Published
December 16, 2024
Small businesses—and all Americans—benefit from strong economic growth. However, new data in the MetLife & U.S. Chamber of Commerce Small Business Index for Q4 2024 gives further evidence that burdensome regulations hinder growth.
By the numbers: The latest Small Business Index survey finds that 51% of small businesses say navigating regulatory compliance requirements is negatively impacting their growth.
- Almost as many (47%) say their business spends too much time fulfilling regulatory compliance requirements.
What we’re saying: “Too many regulations cause big headaches for small businesses, even if they feel confident in their ability to comply or have the means to outsource compliance tasks,” says Tom Sullivan, the U.S. Chamber’s Vice President of Small Business Policy.
Small Businesses Are Spending More Time on Compliance Tasks
Small businesses are more likely than last quarter (as well as Q4 last year) to say the time or resources spent on fulfilling regulatory compliance requirements has increased in the past six months (39% vs. 33% and 34%, respectively).
This increase in time spent on compliance issues caused the overall Small Business Index score, which measures small business owner confidence, to dip to 69.1 in Q4 from 71.2 in Q3.
- Otherwise, small business confidence in revenue, investment, and hiring plans was strong across the board.
Regulatory compliance can have an impact on real-world jobs and projects.
Small business owner Philip Freeman, Founder and CEO of Murphy’s Naturals, Inc. in Raleigh, North Carolina, says lead times for building permits have increased so much that they decided to cancel an extensive office expansion.
- “The delays make the expansion no longer a good return on investment. While we saved money by canceling the construction, some contractors missed out on the construction project that would have been good for our local economy,” Freeman says.
Taxes Among Most Time Consuming Regulatory Burdens
Complying with federal, state, and local taxes are no minor issue for small businesses: Taxes (along with record-keeping) are the top regulatory compliance issues small businesses report spending their time on.
Small businesses also report feeling the regulatory burden more heavily compared to some of their competitors. 69% of small businesses say they spend more per employee to comply with regulations than larger competitors.
Inflation concern persists: Hindering growth for small business are lingering concerns about inflation.
- Consistent for the past two years, more than half (55%) of small businesses say inflation is their biggest challenge.
- Q4 2024 marks the 12th consecutive quarter that small businesses have cited inflation as their biggest challenge.
A Growth and Opportunity Imperative
The U.S. Chamber supports policies aimed at achieving at least 3% annual economic growth. Some of the tools for promoting economic growth are:
- Lower tax rates and a stable tax code that allow businesses to create jobs.
- Smart regulations that give businesses the rules of the road so they can operate, innovate, and invest with certainty.
- Global trade with the 95% of the world’s consumers who live outside our borders.
Taken together, these tools can increase prosperity for every American, while ensuring government gets out of the way and allows small businesses to do what they do best: innovate, grow, and create jobs.
“Our ability to substantially improve our lives depends on how quickly the overall economy is growing,” wrote U.S. Chamber President and CEO Suzanne Clark in a USA Today op ed.
“Unfortunately, in many cases, that is not the reality today, and many Americans do not feel like this economy is working for them. To create the future we want and the next generation deserves, we need to get back to growth.”
Despite headwinds from inflation and concerns over compliance demands, small businesses remain optimistic about future revenue, investment, and hiring.
- Almost half (46%) of small businesses say they plan to increase investment and 41% say they anticipate increasing staff in the next year.
- Both measures have increased significantly from the start of 2024.
For more findings from this quarter, and to explore and browse years of small business data, visit the Small Business Index.
About the authors
Thaddeus Swanek
Thaddeus is a senior writer and editor with the U.S. Chamber of Commerce's strategic communications team.
