Cash flow and finding capital is the top concern for this year.
Finding workers follows in second place.
Partner content from Ron Burgess of RedFusion
As we did last year (Top 5 Business Concerns of 2018), this survey review includes six different surveys to represent a broad outlook of independent business owners. This reports on what the main concerns of small businesses are across the U.S.
Most issues are the same this year, however (doubtless due to the economy), the order has changed from one year to the next and is perhaps most interesting. Finding cash was the top priority in two categories; cash flow and finding capital for expansion. Hiring qualified workers and paying for benefits was unchanged from last year as the second most important issue. Marketing and growth fell from first to third undoubtedly due to an unprecedented growth economy. Despite President Trump’s efforts to reduce regulations it still ranks as number four on the list.
This year’s list rank compared to last
|Taxes and policy||–||4|
Image at the top of the page.
1. Growth has created a need for cash, hiring and management
Far and away last year’s growth (and marketing that generates growth) was the number one issue. Doubtless completing the second year of unprecedented national growth has pushed growth as the major concern to number 3 this year. Instead, the pressures of growth seem to have generated a need for cash: investment, credit and better cash flow that may have been outstripped by growth. The new entry into the top group “administrative” issues may also be a struggle for smaller companies to adapt to growth. Taxes (a minor concern last year) are much less so with the tax cuts now that businesses see how they are affected.
2. Hiring good people
While many small businesses want to hire people, the lack of funds prevents competing with other companies. The high cost of health insurance and benefits make it even more expensive, so many are simply trying to do more with less. In the Inland Empire, nearly every business with over 20 employees, is looking for and complaining about attracting “good” employees. While good may be in the eye of the beholder, many mean properly qualified and skilled, while others complain about just getting employees to work on time!
More people are working now than at any time since 2000. Some 63.2 million workers broke the records in January of this year[i]. The employment rate for the Inland Empire stood at 2,010,000 in December 2018[ii], creating the lowest unemployment rate in a decade or more.
In California hiring outside help as “contractors” has been severely limited by Sacramento. Business owners have been scared away from hiring these outside people due to fear of government State reprisal. Many don’t understand the new regulations yet and are taking no chances. The new order seems to prohibit a business from hiring temporary, outside contractor help if they already are engaged in the activity. A contractor must be outside the usual course of the hiring entity’s business [iii]. This is difficult for small business people who may have a designer on staff but who don’t need a full-time employee yet. Because it is usual to the course of their business, they are prohibited from hiring outside independent contractors. This is a sever limitation in California compared to growing a business in most states and gives larger businesses a great advantage.
3. Growth is the goal, and marketing is the method
Naturally business owners want to grow. They have waited for a decade to feel sure it will happen again. Last year they were less sure it could happen. This year, they have enjoyed it and see current administration policies kicking in. The natural increase in demand however is not translating to all businesses equally. Marketing has completely changed, in the decade of the Great Recession, due to technology. Smaller businesses have yet to understand how to spend limited promotional dollars in the new digital marketing age.
4. Government Regulations are still a major concern for small businesses
Even with the huge reduction by the administration in bothersome and redundant regulations, they are stubbornly number 4 falling from number 3 last year. It takes time for policy changes to get to the bottom of the bureaucracy, so perhaps more improvement will be felt this year. Reducing these rules, regulations and requirements to more beneficial regulation’s is credited with lifting the economy, although its hard to know how much.
This is probably a catch word that includes dealing with all administration and management of a business. Smaller businesses have issues streamlining processes, and help is harder to find. People are busy and technicians, to help do this from outside, are more expensive.
All in all, the top concerns are not as dire as last year. It is amazing what a healthy economic environment can do for most of us who participate in it. Small business owners will always have issues, but those who find solutions and can keep regulators from beating them can prosper. Locally, we hope (even as our environment lags) that we will eventually benefit as the rest of the country seems to be.
Data and Methodology
RedFusion likes to look at multiple small business surveys to get a sense of what small business owners really see as important. Different studies have different emphases, so we combine them to get a better understanding. This year we selected 6 different studies. We scored only the top 4 or 5 issues (some had ten or more issue types). Then the particular issue had to have at least three answers (out of six) to make the top tier. All were current during 2018. See end notes below for economic data.
[i] Trade Economics https://tradingeconomics.com/united-states/labor-force-participation-rate
[ii] Bureau of Labor Statistics, https://www.bls.gov/eag/eag.ca_riverside_msa.htm
[iii] The Law and The Workplace https://www.lawandtheworkplace.com/2018/05/california-changes-rules-on-independent-contractors/