Small Businesses See Economic Improvement but Remain Cautious
According to the most recent Business Confidence Survey released by Insperity, Inc., more small business owners think we are in an economic rebound and are indicating a slight improvement in small businesses and business activity since Q2. However, most respondents were more conservative in adding new products and services. Approximately 41 percent plan to add employees compared to 39 percent in April; 54 percent are maintaining current staffing levels versus 57 percent last quarter; and nearly 5 percent are planning layoffs, compared to 4 percent in April.
The survey revealed that 79 percent of respondents expect to meet or exceed the 2014 performance objectives set in January and 21 percent expect to do worse in 2014. Nearly 42 percent think the economy is currently on the rebound versus 33 percent in April.
“Consensus for an economic rebound is building and overtime pay is now more than 10 percent. This would normally indicate a need for additional workers, but our latest survey reveals that business owners have not become aggressive in acting on that information,” Paul J. Sarvadi, Insperity chairman and chief executive officer, said. “Small business may be awaiting further leading confirmation such as an increase in average commissions, which is remaining relatively low.”
The list of short-term concerns was topped by hiring the right people (50 percent), the economy (48 percent), rising health care costs 47 percent), and controlling overall operational costs (44 percent). Government expansion topped the list of long-term concerns (57 percent) followed by potential tax increases (51 percent), the federal deficit (50 percent), and the economy (42 percent).
The survey results showed that 28 percent of respondents plan to increase employee compensation, down from 29 percent in April, 62 percent plan to maintain compensation at current levels, up from 60 percent last quarter, 1 percent again expect decreases, and 9 percent are unsure.