Small Business Economic Report

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The National Small Business Association recently released its 2015 Year-End Economic Report, which reveals the small business community has a less optimistic outlook on the overall economy than it did just six months ago. Rick Murray, Arizona Small Business Association CEO, will give us details about the report.

TED SIMONS: The National Small Business Association recently released its 20year end economic report and results show among other things increasing concerns over economic conditions. Joining us is Rick Murray, CEO of the Arizona Small Business Association. Good to see you again.

RICK MURRAY: Thank you.

TED SIMONS: This year-end economic report, it looked like there's less optimism over all than in the past. What are your thoughts?

RICK MURRAY: A bit of a mixed bag. I call it the public school phenomenon. When we talk and ask somebody what do you think about the public schools they tell you they are in disarray but if you ask how their particular child's class is doing they say it's actually doing okay. We're seeing actually confidence in small business in the economy is at an eight-year high but what we see, though, is their belief in the economy is that an all-time low.

TED SIMONS: Again, we get 75% confident in their own business yet there's less optimism. I like that public school theory thing, but what's really going on here?

RICK MURRAY: Honestly, it's cautious optimism. You know, we all as individuals tend to be a little pessimistic when we look for the future. These are small business owners. They have gone through some really tough times over the last eight to ten years here. So I think it's just that cautious optimism. They don't want to be jumping for joy but they know things are better than they used to be.

TED SIMONS: You mentioned mixed bag. Looks like plans to decrease the work force is lowest in eight years. That's good but there was no change in the number hired last year.

RICK MURRAY: Exactly. I think again that speaks to really how the confidence is in these small businesses. They may not be reducing force, work force. Are they adding people? I think what you'll see is that they are looking at adding in their marketing buckets, adding in areas where they can gain more business. What does that mean down the road? We hope it means more jobs in the long run.

TED SIMONS: Not only that sounds like 60% plans to increase wages this year.

RICK MURRAY: Well, and I think that is really telling in regards to how those businesses are doing. They are still working hard. It's not getting any easier. They are finding ways to cut corners, being much more efficient. Again we see the dedication for small business to their employees as well. That gets me on a subject in regards to sometimes we talk about mandating minimum wage and it really is a market driven decision as we see today how we're seeing small business owners, 64% are looking at increasing wages.

TED SIMONS: Before we get further, give me a good definition. What is a small business?

RICK MURRAY: Well, whose definition do you want to use? [Laughter] From the federal government's definition it's 5or less employees which we know that is not realistic. Typically what we try to look at is the number in regards to the revenue on an annual basis, about $5 million in that area. When we take a look at the demographics of area businesses 82% of the 400,0small businesses here registered in Arizona have less than 20 employees.

TED SIMONS: Interesting. Report also shows an eight-year high in the ability to access adequate capital yet one in four say they still can't access adequate funding. What's happening here?

RICK MURRAY: Well, certainly it's when we talk about access to capital for small business owners it's usually appear personal guarantee. A lot of times from a business standpoint we look at larger businesses can get business capital. Small business is always based on my own personal, our own personal creditworthiness. That is still something we're still crawling out of in the long run. One thing we have done well in Arizona and thanks to governor Ducey is looking at alternative ways to raise capital. Crowdfunding if you will. We passed that equity crowdfunding bill last year. Another bill this year on the tail of that to help look at that issue of access to capital and crowdfunding.

TED SIMONS: All right, some other results here. Cyber-attacks. Look to be an increasing concern.

RICK MURRAY: It will always be a concern. Even us as consumers need to be on alert, but what has happened here in regards to how much cyber-attack costs a small business. Thousands of dollars. For some thousands of dollars is really can put them on one side or the other of that ledger in regards to being successful for the month or the year. So it's a very, very real thing. I think we all see it every single day in our own inboxes and emails.

As far as political process, 53% of small business owners pay very close attention to the presidential race. Yet they say 5% say candidates understand a small business. 5% of business owners think those yahoos out there -- sorry, shouldn't have said yahoos. The bunch of them understands business at all.

Well, and I think that in lies part of the frustration for small business owners in that they don't believe that Washington knows who they are. The ones that really drive this economy. When we take a look at all employer firms in this country, 98% are considered small business. That's obviously at that level that the federal government defines but 98%. So when we take a look at that I think it really shows how we as consumers really believe there's a disconnect between Washington and what's happening here at home.

For the small business owners, again, 40% say candidates don't understand small business at all. Some say, 5% think they understand a little. 40% not at all. What don't they understand?

RICK MURRAY: Well, I truly think that when we look at the majority of people in Washington that are running our country are not small business owners nor have they ever been small business owners. I think that in lies some of that discontent or that -- the belief from the small business owners in regards to how Washington is treating them. When we take a look at how taxes are treated, how business owners are treated in regulation, we always feel it always ends up resting on the back of the small business.

TED SIMONS: With that in mind, correct me if I'm wrong, seems like a small business sees the tax breaks, regulation breaks and such for the large corporations, and they will sitting down there saying what about us. Accurate?

RICK MURRAY: Well, it is accurate to some degree but at the same time we know that when we talk about business it's not always about the large business but honestly, we feel -- I know that our members, 10,0strong in Arizona, certainly believe that sometimes we get the short end of the stick when we talk about tax breaks. Again, I think that really goes more towards the idea that it's more of a personal tax break than a business tax break because where is that burden going to lie when you give tax breaks, somebody else has to pay. It's not only the individuals but those individual business owners who are getting taxed at a personal level, not a business level.

TED SIMONS: Last question what. Do we take from this report?

RICK MURRAY: I think what we take is really that things are probably not as bad as we think sometimes. I think also that there is some positive things on the future. I think consumer confidence is increasing, which is always a strong indicator. I am anxious to see what our next one looks like and really excited about what the next few months look like here especially in Arizona.

TED SIMONS: All right, good to have you here. Thanks for coming in.

RICK MURRAY: Appreciate it. Thank you.

Rick Murray:CEO Of Small Business Association

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