Economy, profits have small business owners feeling optimistic
To paraphrase a line used in the president’s State of the Union address just about every year, the state of small business is strong. In fact, it’s stronger than ever, at least according to the National Federation of Independent Business (NFIB).
The NFIB’s Small Business Optimism Index, part of the organization’s monthly Small Business Economic Trends Survey, reached its highest level ever in April 2018. Increasing profits played a key role in this particular result, the NFIB reported, but the index is also based on a number of other components, such as employment trends, credit conditions, inventory, and more.
This isn’t simply due to one or two strong months: Over the past year and half, for 17 consecutive months, the index has remained near record-high levels. “Never in the [45-year] history of this survey have we seen profit trends so high,” according to a statement from NFIB President and CEO Juanita Duggan on the NFIB website. “The optimism small-business owners have about the economy is turning into new job creation, increased wages and benefits, and investment.”
That’s the big news. We found a few other interesting takeaways from the April report, too.
It’s increasingly difficult to find qualified employees. In the survey, 57% of small-business owners said they’re hiring or trying to hire, but among those respondents, a whopping 88% also noted that there are few or no applicants with the right qualifications for the positions they need to fill. For 22%, this ranks as their most important business problem. The NFIB projects that small businesses will likely spend more on training and labor-saving technology as a result.
Small-business owners feel pretty good about taxes. While 18% cited taxes as their biggest business problem in the most recent survey, just a month earlier that figure was 13% — the lowest number of votes in more than 35 years. Six months ago, 22% of owners ranked taxes as the top problem, so the recent changes to tax laws seem to be having a significant impact.
Confidence is high when it comes to capital investments. The number of businesses making capital outlays rose to 61% in the most recent survey, and 29% said they’re planning to make expenditures in the next few months. More than 40% reported purchasing new equipment, and 27% acquired vehicles. “There is no question that small business is booming,” NFIB Chief Economist Bill Dunkelberg said, noting a “surge in optimism” across sectors.
Of course, other challenges remain. For example, according to a Babson College report in 2016, more than 40% of small-business owners surveyed feel ill-prepared for a cyberattack — and nearly a quarter have already been through one. (We’ll talk more about cybersecurity, and steps you can take to improve yours, in future posts.)
Also, while concern about taxes might be lower than usual, the massive burden of regulatory and tax compliance is a never-ending issue for owners. The Babson report indicated that 80% of small-business owners are the ones responsible for compliance in their company, and the average time spent is about 200 hours per year.
Avalara solutions can help reduce that burden, and there are plenty of other automation tools and resources to help make your life easier, too. Check back here regularly to learn more — because even when times are good, it’s important to always keep looking ahead.
How are you feeling about your small business? Are you facing challenges? What are your biggest concerns, and how are you addressing them? We’d love to hear from you — email us at email@example.com with your thoughts.
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