Calling All Entrepreneurs and Novice Small Business Owners

The economic climate outside is great for launching a small business and current owners are pleased with the results so far.

The top line is that small businesses expect increased sales as well as an increase in staffing.

According to Paychex Inc., coming out of the recent recession, small business entrepreneurship has played an important role in growing the economy. Based on a historical analysis of a subset of its small business clients (1-49 employees), Paychex evaluated the rate of small business entrepreneurship before, during, and after the recession and found that the rate of entrepreneurship grew immediately following the recession, peaking in 2012 and 2013, and then moderated, declining slightly until 2017 when it began to accelerate again.

Most significantly for entrepreneurial newcomers is that the majority of current small business owners would recommend starting a business today, according to Paychex. More than three quarters of small business owners (79%) would recommend starting a business today, while 21% would not. More than 70% of business owners describe today’s business environment as either better or the same compared to when they started their business.

Of those respondents, 46% said the business environment is better and 25% said it is the same. Only 26% of business owners describe today’s business environment as worse.

Business owners who started their company during or closely following the recession (4-9 years ago) were more likely (57%) to say the business environment is better today than when they started. Among those who started their companies 10-19 years ago or 20 or more years ago, only 44% and 32%, respectively, said the business environment is better compared with when they started their company.

This dovetails with another poll. US small-business owners are largely positive about their financial situations, according to a Wells Fargo/Gallup Small Business Survey conducted April 1-5. Seven in 10 owners describe themselves as “more optimistic than pessimistic” about the financial outlook for their business over the next 12 months with 84% saying their company’s financial situation will be either very good or somewhat good one year from now. And, almost eight in 10 owners describe their current financial situation as very or somewhat good.

Based on this positive outlook for 2019, it is only normal for business owners to increase their staff. More than half (55.5%) said they will be adding new staff, with only 2.6% lowering the number of employees in their organization. For the remaining 42.5%, 2019 is not a year they will be hiring.

The gross domestic product for the first quarter of 2019 was impressive, delivering an annualized rate growth of 3.2%. Along with that positive number, in April, the US economy added 275,000 jobs. This has driven the unemployment rate down to 3.6%, the lowest in 50 years (December, 1969).

For its part, the small businesses with 1-49 employees added 77,000 jobs. This is up by a considerable margin from the 6,000 jobs created in March.

Small businesses with 50-499 employees added 145,000 jobs while those with more than 500 employees added 53,000.

While owners are optimistic about the economy in the coming year they are concerned by challenges attributed to the talent shortage. The low unemployment rate is making it much harder for small businesses to find the talent they need. In the press release for April’s ADP report, Mark Zandi, chief economist of Moody’s Analytics, observed, “The job market is holding firm, as businesses work hard to fill open positions.”

A survey carried out by QuickBridge has revealed small business owners are optimistic about the coming year. In response to the question “How do you expect the U.S. economy to perform in 2019?” 59.9% of small business owners said they will see an increase. This was followed by 27.7% who said the year will remain flat, and the remaining 12.9% believed it will take a downturn.

In addition to low employment numbers (3.9%), wages are increasing, businesses across the board are hiring, and banks are approving record number of loans, a face that bodes well for small businesses. All told, these economic indicators create a positive environment for new businesses and those looking to expand.

The second QuickBridge question looked into what small businesses expect in term of sales for the year. A clear majority (83%) said it is going to increase, with 15% saying it will remain flat and only 2.29% indicating it will be a down year.

Small businesses face a host of challenges, but for this year securing capital took the top spot at 40.8% of the respondents. Increasing profits was next at 28.8%, growth at 22.7%, hiring employees at 20.6%, and new products/services was last with 11.5%.

Regarding financing or securing capital, QuickBridge asked: “How do you find the current financing process offered by online lenders vs. the process at traditional lenders?” Almost an equal amount found the process difficult and very easy at 24.5% and 22.8% respectively. The remaining 53.5% said it was fairly easy.

Consequently, the bottom line for entrepreneurs and novice businessmen and women, is don’t be put off by temporary pitfalls and complications. Stay in the ring for all 12 rounds. Look for skilled marketers, salespeople and social media managers to grow sales.

Look for cost-free consultation from a host of sources like NJSBDC and SCORE and then listen to the cash register.