U.S. Entrepreneurs More Positive About Business Conditions, Says Business Sentiment Report
The Paychex Business Sentiment Report for Fall 2018 reveals a broad improvement in business owners’ outlook since they were last polled in July.
On a scale of 1 – 100, with 1 representing the most pessimism and 100 representing the peak of optimism, respondents’ overall business outlook has risen six points to 71/100 and their confidence in the U.S. economy is up five points over the same time period to 65/100. A complementary study of the same sample of business owners revealed economic growth is the top issue they’re watching heading into November’s midterm elections.
“While the tight labor market is still making it difficult for some businesses to hire and retain qualified candidates, it’s encouraging to see that today’s business owners aren’t letting that impede their general outlook or ability to grow,” said Martin Mucci, Paychex president and CEO. “It will be interesting to see what impact the consistent level of optimism plays in the midterm elections.”
Business size makes a difference
While sentiments were positive across the survey, the owners of larger businesses with 100 to 500 employees stood out as having a particularly optimistic outlook on certain subjects.
| Subjects | 100 – 500 employees | 20 – 99 employees | 1 – 19 employees | |
|---|---|---|---|---|
| The U.S. economy | 79/100 | 72/100 | 64/100 | |
|
83/100 | 79/100 | 71/100 | |
| Regulatory environment | 81/100 | 67/100 | 71/100 |
More money, more optimism
Owners of companies that earn at least $1,000,000 in revenue per year were the most optimistic among all respondents across a variety of subjects.
| Subjects | $1M – $5M+ | $500K - $999K | < $500K |
|---|---|---|---|
| The U.S. economy | 76/100 | 71/100 | 63/100 |
| Overall business outlook | 80/100 | 78/100 | 70/100 |
| Regulatory environment | 69/100 | 67/100 | 53/100 |
| Ability to fill open positions with qualified candidates |
77/100 | 66/100 | 51/100 |
Differences on tax reform and wage legislation
Owners of larger businesses also felt tax reform and wage legislation have had a much more positive effect by percentage.
| Subjects | 100 – 500 employees | 20 – 99 employees | 1 – 19 employees |
|---|---|---|---|
| Tax reform | 74% (32% strong positive) |
57% (26%) |
35% (11%) |
| Wage legislation (minimum wage, overtime, pay equality, etc.) |
72% |
53% (23%) |
18% (8%) |
Employee retention and benefits priorities differ
Another difference that came out of the survey was the relative challenge of engaging and retaining employees versus offering competitive benefits. While owners of smaller businesses felt more challenged by retention, owners of larger businesses were more concerned with benefits.
| Subjects | 100 – 500 employees | 20 – 99 employees |
|---|---|---|
| Engaging and retaining employees | 69/100 | 75/100 |
| Offering competitive benefits | 83/100 | 74/100 |
The economics of geography
Where businesses were located also affected sentiments on particular topics.
| Subjects | South | West | Midwest | Northeast |
|---|---|---|---|---|
| The U.S. economy | 70/100 | 61/100 | 64/100 | 61/100 |
| Overall business outlook | 72/100 | 77/100 | 71/100 | 65/100 |
| Ability to make capital investments |
66/100 | 67/100 | 61/100 | 55/100 |
| Access to capital | 70/100 | 70/100 | 64/100 | 55/100 |
Manufacturing poised for a comeback?
Long-declining U.S. manufacturing was found to be the most optimistic of all industries represented in the survey when it came to the U.S. economy and overall business outlook.
| Subjects | Manufacturing | Professional Services | Retail/Wholesale | Other |
|---|---|---|---|---|
| The U.S. economy | 76/100 | 65/100 | 60/100 | 52/100 |
| Overall business outlook | 76/100 | 73/100 | 64/100 | 71/100 |
Younger companies more confident about hiring
Owners of businesses 4 – 9 years old felt the most positive about their ability to fill open positions with qualified candidates today. Those who owned businesses over 20-years-old were actually pessimistic on the subject.
| Subject | < 4-years-old | 4 – 9-years-old | 10 – 19-years-old | Over 20-years-old |
|---|---|---|---|---|
| Fill open positions with qualified candidates |
56/100 | 66/100 | 52/100 | 42/100 |
Men more optimistic than women
The survey also found that male business owners felt somewhat more positive about general economic indicators than women business owners.
| Subjects | Men | Women |
|---|---|---|
| U.S. economy | 70/100 | 58/100 |
| Overall business outlook | 72/100 | 69/100 |
Maintaining momentum on hiring
While business owners overall feel slightly more positive about their ability to fill open positions with qualified candidates (+1 point) and raise wages for their current employees (+2), it’s important to position your business to turn this optimism about hiring and retaining employees into reality.
Hire qualified talent — part-time, full-time, every time
Low unemployment has made it difficult to recruit and hire qualified candidates, but there are some actions you can keep in mind to help make the process simpler.
When hiring part-time employees, consider being selective with your job postings, asking for referrals, and specifically wording your job descriptions. You’ll also want to determine whether each position should be classified as exempt or non-exempt, according to the Fair Labor Standards Act (FLSA).
Meanwhile, HR technology has been streamlining recruiting and hiring for all positions, with businesses taking steps to automate the onboarding process and leverage applicant tracking software to improve time-to hire — countering the growing phenomenon of job applicant ghosting.
A popular tool for employee retention
Beyond the obvious draw of higher salaries, the opportunity to learn and grow professionally has become a way for businesses to hold on to their top performing employees. While the desire to learn has always been a factor in employee retention, the recent growth of learning management systems (LMS) at businesses of all sizes is now giving employers the tools necessary to keep their employees up-to-date and content in their jobs.
The fact that business owners’ optimism is growing during a difficult labor market is a good sign for businesses continuing to find qualified candidates and new customers, access capital, invest in their businesses, and grow the U.S. economy. Be sure to check back in the spring to see whether their optimism was warranted and whether their overall business outlook will continue to improve.
About the Paychex Business Sentiment Report
Data included in the Paychex Business Sentiment Report was taken from the results of the Paychex Business Survey, administered by Bredin, a third-party research firm. The survey was conducted online between September 12, 2018 and September 24, 2018 polled 600 randomly selected principals of US companies with 1-500 employees. Results are representative of how small business owners feel, on a scale of 1 to 100 with 1 representing the highest level of pessimism and 100 representing the highest level of optimism. This Business Sentiment Report will be distributed on a trimester basis with the next report coming in spring 2019.
