Big Problems for Small Business

Health insurance, liability insurance and workers’ compensation are the top three problems facing America’s small business owners, at least that’s what a study from the National Federation of Independent Business Research Foundation and Wells Fargo claims.

Small business owners are less concerned about so-called “hot button” political issues such as “exporting my products/services” and “competition from imported goods,” which they ranked as the tenth and sixth least severe problems. While certain political issues appear less important, that doesn’t mean they are not oriented towards politics. “This year’s list makes it pretty clear that many of small business owners’ most serious problems are politically generated, rather than spawned from free-market competition,” says Foundation Senior Research Fellow Bruce D. Phillips.

Perhaps politics explains why small business owners find liability and workers’ comp insurance more pressing problems than some of these ranked further down the list:

Cash flow (7)
Locating qualified employees (11)
Poor earnings (12)
Competition from large businesses (22)
Physical facilities’ costs—rent, mortgage, maintenance (29)
Pricing own goods and services (35)
Using technology effectively (45)
Obtaining business loans (68, 70)

It’s good to know that small businesses have these other challenges under control enough that they can focus on politics and on insurance which, with the exception of health insurance, may probably cost most of them only a fraction of what they spend on rent, technology, hiring and training employees, or other tools of their trade.

Insurance will never be a wildly popular expenditure for any business since the benefits are often most evident after a problem surfaces. The benefits of risk management, loss control, safety training and claims management provided by their insurance partners are overlooked. All they see is the premium.

Insurance may be a nuisance for small business owners but is it really their biggest problem, as this survey would have us believe?

Maybe the next survey should ask small business owners who have been sued or suffered a rash of employee injuries what they think about their insurance costs. They may have had to learn the value of their insurance the hard way but at least they now know what they were paying for. Maybe this experience has freed them to focus on their own product pricing, cash flow, earnings and those darn dues from small business associations.