American entrepreneurship is on the rise. Based on a historical analysis of a subset of Paychex clients, in the first quarter of 2018, small business entrepreneurship was near its best pace since the recession. Odds are you’re seeing more entrepreneurs walk through your doors looking for financial guidance as they start and run their business, but are you aware of the current state of entrepreneurship, as well as the opportunities and barriers your clients face?
A new report by Paychex analyzes American entrepreneurship during the past decade and the state of small business today, including today’s business owners’ attitudes and perceptions of the current business environment.
Overall, the majority of business owners feel positively about the state of business as a whole. More than three quarters of small business owners (79 percent) would recommend starting a business today, and 71 percent of business owners describe today’s business environment as either better or the same compared to when they started their business. Most business owners (74 percent) cited the satisfaction of working for themselves as a reason they’d recommend starting a business today. However, the age and size of the business impacts business owners’ outlook:
• Business owners who started their company during or closely following the recession (four to nine years ago) were more likely (57 percent) to say the business environment is better today than when they started, compared to only 32 percent of those who started their companies 20 or more years ago.
• Eighty-one percent of business owners with 100 to 500 employees say the business environment is better today than when they started, compared to 46 percent of owners with one to 19 employees.
• Owners of larger businesses were also more likely to recommend starting a business today. Ninety-four percent of owners with 100 to 500 employees and 91 percent with 20 to 99 employees would recommend starting a business today compared to 78 percent of owners with one to 19 employees.
From an individual standpoint, business owners today also have a positive outlook on their future. Nearly two-thirds (64 percent) are optimistic or very optimistic about their ability to make a profit, and 58 percent are optimistic or very optimistic about their prospects for growth. Half of business owners are optimistic or very optimistic about the U.S. economy, but they face some barriers to starting and running a business too:
• Ninety percent of business owners are at least slightly concerned about rising costs and 84 percent of business owners are at least slightly concerned about taxes.
• In today’s tightening labor market, 67 percent of business owners are at least slightly concerned with finding quality employees (30 percent are very concerned).
• Additionally, approximately 25 percent of business owners are at least somewhat pessimistic about their ability to hire and raise wages.
Each business owner seeks different outcomes from their entrepreneurial endeavors. Only 11 percent of business owners say rapid growth is their top priority at this time. The majority are happy to remain comfortably profitable or grow at a moderate rate.
• Remaining “comfortably profitable” was the top choice for male owners, owners in business 10 or more years, and owners age 50 or older.
• Growing at a “manageable rate” was the top response from female business owners, owners in business nine or fewer years, and owners 18 to 34 years old.
Knowing how today’s business owners are feeling and what they’re facing can help you as you advise them in starting and growing their business. Though business owners know that rising costs and taxes are impacting their business success, your expertise can guide them to best manage and plan for the expected and unexpected barriers they face.