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Uncertainty was identified as the primary reason that business owners are not hiring in a recent survey  conducted by the National Federation of Independent Business. “Uncertainty over business conditions” was cited by 41 percent of the respondents in a survey of 750 business owners with under 250 employees, selected from Dunn & Bradstreet files. And, 51 percent of those cited “political uncertainty” as the source of some or all of their concerns that prevented them from expanding their business (Each “impediment” was ranked on a scale of 1 to 7, the percentages presented here are based on the percent of owners selecting the top 2 severity ranks).

Poor market demand, was cited by  35% of the small business owners as a reason for not hiring.

Unfortunately, 36% of the owners see uncertainty on the rise, 16% “rapidly increasing”. And another 30% see no change in the current level of political uncertainty, a major impediment to spending and hiring.

So, impediment #1 is uncertainty about the future and #2 is poor sales.

The third major impediment to hiring was  “Lack of Finance”, cited by 30 percent. Only a quarter of the owners depend on bank loans, most (53%) use internal cash flow to finance investments in their business. With profits curtailed by the recession that means of financing has also been curtailed. This to a significant degree explains why capital spending is at near record low levels.

Legal and regulatory issues were assigned the two most severe rankings by 25 percent of the owners. Eighty-two percent of those reported that government regulations were the major obstacle to growth. Thirteen percent reported canceling a project as a result of the regulations, 19% postponed spending, 11% suspending planning and 20% proceeded with their investment, but incurred higher costs due to the regulations. Fifty-three percent said the federal government was responsible for the offending regulation, 17 percent, blamed state regulations and 7 percent cited city regulations. Twelve percent said the problems were from  multiple jurisdictions.

The SBA estimates that the cost of complying with regulations costs over $1.5 trillion dollars each year. These results suggest  the cost might be much higher in terms of abandoned projects that would have created new jobs and spending.

In 2010, regulatory proliferation set a new record with 3,573 final rules in the 2010 Federal Register, and proposed rules were up by 20 percent.

Other impediments include lack of skilled employees (16%), lack of good management (8%), family demands (12%), and lack of technology (7%).

When asked to pick just one single major impediment, 25% chose weak sales, 22% cited market or political uncertainty, 16% picked lack of finance (mostly poor profits), and 11% chose legal and regulatory issues.