Everyday we hear different economic numbers from the government but what do they mean? we hear about record numbers in the media about Small Business Confidence. You might think that because small businesses are small in size that this doesn’t matter as much as the mega corporations and multinational companies.
Hi, I’m Bradford Ferguson with Halter Ferguson Financial. And I get why you might think small biz is small potatoes. The truth is that collectively small businesses in the US are big business. In 2014, small businesses created 51 percent of new jobs in the U.S... As of 2010, small businesses provided for 45 percent of economic activity in the U.S. and in 2014, there were 5.8 million small businesses with employees. With how significant a role small businesses play in the U.S. economy, it's critical to understand the mood of small businesses owners. How small businesses owners are feeling about their business can indicate whether small businesses are growing (and how fast) or shrinking and what they are struggling with.
As you know, CONTEXT IS EVERYTHING. The vast majority or 88 percent of small businesses have less than 20 employees. Because of this, small businesses faces a different set of challenges compared to mega businesses and the titans of industry.
One big difference is Influence. It's commonly known that the huge multi-nationals write the regulations at the federal level. If the biggest companies are writing the rules and regulations, they are going to make it hard on small biz. For small businesses to keep up with regulations they have to devote a significant amount of their time, effort, and money to compliance. This means Complying with the regulations. This often results endless mounds of paperwork. For large businesses, compliance costs are insignificant which is why they often favor more regulations. For instance, the mammoth Dodd Frank Financial regulations pushed many community banks out of business. Leaving more money for the big banks. But the landscape is changing.
As of September 11, 2018, today's record 108 point eight confidence reading signifies that small business owners are wildly optimistic. We believe it is a result of a booming economy from Millennials coming of age (getting married, having kids, buying houses, and spending on their houses), a huge reduction in regulations because of President Trump (remember small businesses want less regulations), and lower taxes for small biz owners. These three factors are allowing small businesses to invest in growing their business, hire more people, and pay them more money. If I owned a crystal ball and I do not... I think the strength of small businesses will continue for at least another year because of demographics relating to Millennials. For now, I feel it’s safe to err on the side of optimism. It’s been good talking with you.