Tags: Small | Businesses | economic | Recovery

Small Businesses 'Planting the Seeds' for a Recovery

Friday, 12 October 2012 09:38 AM EDT

If you are trying to figure out if small businesses are hiring, it depends on where you look.

Just last Friday when the government was raising suspicious eyebrows with its report of a sudden drop in the unemployment rate so close to a presidential election, Andy Asbury was hiring a full-time employee to work at his Minneapolis real estate brokerage.

For Asbury, the need for a new employee was clear. Sales at his agency, Better Homes & Gardens Real Estate Area Leaders, are up 25 percent from a year ago and he's expecting them to rise more next year as the housing market continues to improve. He's getting signals from prospective sellers that things are going to get busier and he's gearing up.

"People are planting the seeds right now for when they want to make their move," he says.

Small businesses employ about half the nation's work force, or about 60 million people, so keeping track of how small business owners like Asbury are faring is key to figuring out if the economy is getting better or worse.

Some encouraging signs

There are some encouraging signs. Asbury and others in the housing and construction industries are feeling confident enough to add workers. So are parts of the manufacturing industry as demand for cars and trucks picks up. Many companies in the health-care field are bringing on new workers as the full implementation of the health care overhaul nears and baby boomers age.

The September report from the Bureau of Labor Statistics shows the gains. The number of salaried real estate workers has risen by 195,000 in the last 12 months. In the auto industry, including parts makers, employment is up by 51,700, or 7 percent. The BLS doesn't break out employment in health care consulting services, but hiring at management and technical consulting services for businesses is up by 637,000 or 5.8 percent.

There's also an often overlooked form of small business hiring — people who start their own companies and become self-employed. In September, 118,000 did that, according to the Labor Department.

But for all the good news, skeptics can find their fair share of evidence to support a gloomier view. Not all small companies are on a hiring spree. Many defense contractors are waiting to see how much Pentagon spending is cut under what's called sequestration. The budget cuts — which may be triggered Jan. 2, would come because lawmakers couldn't reach a budget deal — unless Congress stops them. Smaller retailers are holding back because the economy is still so uncertain.

It's been difficult to get a clear picture of small business hiring because there have been so many differing reports. A report Tuesday from the National Federation of Independent Business showed a fourth straight monthly drop in hiring at small companies during September. That was odds with a report last week from the payroll service company ADP. That one said that small businesses were hiring in September

"We're in a recovery, but it's still tepid and small business is not getting its share of the recovery — but maybe it will be soon," says Susan Woodward, an economist with Sand Hill Econometrics in Palo Alto, Calif.

Here are some snapshots of small companies that are hiring or holding off:

Hopeful about housing

The new employee at Andy Asbury's brokerage will do administrative and marketing work including postings on social media websites -- a big change from the part-time bakery job he got following his graduation from the University of Minnesota earlier this year.

Asbury and his father started the brokerage in August 2011 after working at other real estate firms. They held off hiring until they believed business would grow enough to pay a worker's salary. Asbury did work like listing houses online until the brokerage hired a part-time administrative assistant in February. But he realized he also needed an employee who understood social media and who could also write articles that could promote the brokerage online.

"I kind of followed social media but I didn't grow up in it and live and breathe it," he says.

Asbury found the worker through one of his agents, who knew that the young man was looking for a job. "He actually reminded me of myself. I felt like was very intelligent and competent and someone I could trust to pick up on the things we needed to do pretty quickly," Asbury says.

Asbury has also taken on more agents, who work on commission. He now has 17, up from 10 at the start of 2012. He is hoping to double the number of agents he has in 2013 because homeowners are telling him they're thinking about putting their homes on the market.

Cruising along with auto sales

At PRISM Plastics, based outside of Detroit, the recovery in the auto industry and the demise of many of its competitors during the recession created more demand for its products. PRISM makes seat belt and airbag parts and components that go into cars and trucks. The company has been hiring for more than a year and opened a new plant in Chesterfield Township, Mich. six months ago. It has about 20 new workers and five positions still open.

Gerry Phillips, one of the PRISM's three owners, says some of the new hires have been people who were unemployed, but others moved out of jobs they didn't like.

The company is looking for people with technical skills and auto industry experience. It can be hard to turn anxious applicants away, he said.

"You want to give everyone a break and sometimes we get people in who are very nice guys and good people that maybe lack the skills you need, and those are the people you feel the most for," Phillips says. "You feel bad about the people you can't hire."

PRISM anticipates hiring four more workers next year when its new plant begins running 24 hours a day five days a week. In 2013, it's expected to run 24/7.

Healthy hiring

Hil, Chesson & Woody, a Chapel Hill, N.C., a health benefits brokerage and consultancy with 51 employees, is hiring because companies need them to help navigate the health care overhaul that Congress passed in March 2010. The company has hired three people in the last three months and plans to hire two more this year. And because many parts of the health care law won't take effect until 2014, it expects to hire at least six more people in 2013 and a minimum of six in 2014.

The firm's clients are in the dark about the law, says co-owner Skip Woody. "They don't know how it will impact them," he says.

One recent hire was an attorney, a position they originally planned to fill next year. The woman who was hired had been unemployed for six months.

Applicants are becoming more aggressive because they're so anxious to be hired, Woody says. The company's new attorney applied after her husband interviewed with the firm and was rejected.

"It turned out that we loved her," Woody says.

Headcount stalled

Although the busy holiday season is approaching, Roberta Rubin isn't planning to hire more employees for her Winnetka, Ill., bookstore, The Book Stall at Chestnut Court. She just took on two part-timers, but only because other employees cut back their hours. Her overall staffing level won't change.

"I'm not real happy with the economy right now and I worry — but I have great faith in the book business," says Rubin, who has owned the store for 30 years. The number of workers at sporting goods, hobby, book and music stores are below levels reached 12 months ago, according to the BLS.

Aside from the economy, Rubin is faced with changes in the book business as more people download digital versions of books for e-readers, smartphones and tablet computers.

But The Book Stall is busier since three nearby Borders stores closed in April 2011, she reports. "That's been such a bonanza for us," Rubin says. And it's not just more sales at the store -- The Book Stall sponsors and sells books at author appearances and readings at schools and libraries in the area.

No way to plan

"We're being guarded right now. We think we're OK, but I'd still say we're nervous," says Mark Gross, owner of Oak Grove Technologies, a company whose services include helping the Defense Department train military personnel in intelligence and security.

Gross isn't hiring while he waits to see if the Army and other service branches have to cut the number of employees they use for their training programs. Defense contractors of all sizes may have to eliminate jobs if Congress doesn't stop the budget cuts that are set to take place in January.

"We don't know what programs are being cut," says Gross, who has 120 people in administrative jobs and 480 who work on contracts with the government. Oak Grove is based in Raleigh, N.C., and has offices in Washington, D.C., and Orlando, Fla.

Gross has not only put off hiring, he's also delaying plans to buy a smaller company that provides similar services to the government. His bank and attorney told him not to make any commitments until there's more certainty about the Pentagon budget.

"Right now, there's no way to plan," he says.

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If you are trying to figure out if small businesses are hiring, it depends on where you look.
Friday, 12 October 2012 09:38 AM
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