2024 Could Be a Major Turning Point for Small Businesses
More Americans are taking control of their own fate — quitting the 9-5 grind to become an entrepreneur… only to find themselves working 24/7. Small business applications are on track to set another record, with over 5M new business applications expected by year-end — a potential byproduct of a rocky labor market.
Corporate pains, SMB gains: In recent years, small faced fierce competition from large corporations offering massive pay bumps to retain talent. But that’s finally reversing as larger firms pull back on hiring — and small businesses ramp up.
- Firms with less than ten employees represented a record 21% of job openings at the end of the third quarter — the highest since data collection began in 2000.
- Job openings among businesses with fewer than ten employees grew 18% from the previous year — the only group to register positive growth for the quarter.
Despite a surplus of available workers, small businesses are still having difficulty hiring. According to a December survey from the National Federation of Independent Business, 54% of them hired or tried to hire in November, but 93% of owners reported few or no qualified job applicants.
Falling rates can’t come soon enough for small businesses
These enterprises, which have a harder time getting loans and pay a premium to borrow, have been hit especially hard by rising interest rates — which exceeded 9% over the last three months. That’s delayed expansion plans for a significant portion of the US economy, which employed half of Americans and produced 44% of US GDP in 2021.
- 58% of small business owners said high-interest rates were impacting their business, according to a recent WSJ/Vistage Confidence survey.
- According to an October Goldman Sachs survey, only 29% of them can afford to take out loans at current rates.
Forward-looking: Despite mixed economic forecasts, business leaders are hopeful 2024 will bring falling interest rates and lower inflation — which has 57% of small businesses bullish about their revenues over the next year, with 42% expecting improved profitability.