Business costs pose biggest barrier to growth, expansion
Taxes are the single greatest challenge to operating a business in the Hartford-New Haven-Springfield region, according to a survey released today.
The Hartford-New Haven-Springfield Business Survey, conducted every two years by the Connecticut Business & Industry Association and New England's Knowledge Corridor, finds that nearly one-third of businesses surveyed (31%) identified taxes as their biggest challenge now; 36% say it will top their list in 2020.
"This survey was conducted in April and May, which is significant," notes CBIA economist Pete Gioia, "because that was before the Connecticut legislature voted on a budget with a proposed tax hike of nearly $2 billion.
"We can only expect that those numbers would be far higher today." (More than two-thirds of the survey respondents were based in Connecticut.)
Other major concerns in 2015 are weak consumer spending, labor shortage, regulatory climate, and transportation infrastructure.
- Businesses are nearly evenly divided about the region's near-term economic forecast: 31% of respondents anticipate improved conditions in 2015, 32% expect some decline, and 37% believe conditions will remain stable.
- The biggest benefit to operating a business in the Hartford-New Haven-Springfield region is the area's quality of life. However, recent years have shown a steady decline in the percentage of businesses citing this as the greatest advantage: 47% of businesses in 2009, 43% in 2011, 40% in 2013, and just over a third (35%) today.
- The top three barriers to growth are the cost of doing business (52% of respondents), economic uncertainties (47%), and a shortage of skilled workers (30%).
- More than half of the businesses surveyed (53%) say most of their new hires have at least a four-year degree.
- As the economy improves, the percentage of companies recording a profit has inched up: 62% of those surveyed were profitable in 2014, compared to 59% in 2012 and 54% in 2010. In spite of these gains, 37% have considered relocating or expanding to another state in the last five years.
- Traffic congestion and poor infrastructure are the most pressing transportation issues for the region (67% of businesses surveyed). Respondents overwhelmingly agree that added commuter rail and better connectivity with Boston and New York would be a boon to the region: 60% says the planned intercity (New Haven-Hartford-Springfield) high-speed commuter rail will benefit the region, and 79% are in favor of a higher-speed commuter rail connecting New York, Boston, and points between.
Nearly one in three businesses surveyed (31%) have operations in both Connecticut and Massachusetts; even more (41%) expect to in the next five years.
Challenges to doing business in both states include differences in the licensing requirements, costs associated with maintaining licenses in both states, regulatory discrepancies and compliance issues, and different taxes and exemptions impacting certain transactions.
"If we expect to promote regional business growth, economic activity, and job creation," says Gioia, "this is an area that deserves further investigation."
Sponsored by Farmington Bank, MassMutual, and New England's Knowledge Corridor, the 2015 Hartford-New Haven-Springfield Business Survey had 408 respondents, for a +/- 4.9% margin of error.