U.S. small businesses are brimming with confidence — and backing up their upbeat outlook with a burst of hiring and spending.
Sixty-four percent of firms with 100 or fewer employees say their businesses are doing well, up from 61% in late 2015, according to an Allstate/USA TODAY survey of 2,790 such enterprises in mid-February.
And 72% of the respondents anticipate they’ll do well in the coming year compared to their current performance, up from 64% in late 2015. The survey results represent a positive harbinger for an economy that’s expected to record meager first-quarter growth in a report due out Friday. In a barometer that rates small businesses’ overall health, Nashville, Orlando and Tampa ranked highest while New York, Los Angeles, San Francisco and Philadelphia trailed.
While the business owners’ perceptions appear to have been brightened by the election of President Trump, who has vowed to cut taxes and regulations, they’re also rooted in improved sales and the fading of economic headwinds that lingered long after the Great Recession ended in 2009. Fifty-five percent of the businesses say their revenue has increased the past year, and half say it has grown more in the three months prior to the survey than in the same period last year, up from 51% and 43%, respectively, in the earlier poll.
“Small businesses are definitely more upbeat than they have been in about a decade,” says Wells Fargo economist Mark Vitner, who frequently meets with small companies.
In fact, 64% of those surveyed say there’s never been a better time to own a small business and 56% hope to leave their businesses to their children, up from 53% and 44% in late 2015.
“This is the best economy I’ve experienced in the business,” says Ryan Shortill, CEO of San Diego-based Positive Adventures, which conducts outdoor retreats for corporations and private schools to teach team-building, conflict resolution and risk-taking, among other qualities.
During and after the recession, he says, many firms slashed training budgets as revenue plunged and remained cautious for years. Now, “I see companies starting to loosen the purse strings,” especially in light of a new focus on the overall well-being of employees.
Noting that sales have doubled so far this year compared to the year-ago period, Shortill says he plans to add 10 to 20 part-time instructors in coming months to his current stable of 40. He also has nine full-time staffers
There are other reasons small firms are optimistic. Vitner cites a rise in oil prices that has sparked a rebound in the energy sector, noting many crude producers are small concerns. And average U.S. wages are rising more rapidly as the 4.5% unemployment rate forces employers to bid up to attract fewer available workers. That’s putting more money in the pockets of consumers, who are also benefiting from solid job growth, reduced debt, cheap gasoline and near record stock and home prices.
And business loans, which were difficult to obtain from wary banks after the downturn, have become more accessible, in part, because of the spread of online, non-bank lenders. Sixty-one percent of the surveyed business owners who recently borrowed money said it wasn’t difficult, up from 59% in late 2015. Twenty-one percent tapped an online or alternative lender, compared to 15% in the previous survey.
These enterprises aren’t just talking a good game; they’re opening their wallets. Thirty-four percent of those polled said they added at least one new employee in the previous three months, compared to 22% in late 2015.
And in a separate March survey by the National Federation of Independent Business, 64% of small businesses said they made a capital expenditure over the previous six months, matching highs reached in 2005 and 2013.
The performance and optimism of small businesses appears to defy an economy that many analysts estimate grew at an annual rate of 1% or less in the first three months of 2017, less than half the recovery’s tepid 2.1% average. A possible explanation: firms with fewer than 100 workers, which make up about a third of total U.S. employment, aren’t as vulnerable to the vagaries of international trade.
For many small businesses, Trump’s election served as a booster shot for their confidence. While Trump hasn’t yet eliminated any regulations, he has signed executive orders launching reviews aimed at rolling back financial and climate change rules and broadly scrapping two regulations for every new one created.
Source: USA Today