Is the Game is Rigged for Big Business?

A new report finds entrepreneurs think government policy favors large corporations, and that services meant for them fall short

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BY Leigh Buchanan - 01 Mar 2018

PHOTO CREDIT: Getty Images

Government is not doing enough for small businesses. Seventy-nine percent of startup entrepreneurs say they had no support from government to launch their companies, and 60% believe that government doesn't care about businesses like theirs. Who does the government care about? Larger, more established companies, entrepreneurs say.

Those are among the findings of a new survey of more than 2,000 entrepreneurs and small business owners, released today by the Kauffman Foundation at its annual State of Entrepreneurship Address in Washington. A year ago, Kauffman announced a mission to eliminate barriers for startups: toward that end it wants small business owners and their advocates in the room when policy gets hashed out. "Government needs to listen more to entrepreneurs," says Victor Hwang, Kauffman's vice president of entrepreneurship.

While entrepreneurs are unhappy with resources provided by government, the majority has not used what's available, according to the survey. Less than half have tried working with their local SBA office; and less than a third have applied for any type of government grant or funding. Increased marketing of government programs matters less than redesigning them to suit the real-world needs of entrepreneurs, according to Hwang.

"Loan programs and incentive programs may be useful," he says. "But what entrepreneurs really need is help with the basic nuts and bolts of getting a business started." Among other things, Hwang says he would like to see SBA's Small Business Development Centers solicit ideas from local entrepreneurs for programs to support them.

Startups are evenly split about whether it is harder or easier to launch a business today than five years ago. Some of the blocking and tackling has improved. Entrepreneurs are finding it easier, for example, to set up payroll tax and withhold, get insurance, obtain licenses, and pay business taxes. But the bigger steps--leaving a job to start a business and making that business profitable--are harder. "A serious question to ask is to what extent are underlying shifts in the economy making it harder for small businesses," says Hwang.

In many instances, women founders were less satisfied than their male counterparts. Sixty percent of women startup founders said their companies performed well in 2017, compared to 72% of men. Asked whether government cares about them, 35% of women responded yes compared to 44% of men. By contrast, 52% of black startup founders and 42% of Hispanic entrepreneurs agreed with that statement.

Surprisingly, startup founders are relatively bearish on the economy, with 55% describing it as just fair or poor. That comes despite their general embrace of the administration's tax cuts and deregulation agenda. The results may reflect a perception that larger companies benefit disproportionately from the changes, says Hwang.

True to form, while entrepreneurs complain about the overall state of the forest they remain optimistic about their own trees. Sixty-seven percent of startups rate their 2017 performance as positive and expect 2018 to surpass it. More than half planned to invest upwards of $10,000 in their companies this year and to hire more people. "It's very encouraging, and we need that level of optimism," says Hwang. "More entrepreneurs in every community is going to drive more wage growth, more productivity, and better quality of life."