NEW YORK—American small-businesses are more optimistic than ever, the latest data has revealed.
The National Federation of Independent Business (NFIB) and United States Chamber of Commerce (USCC) both report small business optimism in September 2018 are at record-high levels.
The NFIB Index of Small Business Optimism is up 0.9 points to a record 108.8 points. The MetLife and USCC Small Business Index for the third quarter of 2018 reported a record-breaking score of 69.7, up from the previous high of 68.7 in Q1. Small business owners report being upbeat about their company’s future and the U.S. small business environment, thanks to legislative reforms and a booming economy.
“It’s a record!” says the NFIB report (pdf), showing the highest score on their optimism report since they began collecting data in 1986. The report says the “hard” parts of the economy, which include spending and job creation by small businesses, are improving.
“The rise in optimism reflects a rebound in national economic outlook and denotes the highest levels in the history of the survey,” says the USCC report (pdf).
The USCC report focuses on small business owners’ ability to obtain financing, analyzing conditions that affect whether a business can obtain a loan; 70 percent of businesses reported obtaining a loan is easier if they had sought a loan in the past.
A Bureau of Labor Statistics productivity report likewise showed various signs of economic improvement. In the second quarter of 2018, non-farm labor productivity rose 2.9 percent; labor output jumped 5 percent; and hours worked soared 2 percent.
Family Business Roars Back to Life
Vasilios Katranis, owner, veteran, and father, took over the family’s commercial interior construction contracting company with his wife in 2003. Red White and Blue Enterprise Corporation in Woodside, New York is one of the small businesses enjoying an economic revival.
“Back in 1994-‘95 we had some rough times, it was just barely enough to pay the lights,” says Katranis, also recalling a similar situation during the 2008 global financial crisis.
Since then, his focus has moved from labor to capital, specifically, automated machinery. “We did drastic moves like upgrading our software. It was ridiculous—the amount of money we spent,” he says.
Since the financial crisis, and until May 2018, a “one-size fits all regulatory approach” had been used on the economy, according to Tom Sullivan, vice president of the USCC. He says the recently signed Economic Growth, Regulatory Relief, and Consumer Protection Act helps small businesses source capital. This new act, passed by President Trump in May, allows banks to loan small businesses up to $250 billion compared to the financial crisis-inspired loan limit of $50 billion.
The NFIB September report says more owners plan to obtain or maintain capital than the previous month, and obtaining loans is no longer small business owner’s top concern. Furthermore, it says capital spending is at its highest level since 2007, with one-third of the businesses surveyed planning to increase capital spending in the coming three to six months.
The USCC report also says access to capital is strongest since 2008.
Katranis’s capital investments have increased over the years, buying modern machines and software usually used by large scale businesses.
“Automation is not an overnight thing,” says Katranis. “This thing took many years, and slowly we upgraded our machines, and we are in a position that we feel comfortable enough to be able to take large jobs with significant, rapid turn-around.”
New Talent Needed Now
Since obtaining financing is no longer a primary concern, small business owners’ focus has shifted to labor. A record 25 percent of owners cited difficulty finding qualified workers as their “single most important business problem,” according to the NFIB.
“Unfortunately with less and less available carpenters and skilled labor, we had to make big changes in order to survive,” says Katranis. Those changes include investing in capital, and hiring only two new employees since 2008.
With the future looking more secure, Katranis has a strong motivation to ensure longevity of the business—his son.
From his father-in-law, founder of this family business, also named Vasilios, to his 11-year-old son, named Vasilios too, Katranis hopes his family’s business can continue this legacy.
“I would like to pass this on to my son, hopefully it’s still around,” he said.