Various economic indicators continue to show that the U.S. economy is getting stronger: GDP is up, unemployment claims are down.
How is this good news being received in the small business community? The Hartford’s 2014 Small Business Success Study found that owners are feeling better about things in general, but this isn’t translating into expanding their payrolls.
Some key findings from this study:
- 77% feel successful (up from 70% in 2013)
- 56% view slow economic growth as a risk to their business (down from 67% in 2012)
- 40% think taxes are a major risk (down from 59% in 2012)
- 39% consider health care costs as a risk to their business (down from 53% in 2012).
So if owners are feeling better in general and feeling less threat from certain major risks, why aren’t they hiring?
The Hartford study found that 67% of small businesses haven’t hired anyone in the past year. It also found that if owners had an extra $100,000, only 8% would spend it on hiring.
Some reasons given for not hiring or not hiring as much as they would have liked:
- Their business was not growing: 36%
- They can’t afford to hire: 34%
- They are taking on additional responsibilities themselves: 31%
Are these the only reasons for not hiring? My anecdotal evidence shows that there isn’t a single answer; each small business owner has his or her own story. One may have target sales in mind before hiring, while another may expect technology solutions to be a substitute for a new worker.
Historically, small businesses have been the job creation engine of the U.S. economy (the SBA said that small businesses created 63% of all jobs between 1993 and mid-2013). While the engine seems to be idling at the moment, as good economic indicators continue to make small business owners feel better, things may shift into high gear soon.
Note: I work with The Hartford to help small businesses achieve success.
