The talk on Main Street these days is all about record-high levels of optimism among small business (SMB) owners. However, with entrepreneurs more confident about the economy — and their own businesses — than they have been in quite some time, the latest research continues to raise concerns about the tightening labor market, and how small businesses are coping.
New research from Wells Fargo, FedEx, Intuit and others examines the small business outlook in an environment in which the lack of qualified talent in the job pool places new strain on small business owners. Take a look at some of the reports’ key data points below.
Eighteen percent of small business owners agree that hiring and retaining staff is their top challenge, according to The Q3 Wells Fargo/Gallup Small Business Index. This makes the second quarter in a row in which this concern was the largest among SMB respondents. Looking ahead, the problem could stick around: 35 percent of companies said they expect the number of positions within their firms to rise, which could put further strain on their ability to hire.
Seventy-eight percent of SMBs told Wells Fargo that their current financial situation is “somewhat” or “very” good. So, despite hiring still as a top challenge, entrepreneurs are confident with strong finances. Furthermore, 84 percent expect their financial positions to be good a year from now. The portion of small firms that said their cash flow was at least somewhat good rose quarter over quarter by 6 percent. Revenues are also expected to rise by most firms, researchers found.
Eighty-two percent of small businesses agree that increasing U.S. trade will benefit the overall economy, the FedEx Trade Index survey on small businesses found. As small firms’ confidence in their prospective markets — and the economy overall — remains strong, FedEx’s research suggests entrepreneurs view global trade as a critical factor behind keeping the economy growing, now more than ever: the percentage of SMBs that agreed U.S. trade was beneficial to the economy rose 6 percent since earlier this year.
Forty-three percent of employees say they want to switch jobs within two years, Intuit’s Small Business Pay and Benefits Report 2018 revealed. With nearly half of the U.S. population working at small businesses, that desire to switch jobs will inevitably place more pressure on entrepreneurs to retain staff in a challenging job market for employers. Nearly half of professionals surveyed by Intuit feel they are underpaid, and nearly two-thirds agreed that their compensation has not kept pace with the rising cost of living. Companies appear to be trying to meet their workers’ needs, with 74 percent of small business workers reporting that they received a raise this year.
Twenty-eight percent of business advisors say the talent shortage is hurting their ability to sell their clients’ firms, according to the International Business Brokers Association (IBBA), M&A Source and the Pepperdine Private Capital Market Project in a new report exploring the current market for entrepreneurs to sell their businesses. Analysts noted that the hiring struggle adds a challenge for business owners looking to grow organically to sell their business. On the other hand, 16 percent of advisors said the talent shortage is actually helping, as businesses that sell to another can effectively obtain the staff of the acquiring business.
Forty percent of small businesses surveyed by Reliant Funding said they are optimistic about their futures. It’s strong, but Reliant noted in its Small Business Outlook Trends report that it’s a dip from winter 2017 — when 50 percent of small firms were optimistic — and a 4 percent decline from readings taken last spring. Furthermore, the percentage of companies discouraged about their futures has increased a significant 10 percent between winter 2017 and summer 2018. Reliant did not inquire about small businesses’ hiring trends and habits, but the research is among the few that concludes small business optimism may actually be on the decline.