Are you optimistic about the year ahead? If so, you are in good company, according to a pair of recent small business surveys. But they also shed light on challenges ahead and what you can do now to prepare.
Most Miami-area small business owners believe they will see year-over-year growth for 2018 and plan to expand and hire next year, according to the fall 2018 Bank of America Business Advantage Small Business Owner Report.
Indeed, 92 percent are confident their year-end revenue will exceed 2017, the highest among business owners surveyed in 10 major cities, according to the semiannual survey of 1,000 small business owners across the U.S. and the Miami area.
Over the next 12 months:
- Eighty-nine percent plan to expand (vs. 84 percent in fall 2017, and the highest percentage nationwide)
- Forty-seven percent plan to hire (vs. 39 percent in fall 2017, and 20 percentage points above the national average)
- Thirty percent intend to apply for a loan (the highest level in Miami over the past three years, and double the national average)
Yet, in the survey, they acknowledge that identifying and retaining employees has become a significant challenge, one that we will explore in this blog. In the last year, turnover affected 22 percent of Miami entrepreneurs. Among Miami business owners who sought to hire new employees, 51 percent say they had difficulty finding qualified candidates, in large part due to the tightening job market.
Here are some ways business owners have modified their hiring strategies to find and recruit top talent, according to the survey:
- Shifting to a more flexible culture in terms of hours, location and extra time off
- Using social media more actively
- Offering higher salaries
Other interesting findings:
- Healthcare costs remain at the top of the list of economic concerns in Miami (58 percent), although concern has declined from 63 percent in fall 2017.
- As to whether U.S. trade policy is an economic concern, 48 percent say yes, Fifty-five percent say the latest tariffs/U.S. trade policies have impacted their businesses, with 25 percent reporting a mixed impact, 17 percent reporting a positive impact and 13 percent reporting a negative impact.
- Miami business owners are feeling the holiday spirit as 87 percent plan to offer at least one holiday perk to their employees. The top perks: office closures, salary bonuses and employee gifts.
The U.S. Chamber of Commerce also came out with its Q4 MetLife & U.S. Chamber of Commerce Small Business Index.
Its national findings echoed some of the optimism found in Bank of America’s report. Among the most interesting: 40 percent of small business owners say they have been actively searching for new hires throughout 2018, but 67 percent of them are having difficulty finding qualified candidates. Just 9 percent of small business owners say the talent pool for potential recruits is “very good” with the majority (55 percent) saying it’s “fair” or “poor.”
Nationally, 4 out of 5 small business owners say they had to work longer hours or take on additional roles to compensate for their inability to find qualified candidates and 3 of 5 say they had to push their staff to work more. About 55 percent say they are instead focusing on investing time and money into increased training for their current employees.
Most small businesses (84 percent) rely on professional contacts and current employees to refer quality candidates but only one out of three small businesses say they plan to use a different recruiting strategy in 2019.
On the lending front, less than 25 percent of small businesses surveyed reported that it is hard to obtain financing; and two-thirds of them that applied for credit said they’d received the full amount of their request.
What can we learn from these reports?
- The tight labor market coupled with small business’s plans to increase hiring likely will be a significant challenge in 2019 – and could stall your growth. Small businesses are already feeling the strain of not having the staff they need. Some effective ways small businesses are using to attract and retain talent include offering a more flexible work culture and focusing on training their current employees. Another takeaway: relying on referrals for quality employees may not be good enough.
- It may be a good time to apply for a small business loan. More Miami businesses plan to apply for loans next year to help finance their growth, and the outlook nationally looks good. Nationally, according to the Biz2Credit Small Business Lending Index, approval rates for small business financing have increased nearly three-fold since the end of the Great Recession, from 8.9 percent in 2012 to 25.9 percent in 2018. Approval rates were typically higher at regional and community banks.
- The year-end is always a good time to take stock of your business, but particularly if your year-over-year growth rate was not what was expected and you need to get back on track for a better year ahead. Set new goals, and resolve to evaluate your progress at least quarterly. Seek the help of a trusted advisor or mentor.
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