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October 2007 — Vol. 85, No. 8

SMALL BUSINESS

CBIA/Blum Shapiro Survey

Business leaders name top advantages, challenges of doing business in Connecticut

 

Connecticut businesses are facing many complex challenges that affect their ability to
succeed in today’s highly competitive marketplace. Yet despite these hurdles, business executives also see many advantages of being in Connecticut and are developing new products to help their companies grow and prosper.

Those are some of the key findings of the 2007 Survey of Connecticut Businesses, conducted by CBIA and Blum Shapiro, the largest regional accounting firm in the state.

A strong Connecticut economy depends in great part on the strength of the state’s small and midsize businesses. This survey discloses important insights into the competitiveness of these businesses that can help state policy-makers identify ways to improve the economic climate here.

According to the survey, the top challenges facing Connecticut companies include the high overall cost of doing business, rising health care and energy costs, and workforce issues such as a shortage of qualified workers to replace retiring baby boomers.

“Connecticut businesses want to continue growing and investing here, creating more jobs and providing a good quality of life for the people of the state,” said John Rathgeber, CBIA president and CEO. “Executives are hopeful that state policy-makers will help them do that by addressing their biggest concerns, from business costs to energy to affordable housing. Connecticut’s economy will thrive in an environment that fosters innovation and offers lower business costs to complement the state’s many strategic advantages.”

Connecticut’s advantages

According to survey respondents, those advantages include Connecticut’s high quality of life (cited by 37% of respondents), its location between New York and Boston (23%), personal satisfaction (17%), and Connecticut’s close proximity to markets and suppliers (10%).

Biggest challenges

Executives’ biggest overall concern is the continued high cost of doing business in Connecticut. And for a fourth straight year, the biggest cost concern is health care benefits (cited by 50%).

Other significant cost concerns are payroll (26%), energy (11%) and workers’ compensation costs (9%).

The taxes causing the most concern are the personal income tax (cited by 24% of respondents), the corporate income tax (17%), unemployment compensation taxes (15%), property taxes on real estate (21%) and personal property taxes (12%).

Seventy percent of executives believe the value they receive for their tax dollars is extremely low considering the amount they pay in taxes. Businesses would like to see the state do more to encourage economic growth by reducing the cost of doing business in Connecticut (cited by 65%), reducing taxes and offering more tax credits (46%), improving transportation and infrastructure (30%), improving the regulatory climate (25%), and encouraging business investment (22%).

Energy costs

Three-quarters of respondents have taken steps to use less energy, up from 50% just two years ago. Many have replaced light fixtures (69%), adjusted or updated HVAC systems (49%), conducted energy audits (27%), or installed non-lighting energy-efficient equipment (26%).

Workforce Issues

Businesses need qualified workers to fill new positions and replace retirees. Over the past year, 75% of survey respondents hired new workers, and 70% expect to do so in the coming year.

But two-thirds of respondents said they were having difficulty finding qualified workers. The primary reasons cited were a shortage of qualified applicants (76%), the high cost of living in the area (58%), high housing costs (45%), candidates’ lack of job readiness (35%), and a long commute for workers (17%).

“Business leaders need to ask: ‘What are we doing to recruit young, qualified workers?’ We know there is a shortage of them. While some companies have strategies for finding and holding on to young talent, plenty don’t, and some hope the state will step in to help,” said Carl Johnson, C.P.A., managing partner of Blum Shapiro.

Companies’ efforts to attract and retain qualified workers include recruiting at local colleges, at job fairs and online, as well as continuing to offer competitive benefits, including paid vacation, retirement plans, training and bonuses.