Small Business Earnings, Optimism Hit Yet Another High

The National Federation of Independent Business (NFIB), a small business lobbying group, released a report last week revealing historic highs for small business (SMB) optimism and earnings.

“Consumer spending, the new tax law and lower regulatory barriers are all supporting the surge in optimism across all small business industry sectors,” said NFIB Chief Economist Bill Dunkelberg in a statement.

“Never in the history of this survey have we seen profit trends so high,” added NFIB President and CEO Juanita Duggan. “The optimism small business owners have about the economy is turning into new job creation, increased wages and benefits and investment.”

This week’s B2B Data Digest examines the NFIB’s findings; plus, a round-up of key stats in other surveys reveals that while small businesses are feeling pretty good in the current U.S. market, entrepreneurs are still facing significant challenges.

— 45 years: That’s how long it’s been since small business earnings have been this high, the National Federation of Independent Business revealed in a report last week. The SMB lobbying group found that small business earnings in April were the highest in the history of its survey, which began in 1973; further, April marked the 17th month in a row of “historically high readings” of small business optimism.

— 89 percent of entrepreneurs surveyed by the NFIB cited labor quality as their top concern, making it the top issue facing small businesses today as owners trying to make new hires report few or no qualified applicants available.

— 60 percent of SMBs have never applied for funding to support their innovative initiatives, according to BMO Wealth Management’s latest report. The firm surveyed more than 1,000 small businesses in the U.S. and concluded that entrepreneurs are missing out on opportunities to invest in innovation and benefit their firms. More than a third of SMBs said they did not want to take on more debt when they decided not to seek funding for innovation; more than a fifth said they didn’t seek a loan because they were afraid they would be rejected, or that the process would be too complicated.

— 44 percent of SMBs told BMO Wealth Management they weren’t sure how to apply for a government grant, while more than a third told researchers they were entirely unaware of such opportunities. Again, researchers said these findings represent missed opportunities for small business owners to invest in innovation.

— 22 percent of small firms said they have plans to hire staff this year, according to new data from TD Bank. The finding could highlight challenges ahead for small businesses as they struggle to find qualified talent in their hiring process, as found in the NFIB’s report. TD Bank noted the significant increase of small business hiring plans — as last year, its survey found just 9 percent had plans to add new staff.

— 27 percent of entrepreneurs said interest rate changes are pushing them to seek financing sooner rather than later. Business owners are anticipating interest rate hikes, which are encouraging them to take out a loan now rather than refinance existing debt, TD Bank’s survey found. Nearly half (46 percent) of SMBs surveyed said they plan to apply for credit in the next year, compared with 21 percent in 2017.

— 15 percent of SMBs expect higher earnings as a result of tax reform, though TD Bank noted that nearly half said the Tax Cuts and Job Act of 2017 will not benefit their business at all. Of those expecting extra cash on hand from the legislation, 14 percent said they plan to use the money to pay down debts, while 13 percent said they will implement new technology or purchase new equipment.

— 27 percent of SMBs said the health of the national economy was their largest challenge for 2018, according to TD Bank. A fifth said tax reform was their top hurdle, while 14 percent cited inflation and 13 percent pointed to rising interest rates.