Despite more than one-third of polled small business owners reporting that they are somewhat or significantly understaffed, most don't plan to hire in the upcoming months, according to a new survey by TD Bank.
TD Bank's survey – which polled more than 500 small business owners across the bank's Maine to Florida footprint – found that although 35% of surveyed small businesses report being somewhat or significantly understaffed, only 21% plan to hire one or more employees in the upcoming months. A majority (70%) plan to maintain their current employee levels.
"Our survey results indicated that over half (51%) of polled small business owners are not optimistic about the U.S. economy," said Fred Graziano, Head of Regional Commercial Banking, Government Banking and Small Business, TD Bank.
"According to our partners at TD Economics, uncertainty about the future path of fiscal policy and the outlook for the global economy will keep businesses cautious about investing and hiring in the upcoming months. However, for businesses that are looking to grow for the long term, it's a great time to take advantage of the low interest rate environment."
Biggest Challenges: Finding Qualified Employees and Declining Sales
The survey asked small business owners to identify their biggest human resources challenges. According to the results, when small businesses are in a position to hire, they struggle to find qualified candidates to fill open positions.
The biggest challenges in employee management include:
- Finding new qualified candidates (42%)
- Training existing employees (23%)
- Offering competitive compensation (22%)
- Laying off inadequate employees (8%)
- Continuous employee turnover (5%)
TD Bank's survey also asked small business owners to identify their biggest challenge in the next six months. Declining sales (29%) topped the list, followed closely by rising healthcare and insurance costs (27%) and cash flow concerns (23%). The other challenges were pressure from larger competitors (12%) and rising energy costs (10%).
"Identifying creative ways to boost sales revenue while keeping an eye on expense growth and cash flow is a good strategy to follow for managing a business in this current economy," said Graziano. "That's why it's important to lead a strong and innovative team of employees that positively contribute to a business' goals and objectives."
Defining Success as a Small Business Owner
According to the survey, there are different opinions when it comes to best defining success as a small business owner. Doing something they enjoy (24%) and having a stable work/life balance (23%) were the top responses, followed by being one's own boss and earning enough money to live a comfortable lifestyle (17% each). The remaining responses were continuous increases in business profitability (10%) and creating jobs in the local community (9%).
TD Bank polled more than 500 small business owners within its Maine to Florida footprint to understand their companies' thoughts on the economy, employee levels and hiring plans, top challenges and how they best define success. The research was conducted in June 2012 by ORC International, and surveyed companies over the telephone with annual sales of no more than $5 million.