Although the number of small business owners that foresee growth opportunities for their companies in the next six months fell to 56 percent, down from 64 percent reported last fall, growth remains the top reported business priority across the sector, and one in three small businesses also cite plans to add personnel.
Staffing Up, Benefits Down
Looking ahead six months, 35 percent of small-business owners surveyed said they plan to hire full or part-time staff, up from 26 percent reported last fall. Companies with hiring plans are just as likely to add full-time employees than they are part-time workers 41 percent for each nearly one in five of those small businesses that plan to hire new employees will add both full and part-time staff. Three-quarters of those with plans to hire full-timer staff in the next six months anticipate adding between one and three employees.
Kerry Hatch, American Express OPEN Small Business Network executive vice president and general manager, said small business growth will be on the upswing in the near-term, but this growth would not be without additional cost-cutting measures.
"Despite increasing concerns about the overall economic picture, many small business owners are not shelving their plans for growth and report plans to add jobs and invest in their companies over the next six months," Hatch said. "At the same time, small business also appear to be managing their companies through the uncertain economic environment with an eye toward cutting expenses. In fact, the number of small businesses offering health care coverage fell in the survey to 55 percent from 61 percent, reported last fall."
The outlook on hiring varies by business location and size. Small businesses in the West, the North Central states and in the South are more likely to add staff than businesses in the Northeast 37 percent for each region as opposed to 31 percent in the Northeast.
Additionally, larger enterprises are nearly twice as likely than smaller ones to have hiring plans. Fifty-six percent of the companies with 20 to 49 employees and 61 percent of firms with 50 to 99 employees plan to add staff, compared to just 31 percent of businesses with fewer than 10 employees.
While positioning their companies for growth, many small business owners are keeping their eyes on the bottom line, according to the survey. To manage through the uncertain economy, 30 percent plan to cut expenses, and 24 percent plan to cut back on personal spending. Nine percent of small businesses plan to reduce staff or salaries.
On a continuing upturn, 58 percent of small businesses say they plan to make capital investments in their businesses over the next six months, up from 56 percent reported last October and 49 percent in March 2002. According to the OPEN Small Business Network Semi-Annual Monitor, computers and peripherals remain the number one planned capital investment (25 percent), followed by office equipment (13 percent), and manufacturing or production equipment (12 percent).
Cash Flows and Charge Cards
Despite uncertainty, fewer small business owners are reporting cash flow concerns 57 percent down six percent from 63 percent compared to October 2002. Sixteen percent of small businesses with cash flow concerns report being most worried about having enough cash on-hand to win new business, 13 percent are concerned about having the ability to pay bills on time, and 12 percent are concerned about accounts receivable and the ability to track cash flow.
The survey also found that small business owners utilize a range of tools to address cash flow crunches that arise. Nineteen percent indicated they would obtain or use a line of credit, 17 percent would put off purchases, 15 percent would use a charge card, and five percent said they would take out a short-term loan. Only two percent of small businesses indicated they would use personal or private funds. Twelve percent were unsure about how they would manage through cash flow challenges.
According to the survey, credit cards remain a useful financing tool for small businesses, with 74 percent using a credit or charge card to pay for various business expenses. This figure remains steady when compared to October 2002 responses. Office supplies are the number one small business purchases on charge cards, followed by travel, wholesale purchases, computer equipment and business or professional services.
Personalities and Pet Peeves
According to the survey, most small business owners see themselves in very distinct terms. When asked to characterize their small business "personality type," 34 percent of small business owners see themselves as Managers big picture people who enjoy the operational side of business. About one-quarter, 27 percent, described themselves as Heroes problem-solvers who put the interests of customers first and enjoy solving difficult problems.
Sixteen percent of small business owners see themselves as Rainmakers new-business getters who enjoy networking, negotiating an agreement, and making a sale. Eleven percent identified themselves as Artists craftspeople whose passion is creating the product as opposed to running the business. Only four percent of business owners surveyed consider themselves Mavericks risk-takers who sometimes take chances for the sense of adventure alone.
The greatest differences among these small business personality types were in their expectations for how their employees should behave on the job. Managers and Heroes cited constant tardiness as the employee behavior that was their number one pet peeve. Rainmakers and Artists cited consistent lack of initiative as their number one employee aggravation, and not following instructions was the top complaint for Mavericks.
Among small businesses overall, 16 percent are aggravated by employees that are constantly showing up late for work, 15 percent cite a consistent lack of initiative by employees, and nine percent said employees spend too much time attending to personal matters while at work. Interestingly, 35 percent of small business owners overall said they did not have any particular employee pet peeves.
Survey and Methodology
The OPEN Small Business Network Semi-Annual Monitor, released each March and October, is based on a nationally representative sample of 766 small business owners and managers of companies with fewer than 100 employees. The survey was conducted via telephone by International Communications Research (ICR) from March 10-March 22, 2003. The poll has a margin of error of plus or minus 4.4 percent.
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