The economy is going gangbusters. Corporate profits are up. And interest rates remain tantalizingly low. Yet, plenty of small companies aren’t planning to hire more workers, according to the latest quarterly findings of MetLife and U.S. Chamber of Commerce Small Business Index.
In fact, only 29% of small business owners polled by MetLife in Q1 2019 indicate they will increase staff this year. Adding to headcount is a bigger priority among companies with 20 or more employees (44% plan to up hiring in 2019) and among veteran-owned (44%), minority-owned (42%), and Gen X- or Gen Y-owned (39%) businesses. Retailers are more inclined to bring new workers aboard (36%) compared to those in the service sector (29%).
The survey shows that hiring decisions are often influenced by perceptions of business health — 38% of surveyed owners in poor health indicate they’ve decreased staff in the past year vs. 8% of companies in good health. Although minority-owned businesses are less likely to admit being in good health than the national average (59% vs. 64%, respectively), they grew staff more over the past year than non-minority-owned companies (25% vs. 16%, respectively).
Matthew Ross, co-owner and COO of The Slumber Yard, a sleep and mattress review website, was taken aback by some of these numbers.
“I’m surprised that only about one in three small business owners plan to increase hiring this year. The economy seems to be doing well, and a major pullback isn’t projected in 2019,” he said. “Market conditions are conducive for expansion right now, as evidenced by 2.6% GDP growth in fourth quarter 2018.”
Conversely, Scott Caldwell, president and co-founder for Washington Business Dynamics, a boutique management consulting firm, said these findings make sense.
“The U.S. economy faces some challenges, including uncertainties in the global economy and increased trade tensions, that may warrant a more cautious stance toward hiring,” noted Caldwell.
Brittany Love, owner and digital strategist at 9th & Main, also has her doubts about small businesses hiring more in 2019.
The U.S. economy faces some challenges, including uncertainties in the global economy and increased trade tensions, that may warrant a more cautious stance toward hiring.
Scott Caldwell, president and co-founder for Washington Business Dynamics
“I don’t think the current political and economic instability make for favorable hiring conditions. Rising health care prices, changes in tax codes, and threats to immigrants make many business transactions fairly tenuous, and that includes investing in new staff,” said Love.
Nevertheless, she foresees the need to soon enlist a part-time or contract assistant. Ross and Caldwell also expect to increase hiring this year—with the former short on writers and video editors to help with website content production, and the latter seeking more analysts, communication professionals and contract specialists.
Questions that drive Love’s decision to hire or not are pragmatic: “What do I really need to serve my clients the best I can? What holes exist in my and my team’s skillset? And what do we not want to do, or can’t do, that is better suited for someone who excels at that type of work?”
Ross, meanwhile, weighs two simple factors before expanding personnel: profitability and potential growth.
“We need to make sure we’re financially comfortable with the addition of a new employee. Next comes the question of whether the new employee can help us grow,” said Ross. “If the answer to both is yes, we create a new position.”
If your company needs additional staff, prepare for some bumps in the road ahead.
“Small businesses today may find it difficult to compete with larger firms when it comes to attracting talent. But leveraging and promoting things like flexibility of schedule, advancement opportunities, and unique traditions can set you apart,” Caldwell suggested. “There’s a reason why David beat Goliath. The agile capabilities and unique offerings of small businesses can distinguish us in the competitive hiring market.”
Providing an attractive compensation and benefits package can work wonders, too, of course.
“We’ve been able to attract great people to our firm because of special advantages we offer like unlimited profit sharing, which larger firms might find difficult to provide given their size,” added Caldwell.
“Hiring someone may be the easy part. Retention—that’s where things get tricky,” Love said. “So make sure that, whomever your hire, you nurture them, give them the autonomy they’re ready for, and make it easy for them to love showing up to work every day.”
Many employers may already be following Love’s latter advice. MetLife’s Small Business Index reveals that 71% of small business owners have retained the same size staff during the past year, vs. 64% tallied in the previous quarter.
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