10/04/2013 05:22 am ET Updated Dec 04, 2013

The Hartford's CEO: This Economy Is Ready To Pop...In A Good Way

The economy remains a concern for small business owners like me. Growth is slow. Unemployment continues to be stubbornly high. Deficits and our national debt are at historic levels. And this week's fiscal dramas in Washington, along with the launch of the enormously complicated Affordable Care Act are causing uncertainty and apprehension.

But Liam McGee, Chairman, President and CEO of The Hartford, isn't as concerned. At least not for the long term. In fact, he views the American economy as something that is "coiled like a spring that could really pop - in a good way. Particularly if we had more clarity and certainty from D.C." The Hartford, a leader in property and casualty insurance, group benefits and mutual funds just released its third annual Small Business Success Study. (The Hartford is a client of mine and this month I'm blogging about this study on their website.)

If you haven't figured this out by now, McGee is an optimist, known for helping turn around the company from its low point after the last banking crisis back to profitability and growth. But as an optimist, he's also in good company. According to the company's study, which surveyed more than 2,000 small business owners nationwide who employ fewer than 100 full time employees and have been in business for at least a year, 48% of those asked are also optimistic that the national economy will strengthen this year (compared to 33% a year ago, a big jump).

Unfortunately, and as a small business owner myself, I'm not so sure. I'm one of those pessimists. I'm one of the majority who do not feel as confident. Of course I'm rooting for better times. And I hope that McGee is right: maybe the economy is ready to "pop." My company's been slow for at least five years now. We've been profitable. But we haven't been growing. Demand has been soft. My clients are concerned with their own growth, higher taxes, regulations affecting their industries and a general negative business environment in Washington. Like many of them, I haven't hired any additional staff. We're battling harder for fewer opportunities. Every day is a struggle to find new work and squeeze out a few more dollars. So really, are things ready to "pop"?

The economy has shown a few bright signs of late. Real estate is recovering. GDP has nudged up. Interest and inflation remain at historic lows. But it seems that if you dig further into the Hartford's study you could make the case that there's more pessimism than optimism. For example:
-Yes, 48% of small businesses are optimistic about the economy strengthening next year but the majority (52%) are not. And even for those 48%, how much "strengthening" do they really mean? We need more than just a little amount.
-More concerning to me is that 69% surveyed also admit that the number of risks they are taking has remained the same the same over the past six months. Growth requires risk. And it seems like most companies are not willing to take that risk in this environment. I'm one of them. I'm sitting on my cash.
-and growth remains our biggest concern: 59% of us cite lack of demand (followed by taxes, healthcare costs and uncertainty with federal regulations) among the top risks to our businesses. These risks have declined. But they're still extremely high.

-the Affordable Care Act continues to loom heavy on small businesses, with 42% predicting that the Act will force them to reduce employee hours and 38% planning to halt future hiring.

McGee doesn't deny this. "When I started my banking career in the late 1970's/early 1980's the prime rate was close to 20%," he remembered not-so-fondly. "There was uncertainty then! The cost of money was too high to achieve any reasonable rate of return. But even as challenging as those times were I think there's even more conservatism and caution today. Capital is less available from banks because of the recent problems in the banking sector. There's not a clear view for prospects for growth. Most entrepreneurs have seen their taxes go up and are concerned about medical costs. Many are saying: I'm not taking any risk until these things get solved.""

But McGee believes that there's something else that's very different now when compared to the past: today's entrepreneurial environment. "In the last 20 years you've seen an historically unprecedented level of small business creation and success. You have an economy now that's driven by entrepreneurs. There's a tremendous amount of liquidity that could be potentially available. There's a pent-up urge to do something. And there's no better place in the world than this country to succeed."

Sometimes it helps to step back from your own situation and look around a bit. And I admit there is something different going on now than when I was half my age. There are more startups, startup communities and resources for startups than I've ever personally seen. There are more sources of capital than ever before, from community banks to angel investors, venture capitalists and crowd-funders. There are inexpensive technologies that enable entire companies to connect their people from anywhere around the world and collaborate on projects. There are new forms of web-based communications, powered by social media and inexpensive mobile devices that allow us to find and service customers wherever they are and whenever they need. We can take payments online and with our phones. We have new resources of oil and natural gas, let alone enormous advances in alternative energies that will provide us all the power we need for centuries. New advances in 3D printing and wearable technologies will create new ways to profit and be more productive. We are smarter. Our kids are smarter. A new season of Homeland is starting.
Wait...I think I'm starting to feel a little better. There are good things happening.

"Just connect the dots in the survey," McGee advised me. "To me, the message is very clear. Small businesses are saying: I got burned during the financial crisis and there's a lot of dysfunction around me. But just give me some clarity and I'm ready to take some risks. And that's why I think this economy could be ready to pop. It might take another six months or a year. But it will happen eventually."

A previous version of this blog appeared on