Tuesday's release of the NFIB Small Business Optimism survey had some good news and some troubling news. On the face, the report came in modestly weaker than expected (89.5 vs. 89.8). One aspect of the survey, however, was especially encouraging and that had to do with the answer to the monthly question over what small businesses think is the number one problem they face. In this month's report, only 17% of respondents cited poor sales as their biggest problem. This represented the lowest level since July 2008.
While the fact that poor sales is becoming an increasingly smaller problem is a good thing, something has to take its place, and that brings us to the most troubling aspect of the report. In this month's survey, taxes and government regulation continue to be an increasingly larger problem for small businesses. As shown in the table to the right, 23% of small businesses cited taxes as the number one problem they face, while 21% cited government requirements and red tape.
In the chart below, we compare the historical percentage of small businesses that have cited poor sales as their number one problem to the combined percentage that have cited taxes and government regulations as their number one issue. As shown in the chart, 44% of small businesses cite taxes and government as their biggest problem. This matches a record high for this survey (reached just recently) and is more than twice the percentage of businesses seeing poor sales as the number one problem.