By Rieva Lesonsky
For U.S. small business owners, things are really looking up. Small business owners’ hiring plans and actual hiring are hitting new highs, and so are their plans to boost employee wages and salaries. Here’s a closer look at what small business owners around the country reported in the Fall 2015 PNC Economic Outlook Survey.
- One-fourth of small business owners surveyed say they expect to hire new employees in the next six months. That’s the largest number planning to hire since 2012.
- In addition, 26 percent say they have hired employees in the last six months — a significant increase over the 18 percent in the spring.
- Over 40 percent say they will raise wages and salaries in the next six months — the highest percentage since 2007, before the Great Recession.
- More than 90 percent say they will at least break even this year, while 70 percent say they will make a profit. Just 6 percent project taking a loss.
What’s behind small business owners’ optimistic views? Largely, it’s due to declining energy prices, as well as lower prices for other essentials. Just half of small business owners in the survey say they expect their suppliers to raise prices this in the coming year, down from 62 percent last year. And only 28 percent plan to raise their prices in the coming year, a decrease from 38 percent last year.
No wonder that 87 percent of entrepreneurs in the survey are optimistic about their own businesses prospects for the coming year. That’s up from 83 percent this spring. In addition, more than three-fourths (76 percent) are optimistic about their local economies–the highest number since 2007. Almost 60 percent believe housing prices in their local market will rise in the next six months. Finally, more than two-thirds (67 percent) feel optimistic about the overall U.S. economy. That’s not too shabby.
As they plan for a positive year of growth, small business owners aren’t planning to take out loans or lines of credit to attain their goals. Just 18 percent say they will pursue loans or credit lines in the next six months. This, even though 23 percent say access to credit has become easier to obtain than it was three months ago, and just 12 percent say gaining access to credit is harder.
While not tapping into outside financing sources, small business owners surveyed do plan to reinvest in their own businesses. Thirty-six percent plan to invest in business operations, 29 percent will put money into their cash reserves, 27 percent will distribute money to owners, and 25 percent will pay off debts and liabilities. One rising cost they are worried about is health care: Nearly half (49 percent) expect the cost of employee health insurance to increase in the next six months.
Small business owners do have a few concerns, however. For one thing, although they’re interested in hiring, they say it’s becoming more difficult to find qualified workers. More than one-third (34 percent) say it has become harder to hire qualified employees than it was a year ago. One in 10 (11 percent) who aren’t currently hiring say it’s because they can’t find skilled workers.
Really, though, that’s just one cloud on an overall sunny horizon. Do you share these entrepreneurs’ positive outlook? I hope so!