Hiring May Be Down, But These Small Businesses Are Optimistic

If you could sum up what’s most important to economic recovery right now, it would be jobs.  National Retail Federation (NRF) research partner BIGresearch asked consumers this September: “What sign do you believe will best demonstrate to you that the recession is over?” It’s no surprise that the answer was:  it’s about jobs, stupid!   Over 70% of consumers say they will believe the recession is over when businesses start hiring again.  And the graph in this story “Business Hiring Plans are Still Very Weak” tells the story at a glance.

I interviewed small business owners across industries and states to find out how they’re feeling about the economy right now. The thing that I noticed when talking to small business owners is their optimism. I think that’s the quality I like most and that was obvious no matter what their situation right now. They all thought it would only get better. However, few planned to hire.

Key issues for small businesses:

  • Customers are spending more on needs than wants so average order size is lower.
  • Small businesses are not hiring or replacing employees who quit.
  • For many small businesses, expenses are going up but revenue is down.
  • Online sales may be the one metric that is stronger than last year. Forrester Research  said retail and travel sales grew from $31 million to $33 million in Q1 and Q2 this year. They predict that online holiday sales will grow 20% over last year to $13.2 billion from $11 billion.

I talked to business owners or managers in a shipping business, a dress business, auto repair shop and auto parts to get their thoughts.

Seth Wright is the office manager for an office supply business and said business is down 20-25% but it’s starting to look up. His biggest concern is that taxes are going up. As far as hiring he said that last year they spent $500k on salaries and compensation and this year it’s about the same. The problem is that profits are down. So while he hasn’t let anyone go, he hasn’t replaced employees who have quit. The economy is also halting or delaying his plans to act on new ideas.

Then there’s Dave Young, CEO of a business that sells modest wedding dresses said, “we’re feeling it.” People still get married and buy dresses for the prom, so he’s selling dresses. It’s just that in leaner times his customers look for lower priced dresses. His sales are down 20% and he responded by cutting back on expenses, including advertising. Inventory is also down and shoppers are looking for bargains on the clearance rack – which include last year’s styles. Still, he is hiring right now to ramp up for their busy season in the Spring. Last year’s sales were quite a bit better.

Then I spoke to a local car mechanic shop in Chicago. They were most optimistic of all I talked to. They’re ahead of their goals for the last four weeks. They plan to expand their shop but will probably maintain the same size staff. Good word of mouth is what keeps his business growing. Overall, compared to last year, business is down just slightly.

Dustin Hansen of Dan Perkins Chevrolet in Connecticut says that business is okay. The repair business is good but the body work business has slowed. Customers are not adding extras to their orders like they used to. They’re just paying for the essentials and skipping additions like adding a vest, backpack or coffee mug. They are more likely to ask for a discount or to barter.  As far as hiring, Hansen says they don’t plan to hire. He mentioned that last year was a lot more scary than this year – because no one knew what to expect next. This year people have settled in and are used to not spending as much.

I wanted to see what hiring looked like on Twitter so I used the Open Forum’s new pulse tool – it aggregates small business tweets from Twitter at OPEN Forum Pulse.

I found this optimistic tweet:

twitterpic

Being an optimist myself, I wanted to find a positive story to end this post. I found this one about how small businesses in Oregon are planning to hire hundreds of new employees next year. Just reading about them fills me with optimism.

What about your business? How do you feel about the coming year?  Are you planning to hire? Let us know in the comments.

Editor’s note: this article was originally published at the American Express OPEN Forum titled, “Small Businesses Optimistic on the Economy Long Term, Few Hiring” and is republished here with permission.

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Janet Meiners thaelerAbout the Author: Janet Meiners Thaeler is an Evangelist for OrangeSoda Inc. and the principal blogger for their corporate blog and Twitter account. She regularly advises clients on blogging and social media strategies. Her own blog is Newspapergrl.com (and Twitter account @newspapergrl). She is passionate about online marketing and is always looking for new insights, resources and trends to help her clients.

9 Comments ▼

Janet Meiners Thaeler


Janet Meiners Thaeler Janet Meiners Thaeler is an Evangelist for OrangeSoda Inc. and the principal blogger for their corporate blog and Twitter account. She regularly advises clients on blogging and social media strategies. Her own blog is Newspapergrl.com (and Twitter account @newspapergrl). She is passionate about online marketing and is always looking for new insights, resources and trends to help her clients.

9 Reactions

  1. Janet: Looking at the Purchasing Managers’ Index gives you a sign of hope and the long trend is positive according to my view.

  2. It pays to be optimistic.
    It’s been my long experience in the workplace that managers are optimistic about the views of their superiors and pessimistic about the views of their underlings. There’s a “survival” element to that situation.

  3. Great insight Janet
    One thing I’ve noticed with many small business owners is that they don’t have a good handle on their numbers and therefore many of their comments and thoughts are shooting from the hip.
    As a result they often run business models which are not that effective and with the small business world changing rapidly through technology (i.e. Marketing and Distribution) they are often ill equipped and can get locked in the past.

  4. Andee has a point; many small business owners make decisions on their general “feel” and right now the feeling is cautious. Therefore I would expect any hiring decision to be very deliberate and most likely delayed. 2010 will be good, not great, for hiring.

  5. Real estate sales is a great option for Gen X and younger as the current Realtor population averages 53 years old. The average home buyer is 31. This is an exceptional opportunity for job seekers who want to set goals and achieve them in a short period of time. Focus on the buying side and customer service – this is the segment of the market most Realtors avoid. As an Independent Contractor, you will be operating your own small business and can develop it they way you want. You have the opportunity to create your own success in a real estate career.

  6. I am going to go out on a limb and say this year will be much better than the last few as far as the job market goes. As a Realtor working just outside the Boston Massachusetts area, we have started to see improvements in the market which are partially due to the improving job markets.

  7. For start up and small business, small business outsourcing company I think is advisable.

  8. It’s true that companies aren’t hiring new employees when the old ones quit or get fired. Every single company is trying to penny pinch and save wherever they can. Sometimes it even ends up hurting their productivity, but they save thousands of dollars a year with one or two less employees which can go a long way especially in a small business.

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