Study examines cost of doing business in Nebraska

The Bureau of Business Research at the University of Nebraska-Lincoln College of Business Administration has announced results of a survey of 500 Nebraska businesses to asses the cost of doing business in the state.

The cost of doing business in Nebraska affects all residents of the state. It directly influences the profitability and prospects of tens of thousands of Nebraska proprietorships, partnerships and corporations. The indirect effects may be even more far-reaching, affecting both the cost of living and the quality of life statewide.

The survey was sent to 250 Nebraska businesses with fewer than 20 employees and an equal number of businesses with 20 or more workers, surveying a random sample of Nebraska businesses about their cost reduction priorities. Businesses were presented with a list of 19 cost factors ranging from market-driven matters (such as the cost of supplies and raw materials, labor costs or utility costs) to factors more directly tied to federal, state, and local policies (such as taxes and regulation).

Other than health and energy costs, tax reduction was most often among the top priorities for Nebraska businesses. Approximately 40 percent of businesses selected state or local taxes as a priority for cost reduction, and almost half of business selected federal taxes (Table 1, see link below).

The workers' compensation program is also a high priority. Among businesses that employ at least 20 workers, reducing workers' compensation costs was a priority for about (versus just 24 percent of businesses overall). Reducing workers compensation costs is the second priority of mid-size and large businesses, greater even than reducing state and local taxes or energy costs.

To test if cost reduction priorities differ among growing businesses and stable or shrinking businesses, the bureau separated respondents into growing and stable/declining businesses based on recent growth. The survey asked questions about growth in sales and employment over the three previous months. For both sales and employment, businesses could select one of three responses: increased, unchanged, or decreased. For the purposes of analysis, the bureau defined any business that reported an increase in either sales or employment over the three previous months as a growing business. All other businesses were categorized as stable or declining.

Table 2 (see link below) lists reported cost-reduction priorities for growing businesses and stable/declining businesses. The most striking feature of the table, according to bureau director Eric Thompson, is that priorities are very similar for growing businesses and stable/declining businesses. Focusing on the priorities of all businesses also will help address concerns of growing businesses.

Tables 1 and 2 mentioned above are available for download in Microsoft Word format at the links below.

CONTACT: Eric Thompson, Bureau of Business Research, (402) 472-3318