Local Institutions, Attitudes Crucial to Small Businesses: NFIB Poll

Published January 1, 2007

Small business owners consider local institutions and attitudes toward enterprise to be key factors contributing to a small firm’s success, according to a new National Federation of Independent Business Small-Business Poll on local business climates.

The poll was released in October. Half of those surveyed felt local governments made little effort to boost entrepreneurs.

Nearly two-thirds of the owners surveyed, 65 percent, think their local community has a favorable business climate. Characteristics most valued by Main Street are community support, people working together, a strong customer base, constant growth and expansion in the area, a close-knit community, little government interference, opportunity, diversity, and quality of life.

More than two-thirds of the business owners agreed that, in their own locality, a true community spirit exists.

A local business community that works closely together and a local school system that works cooperatively with business groups were each cited by 55 percent of the owners surveyed as important factors in creating a good business climate.

Community Support Valued

Community spirit received the most favorable assessment as an element key to the success of small businesses.

Fifty-two percent of respondents agreed that bankers and investors go out of their way to help local businesses, including those trying to start a business.

Community groups and organizations also were ranked favorably by 52 percent of those polled. Local news media outlets fared well, too.

Survey respondents said among the characteristics they valued least in a community were government interference and regulation, the cost of doing business and taxes, lack of support or encouragement, and resistance to change.

Citizens’ Attitudes Viewed Favorably

“Typically, those who own and operate America’s small firms view the attitudes of local citizens in a favorable light even if they see the local government as an obstacle,” said NFIB Senior Research Fellow William J. Dennis.

Three-fourths of the business owners surveyed, for example, believe their local business community is open to newcomers, and nearly two-thirds view their community as placing importance on the responsibility of the individual to manage his or her own life.

But a majority believes young people do not receive the encouragement necessary to be independent and start their own small enterprise.

Local Conditions Crucial

The study delved into key community issues that affect small firms, including the role local institutions play, values and attitudes, and the decisions that determine business location. Of those surveyed, 86 percent of businesses are still located in the community where they were founded.

“In the beginning, most businesses operate and market their business in a relatively small geographic area,” said Dennis. “That means the local business climate for a small firm can be critical to a small business owner’s success or failure.”

Spirit Is Key

Local communities and institutions are starting to realize what’s at stake.

Nearly one-fourth of the small business owners surveyed will plan or consider a significant expansion of their business. Most, 59 percent of those considering expansion, said they plan to do so within their own community.

Of those who are looking to locate elsewhere, half noted that business imperatives were pulling them away, while one-fourth said the local business climate was pushing them out.

Holly Wade ([email protected]) is a policy analyst for the National Federation of Independent Business.

For more information …

The National Federation of Independent Business’s poll on local business climate is available through PolicyBot™, The Heartland Institute’s free online research database. Point your Web browser to http://www.policybot.org and search for document #20168.