While just 4 percent of U.S. SMBs saw a decrease in revenue last year, fully 52 percent hired no new employees in the last 12 months, according to a recent ScaleFactor survey of 500 principals of U.S. companies with under 500 employees.
Key impediments to hiring, according to respondents, include salary costs (18 percent), skills shortages (13 percent), healthcare / benefits costs (10 percent), and a competitive labor market (4 percent).
The survey also found that 58 percent of respondents use a technology-based solution for accounting/back-office needs – and that as a result, 76 percent of respondents that don’t have a full-time or fractional CFO have no plans to hire one.
“Small businesses are finding increased value in adopting technology solutions to assist in the back office as customer demand for quickness and e-commerce solutions increase,” ScaleFactor founder and CEO Kurt Rathmann said in a statement.
Use of technology appears to be linked directly to company size – among very small businesses with 20 or fewer employees, just 13 percent currently use AI or machine learning, but that jumps to 41 percent of small businesses with 20-99 employees and 72 percent of medium businesses with 100-500 employees.
Sources of financing
To finance business growth over the past year, SMBs’ sources of funding varied widely. While 34 percent reinvested company profits, a surprising 32 percent turned to credit cards and 26 percent leveraged company savings.
Eighteen percent used a line of credit from a financial institution, 16 percent used a loan from a financial institution, 6 percent got a loan from a friend or family member, and 4 percent sold a portion of the business to finance growth.
A separate survey of more than 500 small business owners by GoDaddy and Kabbage found that almost 50 percent said a lack of money is the most significant impediment to growing their company’s digital presence or online advertising.
Still, 60 percent of respondents said their revenue increased after they invested in online advertising – and 44 percent said sales increased by as much as 25 percent in response.
Forty-three percent of respondents also said having a website for their business is the most helpful digital tool for growing and expanding, followed by social media marketing (35 percent).