Although today's measure of optimism among small businesses from the NFIB was slightly weaker than expected (92.5 vs 92.6), it did show an improvement from October's reading of 91.6. While optimism improved, the factors that businesses continue to cite as the most important problems they face is troubling.
The table to the right shows the factors that have been cited as the most important problem faced by small business, as well as the percentage of businesses that have cited each factor. Topping the list this month is Government Requirements and Red Tape, which was cited by 22% of small businesses as the most important problem they face. Right on the heels of Red Tape is Taxes, which was cited by 21% of small businesses as the single most important problem.
While 43% of small businesses cited issues concerning the government as their number one problem, the percentage that cited Poor Sales as their number one problem fell to 15%, which is the lowest level since June 2008. The chart below compares the combined percentage of small businesses that cite taxes and/or government regulations as the number one problem they face to the problem of poor sales. It's a said state of affairs that when running a small business the biggest problems you face have nothing to do with actually running the business, but that it where businesses increasingly find themselves these days. Hopefully Tuesday's news that Congress has reached a two-year budget deal will help to reverse or at least slow this trend.