Business Wire reports that optimism was at an all time high in this years’ Q2, according to a survey of International Business Brokers. Some claimed it was the highest they had seen optimism in the last 5 years, other said it was higher than they had ever seen it.
The optimism is based on low unemployment, available capital for expansion and higher than anticipated actual sales. If you have have been out to eat on a Saturday night without a reservation lately, you will see that consumer spending is robust!
“For many sellers, this is the time to take some chips off the table and head for the exit. Savvy business owners are taking advantage of the strong seller’s market, even though they aren’t ready to retire,” said Mike Camerota, JD, M&AMI, CM&AP, Founder of Touchstone Advisors, M&A Source Chair. “The idea is to maximize value by selling now, diversify their net worth, and then buy or start another business where they see opportunity.”
As a Jacksonville Business Broker, I see this often with young, energetic entrepreneurs for whom the excitement of getting a business to a $1 million in sales does not continue over the next big hurdle of growing to $10 million. It takes a different set of skills to scale a $1 million business to 10 million. Some entrepreneurs are willing to develop another skillset; for others, the early days are the best and they prefer to sell at a good top value and move on to build something else. These can be great companies poised to get to the next benchmark quickly.
With this kind of growth, businesses would like to expand. Capital is available and demand is high – perfect right? More and more employers say they can not find qualified workers to expand their teams with. Sometimes the shortage is based on salary expectation. There are qualified people but they recognize they are in demand and require greater incentive to move companies. But equally, as every economy becomes more global, so there are cheaper labor options available. Margins today are built on the salaries set in the last, and quite recent, recession. Global workers will produce at those prices, but that is not an easy solution. Labor in other countries are on differing time zones, follow cultural norms alien to US business owners and while they speak or write English well, they do not speak as a native. Their ability to produce written word is not reliable, though they are gaining ground fast. Teams that involve exchange programs with their US counterparts have become the most productive.
In September, nearly two-thirds of a National Federation of Independent Business Owners survey saw respondents hiring or trying to hire, but 53% said there were “few or no qualified applicants.”
“Quality of labor” was respondents’ single biggest business problem, followed by taxes — in spite of the 2017 tax cuts that made business owners so giddy.
AI (Artificial Intelligence) is coming, and while it may not work in all sectors, transportation, emergency response, credit card marketing and any field that requires predictive analysis is already reaping rewards in this space.
“2018 has seen the longest streak of small business optimism in history, evidence that tax cuts and regulatory rollbacks are paying off for the economy as a whole,” NFIB President Juanita Duggan said in a statement. “Our members say that business is booming and prospects continue to look bright.”
| Index component | Seasonally adjusted level | Monthly change |
| Plans to increase employment | 23% | -3 |
| Plans to make capital outlays | 30% | -3 |
| Plans to increase inventories | 3% | -7 |
| Expect economy to improve | 33% | -1 |
| Expect real sales higher | 29% | 3 |
| Current inventory | -1% | 2 |
| Current job openings | 38% | 0 |
| Expected credit conditions | -5% | 1 |
| Now a good time to expand | 33% | -1 |
| Earnings trends | -1% | -2 |
Big picture: In August, NFIB’s gauge hit the highest level in the 45-year history of the index. September’s slight downturn was the third-highest reading on record.
The NFIB Research Foundation has collected Small Business Economic Trends data with quarterly surveys since the 4th quarter of 1973 and monthly surveys since 1986. Survey respondents are drawn from NFIB’s membership. The report is released on the second Tuesday of each month. This survey was conducted in September 2018.
