There is no doubt small businesses are helping increase stability within the economy. However, many company owners wonder if the business landscape will continue to be profitable for small firms over the next few years. With the presidential election behind us and gas prices continuing to rise, there are a few important factors to consider.
Small business statistics accounting for job growth
It wasn’t long ago that many large conglomerates and international outsourcing made it hard for the little man to stay in business. Now that these corporate giants have fallen to bankruptcy, downsizing, restructuring, bailouts and unemployment, small business has had a greater chance at growth.
One of the most telling statistics that small businesses are helping anchor our economy is their contribution to job growth. By increasing the number of employees on their payroll, smaller employers help boost the economy. Whether or not these independent and start-up firms continue to help lower unemployment rates, however, remains to be seen. Gas prices and operating costs are continuing to rise, which has a direct link between whether or not a small-sized company can afford to meet payroll for additional employees.
Many small business owners opting for outside help
One easy way to see the economy is improving is when a small business outsources their payroll, tax filing and human resources tracking to an outside vendor. Many payroll providers are noticing an uptick in the number of small businesses needing such services due to an increase in hiring.
Another way to look at small business growth and the economy also has to do with the outsourcing of other small businesses. For example, Company A needs 500 parts from Company B. This order helps Company B grow, increases the number of employees they can afford to hire and helps stimulate the local economy. This relationship between firms can have a huge impact on the strength of small business.
Of course, the duration in which small businesses have the opportunity to continue to create new jobs depends largely on the upcoming elections. Obama will have to make some major decisions with regard to the upcoming fiscal cliff, and his decisions on taxes and spending, both now and during the next four years, will have a large impact on most small businesses.
Obama is currently coming off one of the worst economic tenures in history. After being elected to a second term, chances are he’ll be looking for a way to help turn the current economic situation around. In order to do so, he will most likely have to concentrate on helping business owners via government tax breaks and hiring incentives.
Nobody knows what the next four years holds for small business growth or the economy. For now at least, hiring statistics point to independent business staying strong in the short term.