When Donald Trump was elected in November 2016, there was plenty of speculation about whether or not he’d be the leader small business owners were looking for. While the economy has significantly improved since the Great Recession, many of America’s small businesses still struggle with issues like financing and government regulation.
Trump is a businessman—one of the most notorious of the 21st century—which made his election an exciting event for business owners. There was finally a president that would have an allegiance to business before politics. And, after the election in December, the NFIB’s read on small business sentiment jumped to its highest level since 2004.
But with Trump almost 6 months into his term, we wanted to check in to see where he now stands with small business owners.
What do business owners think about our current political climate now that Trump is in office? What’s their economic outlook for this year? What matters to them most in 2017?
To find out, Fundera and Qualtrics conducted a survey in May of this year, asking entrepreneurs across the country questions like:
- Do you approve of the Trump administration so far?
- Do you expect your local economy to improve or decline over the next year?
- How many employees do you plan to hire?
Whether it’s the current political climate, the stock market’s record high, the Fed’s rising interest rates, or the unprecedented Trump administration, small business owners are affected by it all.
Here’s what they had to say.
- Small business owners have a lower approval rating for the Trump Administration than the general population does.
- 34.72% of small business owners surveyed approve of the current presidential administration. This is a few points lower than the approval rating from the general population, which currently sits at 39.6%.
- More small business owners approve than disapprove of recent policy changes.
- 37.16% of entrepreneurs surveyed support Trump’s proposed changes to the tax code.
- 42.45% of small business owners support the repeal of the Affordable Care Act (also known as the ACA or Obamacare). While our study did not gauge whether they prefer Trumpcare to Obamacare, it confirmed that entrepreneurs are satisfied with a repeal of Obamacare.
- Entrepreneurs are confident that the local and national economy will improve during 2017.
- While confidence is strong at both a local and national level, our survey finds that entrepreneurs are most confident at the local level with a confidence level of 50.37%.
- Despite a tumultuous political environment, business owners remain hopeful that they will grow revenue and headcount this year.
- Entrepreneurs expressed their strongest numbers in this category, with 85% expecting to grow revenue and 61% planning to hire new employees in the coming year.
1. Small Business Owners’ Approval Rating for the Trump Administration is Lower than the General Population
According to FiveThirtyEight’s latest calculation, Trump’s overall approval rating is currently at 39.6%. Our poll was conducted in late May when the approval percentage from FiveThirtyEight was at 39.1%.
Our findings show that for small business owners, Trump’s approval rating is even lower than for the general population—roughly 4 points lower.
Only 34.72% of small business owners approve of the current administration, while 45.97% of small business owners don’t approve of the administration.
This is a finding that we will track over the coming year. Just as the Trump administration’s approval rating has fluctuated over the first 6 months of the term, we expect this approval rating from small business owners to fluctuate as the administration proposes new legislation and approaches midterm elections.
2. Small Business Owners Support Recent Policy Changes
As our study shows that 46% of small business owners surveyed do not approve of the Trump administration, we wanted to dig deeper into why.
What are these entrepreneurs’ opinions on legislative items proposed by the Trump administration over the past several months, such as tax policy and health care?
Changes to the tax code have a direct impact on small business owners as they affect both their bottom line and the benefits they receive from the government.
In April, the White House circulated a document outlining proposed tax cuts for businesses and individuals alike. While the finalized tax plan has yet to surface, the proposed plan indicated where the Trump administration hopes to make changes.
The tax plan includes the following relevant points for small businesses:
- Set a 15% business tax rate
- Repeal the 3.8% Obamacare tax that hits small businesses and investment income
- Reduce the 7 tax brackets to 3 tax brackets of 10%, 25%, and 35%
- Repeal the Alternative Minimum Tax and death tax
37.16% of small business owners think potential changes to the tax code will help their business, while only 27.87% think it won’t. It is important to note that the responses of small business owners in this survey were based on their knowledge as of May 24, 2017.
The results from our tax code question aligned with the June SurveyMonkey/CNBC poll, which found that 42% of business owners think Trump’s changes will have a positive effect on their business and 24% believe it will have a negative effect. Additionally, that survey found that small business owners overwhelmingly cited taxes as their number 1 concern while running their business.
On May 3, 2017, the U.S. House of Representatives passed the American Health Care Act (AHCA), intended to repeal and replace the Affordable Care Act (ACA). The bill calls for the elimination of many key provisions of the ACA, including the individual mandate, employer mandate, and certain taxes and subsidies for subgroups.
Last Thursday, Senate Republicans introduced the draft of their plan: the Better Care Reconciliation Act. The current version of the Senate bill is similar to the House bill but with a few key differences including:
- Cuts going into effect after the 2018 congressional election and 2020 Senate election
- Allowing states to ask permission to reduce required coverage
- Considering community rating and income rather than age for tax subsidies
We were especially curious about small business owners’ reaction to this legislation, given that 1 in 5 consumers on the ACA marketplace are small business owners or self-employed individuals.
When asked how they viewed the repeal of ACA, 42.54% of business owners surveyed supported the repeal, while 36.19% did not support the repeal.
3. Small Business Owners Remain Confident in Both the Local and National Economy
Despite the high disapproval of the current administration, small business owners are optimistic that the national economy will improve. When asked if they expect the economy to improve or decline over the next year, 47.19% of small business owners were hopeful that it would improve and indicated a positive outlook.
This is an interesting finding because it’s a decrease of 5 points from the Bank of America Business Owner Report conducted in February 2017.
It’s important to look at the economic outlook at the local level as well. Small businesses are the lifeblood of communities across the country, and the key to building long-term economic growth starts with entrepreneurship in America’s communities.
When we asked small business owners about their local economies, we found that small business confidence in the local economy is more than 3 points higher than confidence in the national economy. 50.37% of small business owners surveyed expect their local economy to improve over the next year.
Our data on this point aligns with the Bank of America Business Owner report from February 2017 that also found 50% of small business owners expect their local economy to improve over the next 12 months.
4. Most Small Business Owners Expect to Grow Their Businesses in 2017
While economic outlook at the local and national level is something small business owners care deeply about, they remain hyper-focused on the performance of their businesses. We asked a series of questions to gauge their outlook for their own companies in 2017 and found that entrepreneurs are generally optimistic when it comes to growing their businesses.
When asked, “Do you expect to grow your revenue in 2017?”, 85.09% of small business owners surveyed responded confidently.
This isn’t a surprising result, as other surveys have shown small business confidence to be at an all-time high. The National Federation of Independent Business Owners conducts a monthly index tracking small business confidence—which has been at historically-high levels for 6 straight months.
According to NFIB President and CEO Juanita Duggan, small business confidence is directly correlated with the new administration. In her most recent statement, she said, “The remarkable surge in optimism that began last year right after the election shows no signs of slowing down.”
In terms of hiring plans, 97.06% of business owners surveyed plan to either keep their staff the same or grow their headcount during 2017.
Our study discovered that only 2.93% of small business owners have plans to decrease their staff.
So while there’s uncertainty related to the current administration, small business owners remain confident in their ability to grow their revenue and maintain headcount through 2017.
The 2017 MetLife and U.S. Chamber of Commerce Small Business Index stated that roughly 1 in 3 small businesses expect to increase their staff in the next year. This in line with our survey’s finding that 35.7% intend to increase their staff during 2017.
Of businesses that plan to increase their staff, we asked the follow-up question: “How many employees do you plan to hire?”
The majority of these growing businesses plan to hire more than 2 employees, with 42.47% planning to hire 6 or more employees.
Fundera and Qualtrics conducted a random survey of 409 small business owners and senior leadership at small businesses to examine the state of entrepreneurship in America. The survey was conducted online between May 24 and May 26, 2017.
Respondents were asked 79 questions across 5 categories: demographics, credit scores and credit cards, lending, lifestyle, and economic outlook. Certain questions qualified or disqualified respondents from receiving further questions in the survey.
389 respondents self-identified as a “small business owner,” while 20 respondents identified as a “VP-level or above at a small business.” Qualtrics defined a small business as a US-based firm with less than 500 employees.
The module below outlines demographics of our respondents.
Small business owners can be a tough group to characterize. They live in different parts of the country, work in unique industries, and operate businesses of various sizes. No business owner looks exactly alike.
But despite their demographic differences, many of these entrepreneurs share the same beliefs and feelings towards politics, policy, and the economy. While there were mixed emotions from our respondents about the current administration and the policy it has proposed, there was one topic where small business owners seemed to align: self-confidence.
We were encouraged by the responses from America’s job creators about their expectations about revenue and hiring plans for 2017. While the political climate is out of their hands until the next election, they are confident in their own ability to grow their companies. If their responses are any indication of what’s to come, we’re excited to see the economic growth from America’s 28 million small businesses over the next few years.