Small businesses wary of hiring
Small-business owners’ confidence took a dive in the first part of the year and many say the presidential election is weighing on their minds, according to a recent survey released by Capital One.
The March national survey of some 400 for-profit small businesses, defined as having less than $10 million in annual revenue, revealed subdued hiring plans and worsening perceptions of the economy.
Just 26 percent of respondents said they plan to hire employees in the next six months, compared with 32 percent who said so this time last year and 37 percent who said so during the last election in 2012.
The share of small-business owners who said current business conditions are “excellent or good” dropped to 41 percent from 50 percent last year, while the share who identified business conditions as “poor” rose to 19 percent from 15 percent. More respondents also reported decreased sales.
The small business “confidence score,” which takes into account economic sentiment, hiring plans, recent sales and future outlook, had been trending upward since the end of 2012 but slid over the past year.
“We have seen a retraction of some sentiment,” said Brian Smith, senior vice president of small business banking at Capital One. “There’s a caution around investing.”
Asked what they are most concerned about in 2016, a quarter of respondents named the upcoming presidential election.
Asked to name the greatest issue of concern when evaluating the presidential candidates, by far the most common answer was tax policies on small businesses.
Other findings surprised Smith, including the slow adoption of technology that can help owners manage and market their businesses. For example, 40 percent don’t use social media at all for their businesses.
In addition, the percentage of small businesses offering 401(k) plans to employees fell sharply to 13 percent from 24 percent at the end of 2014, Smith said.
The report emphasized that some business owners remain optimistic, with 39 percent expecting to be in a better financial position in the next six months. About half expect financial conditions to be the same.
Millennial business owners were far more likely than their older counterparts to be optimistic and to report hiring and sales growth.