Small businesses perceive lack of support

“Entrepreneurs don’t believe the government is helping them” is one of the takeaways from the Ewing Marion Kauffman Foundation’s 2018 State of Entrepreneurship address and survey. The survey found entrepreneurs at both startups and established firms feel the government does not care about their businesses and that the government does not support small, local businesses.

Incentives are part of the story. Over three-quarters of surveyed business owners agree that government incentives favor established businesses over start-ups.

Many perceive that businesses larger than theirs are the ones that are thriving today, potentially because they see government incentive favoring established businesses rather than startups.

We know state and local governments do seek to support entrepreneurs, small businesses, and innovation in their economies. Yet the perception remains that government favors big business and offers small business programs that are not helpful to actual businesses.

The Kauffman survey also notes that the majority of businesses do not use government services that are available to them. And less than half of respondents thought the government should provide grants or funding to businesses like theirs. Instead surveyed entrepreneurs support promoting a business-friendly environment focused on infrastructure investment and reducing complexity in the tax code.

One factor driving these perceptions is that many small business programs can only help a very limited number of companies in any given year. The programs may be helpful to those couple of dozen firms but would not likely be headline-worthy so that everyone else could see their impact. A second reason is that many government small business programs are managed with an eye to process and compliance, not business outcomes. In other words, they focus on eligibility and transaction metrics and less on the business success metrics that are of primary concern to the entrepreneur/owner.

We suggest two options to change these perceptions: 1) Expand outreach efforts so that existing small business incentives, financing and service programs connect with more entrepreneurs; and 2) Manage and measure programs to convey how they contribute to business success and generate benefits within the communities where these entrepreneurs and small businesses operate.

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