The National Federation of Independent Business (NFIB) recently released its January 2018 Small Business Economic Trends report, based on a survey of 1,658 firms hailing primarily from the retail, construction, services, agriculture, and manufacturing industries.
We scoped out the report to see what things are looking like for small businesses across the nation.
Being a Small Business Owner in 2018:
1. Small businesses are more optimistic than usual about the future
In January, only 41% of business owners said that they expected the economy to improve, 25% said they expected real sales to improve, and 32% said it was the right time to expand. On the surface those numbers may seem pessimistic, but the NFIB says things are actually looking good when you put them in a long-term context.
In its report summary, NFIB points out that its Small Business Optimism Index, which consists of 10 different components, is showing “one of the strongest readings in the 45-year history of the NFIB surveys.” The Optimism Index includes everything from plans to increase employment, capital outlays, and inventories to expectations for economic improvement, higher sales, and expansion.
All in all, NFIB points out, things are looking up. The last time optimism was this high was nearly 35 years ago, in July of 1983.
If you’ve had a good feeling about your business this year, you may be on to something: many other small business owners are feeling the same way, and NFIB credits some of this to “new management in Washington tackling the biggest concerns of small business owners—high taxes and regulations.”
2. It’s getting harder to find great people
Hitting a dead end with your hiring efforts? It’s not just you: businesses across the nation have had an unusually tough time filling open positions.
How tough, exactly? While over half of the firms surveyed said that they were hiring or trying to hire, 89% of them indicated that there were “few or no qualified applicants for the positions they were trying to fill” and 34% said they had job openings that they just couldn’t fill.
The situation is so serious that 22% of respondents said finding qualified workers was their single most important business problem—more pressing than taxes or regulation costs.
Some businesses seem to be approaching this problem by throwing money at it: NFIB reports that worker salaries are trending higher, topping out at the highest levels since 2000, and one of the highest recorded in the survey’s history. “Small firms are raising compensation to attract and keep the employees they need,” write the report’s authors, William C. Dunkelberg and Holly Wade.
If you need help hiring the right people for your small business, be sure to check out our tips for creating better job descriptions and attracting better hires to your business.
3. It’s a good time to expand and invest
The NFIB is jubilant about its January survey results, sharing that record numbers of small business owners believe current economic conditions make this a great time to grow their businesses.
A record 32% of businesses indicated that “now is a good time to expand,” the highest level since the survey started in 1973. Most credit the current economic climate for this, and are spending capital on new equipment (44%), vehicles (28%), and improving or expanding their facilities (16%).
NFIB points out that higher earnings and lower taxes free up capital for business improvements and expansions. If you achieve that perfect sweet spot of generating more sales but having to pay less in taxes, it may be a great time to reinvest that surplus into growing your business and ensuring it stays healthy in the years to come. This year, it looks like more businesses than ever are planning to do just that!
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