been in business for five years or more.
One of the survey's more surprising results revealed that tort reform -- particularly limiting class-action lawsuits -- is not a major priority. While reform proponents in Washington frequently cite the impact of lawsuits on small businesses, and big business lobbies have made their own push, 67% of those surveyed said they do not believe, or were not sure, whether tort reform would benefit companies of their size.
"Small-business owners don't have a very active interest in legal issues, apparently," Lally says.
"IN CRISIS." The majority of business owners also do not let potential lawsuits influence their decisions. When asked whether they evaluate the risks of being sued when making business moves, 66% answered "rarely" or "never." The response raises the possibility that "while litigation is widespread in the macroeconomic environment, they are not educated or informed about how or whether they can lower that risk," Lally says.
On Social Security, respondents seem to deviate from the prevailing opinion among the general public. During his barnstorming tour this spring, President George W. Bush has had to struggle to drum up serious concern about potential Social Security insolvency, but the small-business community already seems to be taking his warnings to heart.
When asked how important Social Security reform is, 43% of the business owners surveyed said the system is "in crisis and needs to be fixed now." Another 34% said the system has serious shortfalls that need fixing but are not critical. Only 23% termed the issue "a manufactured crisis" or said the problems have been overstated.
"OVERCOMMITTED AND UNDERDELIVERING." Other recent national surveys, on the other hand, show that more than 50% of Americans now oppose private savings accounts, a cornerstone of Bush's Social Security reform push (see BW Online, 5/9/05, "Bush's Blunder on Social Security").
"Entrepreneurs tend to be very bottom-line focused, so it's not surprising to see them look at Social Security from a needs-to-be-fixed standpoint," Lally says. "The small businessperson is a pragmatist, so when he sees a system that is overcommitted and underdelivering in the long term, he sees that as a big problem."
Many of the survey's questions dealt with online marketing and sales. Results show that companies are continuing their adoption of online communications and Internet-based sales and marketing, with only 6% of respondents saying that their companies have no Internet access.
Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues
Edited by Rod Kurtz
BW MALL
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