Optimism among small businesses about the national economy is up from last year rising from 42 percent in 2014 to 47 percent this year.
That’s according to the recently released 2015 Chase Business Leaders Outlook. For the annual outlook, JP Morgan Chase surveyed 2,000 small business leaders to find out their thoughts for the coming year.
But while the outlook for the national economy is good, outlook for the world economy among small business owners is not. The survey found optimism about the global economy among small business owners had fallen from 29 percent in 2014 to just 26 percent in 2015.
Revenue and Labor Will Remain Challenges
In a video response to specific questions from Small Business Trends, Jim Glassman, senior economist at JP Morgan, explains small businesses do have opportunities but also face challenges ahead.
See his complete answers in the video below:
“The big challenge they face is revenues — that’s always an uncertainty. I think as the economy continues to grow and their optimism is reflecting it, that challenge will be manageable. The second big challenge that they all identify is trying to find workers with the right skills.”
According to the survey, only 9 percent of small business owners say they are extremely concerned about finding appropriate job candidates as they grow their business. Meanwhile, 31 percent say they are not at all concerned.
However, Glassman says despite positive economic trends, small businesses may find competition for good help their greatest hurtle.
“Businesses are going to be finding it’s going to get more and more competitive as they try to find the right workers for their jobs,” Glassman says.
“Companies are having to do things to attract workers — increase pay, develop in-house training programs, offer coverage of health insurance for those [businesses] who didn’t need to. And finally, to meet the challenges that they can see coming as they become more optimistic and are pretty convinced that the business is going to continue to recover, they need the staff levels to meet that level.”
Regulation is of Less Concern
On the other hand, Glassman says he sees few major changes on the regulatory front to hamper small businesses in the coming year.
In fact, the survey found decreases in concern among small business owners about the major regulatory issues of taxes, healthcare regulation and fiscal policy.
“You know, frankly, I don’t think there’s a lot going on,” Glassman explains. “We’re kind of divided in Washington, but what we find interesting from our survey is that for a while, businesses were flagging regulatory challenges as a very big obstacle. This year, they are telling us that it is becoming less of an issue for them. Probably not because the regulations are going away, but because maybe they’re getting used to it, and partly because as they become more confident in their own business outlook, the promise of better business is helping to offset concerns about more regulations. So, I would be surprised if we see major changes on the regulatory front right now that would affect the small business community.”
Technology Will Offer Small Business Opportunities
And finally, Glassman says changes in technology may continue to offer huge opportunities for large and small businesses alike, but in different ways. He explains:
“Technology is replacing a lot of the routine work, but the businesses that are touched by that more are the businesses that have more complex manufacturing processes, for example. If you’re running a small business — a restaurant, food services, other kinds of services — the technical challenges of those jobs are not as complicated as they are for big businesses.”
While small businesses may not face the technical challenges that larger ones do, there is another place where Glassman says technology offers a huge opportunity.
“But I think technology is a real plus for small businesses because it’s allowing them to reach a broader audience more efficiently, in more cost-effective ways, and it’s also giving them ways to understand how consumers see their business and how they respond if they’re in the service business,” he explains.
“So, technology is transforming a lot of businesses, large and small, and I think for small businesses, it’s more of a positive than a destructive force because it is displacing jobs and it’s contributing to this mismatch of jobs and the proper skills for those jobs [in large businesses],” Glassman says. “But for small businesses, it’s helping them run their businesses more efficiently.”
Image: MagicBullet Media Inc.
Revenue and labor are challenges because they are somewhat conflicting. They are conflicting in the sense that if you improve labor, you sacrifice revenue and it is the same the other way around.