One third of U.S. small businesses plan to expand during the next twelve months. Owners also plan to invest in productivity enhancements and improved staff training, according to a study by the Small Business Research Board (SBRB) conducted in conjunction with International Profit Associates (IPA).
Expansion plans varied considerably throughout the U.S., with 40 percent of the Northeast respondents planning for expansion. Of that 40 percent, business owners plan to invest first in current locations and then in providing more services. This was true throughout the U.S. The addition of new products, enhancement of customer service and adding locations were identified as the next three leading areas.
Staff training, rated first in each region, will get the most attention during the course of the next twelve months, as owners seek to improve productivity. Improvements in existing automation, adding more automation and technology, as well as staff additions followed as the next three priorities. Implementing or enhancing employee incentive programs was fifth across the board.
"The tight labor market should compel small businesses to make certain they have programs in place to retain and train employees," says Gregg M. Steinberg, president of IPA. "Furthermore, while it ranks low on the list of priorities, businesses may need to consider creating or enhancing incentive programs as an offensive weapon to attract or retain quality employees."
Small business owners' confidence continues to grow despite a shift in the major issues that concern them. During the second quarter of 2007 taxes were the leading concern, which replaced health care, the issue that had the greatest impact, according to the latest SBRB study.
Taxes were closely followed by overall economic conditions and energy/fuel costs as key concerns. Of the concerns voiced by more than 770 respondents, health care was fifth on the list.
The quarterly poll indicated that taxes were the leading concern in specifically two of the four U.S. regions: the South/Southeast and the Western states. Taxes ranked second in the Midwest and fourth in the Northeast, while economic conditions were the leading concern in both regions.
Energy and fuel costs were tied as the second greatest concern in three of the four regions: the Northeast, Midwest and South/Southeast. Health care was fifth in each of those regions.
Although taxes were the foremost concern during the second quarter, that does not mean paying the IRS is necessarily a seasonal issue. It does indicate that tax issues were more of a concern this year than other issues. "Small businesses can adopt the same strategy as big businesses by strategically planning ahead and initiating actions to obtain the greatest tax efficiency," says Steinberg
Business owners are making their expansion and productivity improvement priorities for the coming twelve months, and doing so with increased confidence, despite their concerns. The SBRB recently reported that its U.S. Small Business Confidence Index (SBCI) rose to 46 for the second quarter of 2007, a jump of 5.22 points from the previous quarter. Businesses in the Northeast, Midwest and South/Southeast all reported increased confidence from the prior quarter.
The universe of participants in SBRB studies is developed from among small businesses across the U.S., and more than 700 small business owners and senior managers participated in the poll.
IPA, based in Buffalo Grove, IL, is a provider of management consulting services to small and medium size businesses in North America.
For more information on the Small Business Research Board, visit www.ipasbrb.com.
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