After a year of uncertainty and cost-cutting, the small business economy is finishing strong.
The holidays will be filled with plenty of Oscar-worthy films, but I suspect the best surprise ending will take place on Main Street.
The trajectory for local Main Street businesses, those with usually only a few employees, is beginning to look like a classic underdog story in 2013. With everything going against them--government inaction, uncertainty over health care, payroll tax increases, sluggish demand--they’ve found a way to persevere.
Going into 2013, our small business clients told us their primary goal was to cut costs to increase profitability. Now according to our November 2013 SurePayroll Small Business Scorecard®, 55 percent are offering holiday bonuses, up from just 38 percent last November. Eighty percent of those bonuses will remain the same or larger than last year.
It’s a significant turnaround and an indication that they’ve continued to generate revenue in the face of uncertainty by finding a way to grow without hiring.
Speaking of which, hiring for the year is slightly down--at 1.7 percent--and the average paycheck is flat, meaning small businesses have been able to grow revenue without spending more on either new or existing employees.
Optimism is up to 63 percent from 57 percent at the beginning of the year, and Main Street businesses are reflecting their increased optimism and cash flow with an increased amount of year-end bonuses. They’re spending the extra cash on their employees, which should put more money on Main Street this season.
For all they’ve endured, small businesses with 10 or less employees have somehow found ways to generate consistent performance.
MICHAEL ALTER is president of SurePayroll, America’s leading online payroll service. He received an MBA from the Harvard Business School and holds a bachelor's degree in economics from Northwestern University. @michaelalter