This month’s numbers don’t reveal anything earth-shattering. But what’s really changed is the small business owner’s outlook on the state of the economy. Although we’ve had two months of similar hiring and paycheck numbers, the SurePayroll small business owner optimism number plummeted 11 points, revealing that only 55 percent of business owners are optimistic about the economy. That dip is not too far off from consumer sentiment, according to the Thomson Reuters / University of Michigan consumer sentiment index. Their survey shows a 9 point dip in consumer sentiment from June, with 67 percent of consumers indicating they feel good about the economy.

I would say the numbers and rise in number of people who are pessimistic just confirm that we’re in a near holding pattern in our long, slow climb out of the depths of the recession. That is, if you think we’ve left the recession. Unfortunately, most small businesses don’t think we have (3 in 4 business owners we recently surveyed don’t think the recession is over). When asked why, the majority cited a continued high unemployment rate as the main reason and government policies as another reason they don’t buy economists’ views that we left the recession several quarters ago. Perhaps the difference between the small business owners surveyed and these economists is simply a matter of semantics — what does “out of a recession” technically mean? But either way, business owners aren’t yet feeling better about the economy.

Likewise, consumer confidence is in a decline. More business owners may be feeling that the economy is not improving, but they aren’t drastically changing their hiring or pay habits at this point. We learned that consumers, on the other hand, are acting on their feelings. They put a drastic halt on spending in July, which certainly won’t help improve small business sentiment.

The results of this month’s scorecard come out at the same time we get news that the GDP was much lower than expected in Q2. While there were some winners in the report that could be helping some of the business owners who reported that they are optimistic (non-trade business increased and equipment, software, structures and new construction spending rose), the media has concluded what business owners have —without more jobs, we won’t see increased spending. And without increased spending, we won’t see more jobs.

What does this mean for how you operate your business? Clearly, everyone’s situation is different and requires an individual evaluation. However, given the catch-22 we’re in (without increased demand/revenues, it is unlikely businesses will hire and take us out of the recession and without businesses hiring, it is unlikely consumers will have the income to spend to increase demand/revenues), the mantra of the day remains “caution.” Take slow, deliberate actions that limit your risk for now.

With more than a half-year of data behind me, I can assure you they do.

It’s true that as the online alternative to traditional payroll services, we knew we had to be the first service to offer a mobile option – providing a mobile application is a natural extension of our mission to provide the most convenient payroll process on the market. But we were absolutely stunned at how many customers have downloaded the app. In fact, it had the fastest adoption rate of any feature we’ve ever released. We now know that it’s more than just something to talk about in marketing materials – it’s a useful business tool thousands of our customers rely on to get payroll done.

We are quickly reaching the tipping point when it comes to the expectation that all things capable on a PC should also be capable on a mobile device. More and more business applications continue to be built for smartphones, and you will see greater adoption of mobile devices as an essential business tool.

Smartphones offer more control than any other technology out there. They provide the ability for a business owner to stay connected to their business at all hours of the day, or night, without having to stop their lives or interrupt other business activities to access information. So if you’re in the technology area servicing small businesses, you need to think about offering one. And there’s a lot to consider.

First, you need to understand for which mobile device you should develop your app. For us, we know that our customers who use iPhones use it for browsing, while those who use a Blackberry rely on that device primarily for email. So it made sense to launch an iPhone application first.

Second, you need to be aware that Apple or Blackberry or Google will have to approve your app, which can take longer than you think. And you will owe them a percentage of your sale price if you charge for it.

Third, you need to figure out if you’re going to develop the application in house or outsource it. Knowing that it was going to be a core part of our business, we wanted the control and skills in-house. As with any application, “simple is not easy.” We invested a lot of time and resources over six months designing and building our application. It was a lot harder than we thought to develop an easy-to-use, intuitive mobile business application robust enough to be able to run payroll.

Finally, you need to be able to commit to its support, just like any other platform. You need to be able to make upgrades, manage security and have the appropriate level of customer service staff and provide them with the tools to support it. For all intents and purposes, you should think of it as a brand new product platform that needs regular care and attention. We are only seven months in and have already launched versions 1.0, 1.1, 1.2, and 2.0.

While an app takes a lot of work to develop and maintain, the increased business, customer loyalty and promotion could be well worth it. SurePayroll not only sees that thousands of customers are using the app, but we’ve been recognized by PC World as one of Five Helpful iPhone Apps for the Office, named a Top 10 Must-have Small Business iPhone Apps for a Productive 2010 by Small Business Trends and won the CPA TechAdvisor’s Tax and Accounting Innovation Award winner for 2010. It’s a key differentiator for us and one more way that we stay loyal to the needs of our small business customers.

Over the last few months, I've written that the economy was showing signs of stabilization, but I wasn't ready to call it a recovery. In light of this month's SurePayroll Small Business Scorecard, I'm glad I haven't.

While the national data shows 3.9 percent hiring growth year-to-date, similarly positive regional hiring numbers and acceptable optimism among our small business customers, the average paycheck dipped by 0.4 percent year-to-date.

June marks the first month this year with negative year-to-date paychecks. In fact, pay across the nation hasn't been this low since October 2005.

These numbers disrupt a pattern of paycheck stability we saw over the last few months. The question is whether we've hit the lowest point or if there's still room to fall. We may be bouncing around the bottom. Then again, we may not be.

As business owners navigate the economy, they must contend with even more uncertainty beyond employment facts and figures. The Gulf Oil Spill, a gyrating stock market, pending financial reform legislation, and severe summer weather—external forces such as these have the power to disrupt the decision-making processes at many businesses.

Economic uncertainty stops everyone from spending and lending. Until business owners feel certain about economic stabilization, they won't drastically boost hiring or offer employees more hours and pay. And until consumers feel secure in their jobs, they won't spend more.

So I'll stick to my earlier predictions that we're likely many months away from a full-blown recovery, that there's too much uncertainty to be certain about anything. My advice: Be cautious and deliberate in running your business. You don't want to stick your neck out just yet.

Last month I reported a near-record-low level of small business optimism, 46 percent. In other words, fewer than half the business owners out there felt confident about the direction of the economy. That pessimism came despite an increase in small business hiring and other signs of stabilization, as indicated by the SurePayroll Small Business Scorecard, an economic indicator we created in order to track the health of the U.S. small business economy.

Luckily, the numbers continued to improve in February. Hiring has increased by 1.9 percent year-to-date. And paychecks were essentially flat (up 0.2 percent) for the first time in February following two years during which paychecks declined month after month. The biggest difference of all involved employer confidence. More business owners report that they feel good about the economy. In fact, optimism shot up 16 percentage points over January's numbers. Now well over half of small business owners say they are optimistic about the small business economy.

So the big question is: Will that sentiment endure and propel the economy forward?

Truth is, while the numbers are telling us we've bounced off the bottom and are now heading in the right direction, only the actions of the small business owners will demonstrate when we're completely out of the water. When they're feeling positive, we'll see their safe-bet decisions, such as hiring contract workers rather than adding full-time employees, turn into more aggressive actions, such as adding headcount and making capital expenditures. When that starts to happen, more money will move through the economy, building positive momentum. We'll see paychecks holding steady, without erratic dips or slight increases. We'll also see our optimism levels return to 2007's highs of nearly 80 percent. For business owners and for everyone else, we can't get off this wild ride a minute too soon.

The first month in 2010 was the first in years that that both small business hiring and salaries are up, 0.8 percent and 0.1 percent respectively. Following the last few months of '09 that showed strong signs of improvement, it seems like the data would have a whole lot of people feeling positive. But business owners are far from it.

In fact, SurePayroll's optimism survey reveals one of our most pessimistic months ever, with more than half of business owners reporting that they feel pessimistic about the economy at this time.

So why does our technical data tell us business owners feel — and are acting — confident about the economy while our emotional data tells us they're not?

There is still huge uncertainty.

There is uncertainty about where health care will land. Will a bill get passed? Which version of the bill? Will it cost small businesses more or less?

There's uncertainty about the president's small business incentives. Will the community bank lending program impact small business growth? How quickly will tax incentives, and credits for investment and hiring have an effect? Is there enough stimuli? When will all of this get implemented?

And there's uncertainty about the stock market. Why have we seen the worst monthly decline since last February? Was optimism too high at the end of '09? Is the government getting too anti-business?

If people continue to feel uncertain, pessimism will grow and their actions will quickly catch up. But since most business owners have no control over the health care bill, the stimulus package or the stock market at this time, all you can do is focus on what you do have control over at this time - your business practices. Whether you're hiring or investing or downsizing and conserving, you need to take a stark, non-emotional look at your business and decide how you should feel'and then how you should be acting.

It's the business owners who did that last year and even two years ago that are still around this year.

According to the SurePayroll Small Business Scorecard, our economic indicator that aggregates data from tens of thousands of small businesses, hiring is up 0.8 percent month over month -- that's the greatest month-over-month hiring increase we've seen since February '08. That brings us to a year-to-date increase of 3.4 percent.

Now, if you've followed the Scorecard throughout 2009, you know that hiring has been up for much of the year, but it's been driven by small businesses playing it safe and hiring temporary workers versus full-time employees. That has shifted. This month, we see the contractor index increasing at a much lower rate, meaning more of the month-over-month hiring increase is made up of employees and not contractors.

And some more good news. Salaries are declining at a decelerating rate. The month-over-month decrease was only 0.4 percent, bringing us to a year-over-year decrease of 8.3 percent. While salaries are still declining, this is the second month they did so at a lesser rate.

So, I see some trends telling us we're finally starting to bounce off the bottom and that the worst is behind us. And many small business owners agree.

In a late December survey, two-thirds of SurePayroll customers indicated that they predict their revenues will be up in 2010, and the same number feel good enough to say they believe the economy will get better in the new year. It makes sense. After all, with the continual and drastic declining salaries of 2009, small businesses couldn't count on increased revenues -- no one had the money to spend. Now that we're seeing more hiring, we should see more spending, and so an upward cycle can begin.

That's not to say business owners won't have tough challenges in the year ahead. A rebound doesn't happen in just a month or two. But if trends continue -- along with small business owner optimism -- I predict we'll be reporting on some kind of a recovery by summer]]> Tue, 05 Jan 2010 15:51:32 -0500 Michael Alterhttp://www.inc.com/michael-alter/2010/01/good_news_on_the_horizon_1.html http://www.inc.com/michael-alter/2009/12/hirings_up_now_the_bad_news_1.html As we saw in the post-Thanksgiving retail reports, more holiday shoppers came out this year than last. Unfortunately, they spent less, giving us the "More Shoppers, Less Spending" mantra seen all over the news. The latest SurePayroll Scorecard headline has a similar ring. Replace "shoppers" with "hiring" and "spending" with "pay" and you have this month's small business hiring and pay summary.

Small employers are more actively hiring than they were last year, but like the holiday shoppers, they are being much more careful with cash.

According to the November Scorecard, which aggregates data from more than 25,000 small businesses nationwide, hiring is up in November from October, bringing us to a 2.6 percent increase year-to-date. But don't get too optimistic. Like the past few months, we can thank a continued reliance on independent contractors for the majority of the increase.

Small business salaries continue to decline, with a national year-to-date drop of 8 percent. It's no wonder holiday shoppers are spending less. On average, the small business employee earned 9 percent less year-to-date in 2009 than during the same time period in 2008.

I agree with all you business owners who continue to play it safe, hiring temporary staff and conserving cash while waiting for solid signs that the worst of the recession is coming to a close. Tightening your purse strings isn't fun, especially around the holidays when employees may be used to gifts, bonuses, or other holiday extras that just can't be given this year. You'll have to get creative and come up with non-monetary ways to bring holiday joy to the office, such as giving your employees extra comp days or hosting an in-office holiday lunch. Get through this tough time with as much cash in hand and you'll be happy you put yourself in the best possible position to grow when the economy turns.

For a broader picture of the small business economy, check www.SurePayroll.com for the full SurePayroll Small Business Scorecard data for November, including regional and key-states result.

At SurePayroll, we recently surveyed our customers and discovered that three out of four admit to making hiring mistakes, many of which cost as much as $10,000. In today's extremely competitive job market, employers have to be much savvier to avoid getting burned by candidates who stretch the truth to land a job.

How can you make sure you don't get duped by a bad hire? Use proven methods -- not your intuition -- to check out their background, skills, and personality traits. Gut instinct is important, but it isn't foolproof. Employers often hire candidates only to find out they aren't really that friendly, talented, or qualified. They were simply great actors.

Here are four affordable screening tools you can use to help you avoid costly mistakes:

Background checks. Background checks will ensure you're not risking your business by hiring a violent criminal, white-collar criminal, or illegal alien. With nearly half of all small business job applicants submitting resumes with false information, going the extra mile to have professionals check for red flags is a must to keep your business out of harm's way.

Drug screening tests. Experts in toxicology say that 75 percent of illegal drug users are employed, and most work for small and midsize businesses. If you're in a business that uses drivers, people performing physical labor, or other positions that require alert, sober employees in place to avoid serious accidents, drug tests are an absolute necessity.

Skills testing. Just because a candidate looks good on paper doesn't mean he or she will be able to follow through with excellent work. Whether you're hiring a copywriter who must have an excellent grasp on grammar or a programmer who needs to be well versed in C++, skills testing will provide a detailed look into how a candidate is truly capable of performing.

Personality tests. A professional personality assessment can reveal aspects of a candidate's character and potential that an interview can't. Will the salesperson you're thinking of hiring be a good fit in your highly competitive business? A personality test lets you find out before ever sending an offer letter.

By putting these pre-hiring safeguards in place, business owners can stop losing sleep over bad hiring decisions and focus on what really matters -- growing their companies.

Likewise, optimism among business owners is also continuing to decline, dropping to 50 percent -- one of the lowest levels of the year. With hiring increasing, the cost of labor declining, and the government's recent measures to open up credit for small businesses, you'd think small business optimism would be higher. But here's the thing: When we look a little closer, we see that most of that hiring was driven by independent contractors, not employees. And because of continually decreasing wages, less and less money is being pumped into our economy.

Finally, as many of SurePayroll's customers responded in a recent survey on the government's small-business rescue plan, the opportunity for increased credit may take too long to make a difference for some business owners who are already struggling to keep their heads above the water.

So, while Wall Street is telling us we're starting to recover, it seems that half of the business owners out there adamantly disagree. And if you ask me, no one is more in touch with the economy and how it affects their business than entrepreneurs. You are playing it safe by opting to hire independent contractors instead of employees -- and you should continue to hedge your bets. Now is the time to forget about shooting for huge growth and instead conserve cash.

Only time will tell which way we're going. But one thing's always certain to me -- as business owners, you are part of the most resilient group out there. So play it smart, keep doing without the extras, and know that this too shall pass.

The full SurePayroll Small Business Scorecard data for October including national and regional data will be available at www.surepayroll.com starting Friday, November 6.

I had the opportunity to validate this thinking after reading Jan Carlzon's book Moments of Truth, where the former CEO of Scandinavian Airlines System details how he grew the business by encouraging risk-taking and trusting employees with authority.

It comes down to the fact that employees should feel comfortable and knowledgeable enough to deal with delicate customer situations on the spot.

We make it a point to give our employees the tools they need to make the right decisions, and then step back and let them follow through. When a customer emergency comes up, we have to trust that we've empowered our team to think fast and handle it in a way that delights the customer.

A customer's interaction with an employee is so important, I can't stress it enough. It frequently comes down to these little moments of truth playing a large role in the customer's perception of your business. Sometimes, the customer service will be even more important to the customer than the quality of your products or services. You don't want to lose a customer just because your employee didn't have the knowledge and assurance to appropriately respond to the situation without checking with superiors. They should always know how to respond. You can't anticipate or control moments of truth. They just happen.

Instead of trying to prepare your employees for moments of truth through a specific plan or process, the best thing you can do is simply trust them to make good decisions on the fly. As long as you hire the best people, you don't have to hold their hands or guide them.

As an example, my friend Pete told me he used the same car rental service for his entire adult life, and then one day they didn't have a vehicle for him. So, he was forced to use another rental company. When he called the new company, he let an employee know he was a new customer. The employee told him how happy she was that he decided to try them out, and automatically upgraded him to a nicer rental for no extra charge. And, when he showed up at the company's location in January, in Minnesota, his rental car was waiting for him, turned on, warmed up, and ready to go. Pete's old rental company didn't give him that kind of service. I can assure you that the new company earned Pete's future business, and they may well receive the business of every person Pete tells the story to, including me.

So give your employees the power and confidence to make these types of decisions in the "moment of truth" and watch the result -- more loyal customers who just may tell their friends stories about how great your company is.

In the survey, optimism levels in September dropped to 60 percent -- an 11 percent decline from optimism levels the prior month. Small business wages also continue to decline, down 6.5 percent year to date. At the root of these figures are tight credit restrictions and concerns over the cost burden small businesses may have to shoulder to support the proposed health-care legislation.

Surprisingly, despite those seemingly discouraging statistics, hiring on Main Street is up almost 2 percent year-to-date and independent-contractor hiring is up 14 percent year-to-date. This illustrates that any recovery for small businesses will include a catching-up period to move past the current state of "underemployment," where people are working less hours, or working for less money.

For small-business owners moving forward, here are a few tips as Main Street strives to recover:

1) Where applicable, leverage the growing number of independent contractors to provide immediate and efficient help.

2) Streamline budgets by reevaluating, and in some cases renegotiating existing expenditures. Even fixed costs can be variable over time.

3) Be creative and explore new ways to save money. Just because your grandfather had certain procedures for the family business doesn't mean it works best for you in modern times, in this challenging economy (and with today's technology at your fingertips!).

4) Be gracious with your employees. Everyone is doing more for less right now. Recognize their accomplishments, acknowledge their efforts, and thank them for working so hard.

More on these economic trends can be found in our Small Business Scorecard, which tracks hiring, salary, and other trends for U.S. small businesses. For more information, visit www.surepayroll.com.

That's according to our latest SurePayroll Small Business Scorecard, which tracks hiring, salary, and other trends based on aggregated and anonymous payroll data for over 25,000 U.S. small businesses.

The legacy of this economy will be that while many small businesses have failed or suffered, a substantial number have done just fine -- and that's kept the overall small-business economy in decent shape.

Adding support to the idea that things are looking up, we saw a strong rebound in owner optimism in August. The percentage of small-business owners who were optimistic shot back to 71 percent, from a surprising low of 56 percent recorded in July.

Other noteworthy trends from the Scorecard are that small business labor costs dropped in August and that small businesses appear to be becoming more reliant on independent contractors. With respect to labor costs, we saw that small business salaries fell 0.9 percent in August. Salaries are down 6.0 percent year-to-date. That's good news for business owners -- but bad news for the unemployed who may be knocking on small business doors looking for a job.

For more information, visit www.surepayroll.com/scorecard.

Me? No way. In high school I held down 3 jobs, 2 lifeguard gigs in the summer, and I worked as a restaurant prep person all year. In college, I was a Resident Assistant, worked at Public Safety, and at the local tavern slogging drinks. I was the person who was sick of school the day it was over. I started my first "real" job the Monday after I graduated while the other kids were getting ready to backpack through Europe.

I have been labeled as what some might call a "scrapper." We fight fiercely to get the job done, whatever it takes. I tend to gravitate towards the types of people who don't mind rolling up their sleeves and diving in. That's how I've learned: on-the-job training. Even though I've hired MBAs at VerticalResponse, I'm very clear with them that they too have to roll up their sleeves and get scrappy.

Is there anything wrong with women who go to get their MBAs? No way. In fact the business schools are crying for us. From a recent poll, only 30 percent of the MBA students in the US were made up of women. Not only that, but we're doing it later in life, around the age of 29, right when we're in the middle of climbing some corporate ladder and are thinking about a family. No wonder there's such a low percentage.

Doors can open wide for these women, and depending on the school, we can literally fly past other qualified candidates because of the sorority we were in. Maybe the name of your alma mater gets a foot in a VC's door — but the viability of the business is what makes it successful.

So what are some additional reasons you may want an MBA? You might work in a large company that is very structured and the only way to get ahead is have a degree. And with so many more men than women getting their degrees, it's no wonder we also have more male than female executives.

All legitimate. But there's also nothing wrong with women who didn't go to business school. Perhaps we couldn't afford it, didn't have the time, or wanted real-world experience as soon as we could get it.

Maybe I'm not as professionally-trained as I would be if I did further my education, and it may have taken me a bit longer to think about how decisions I make impact the bottom line, but I do think as a business owner, you have to be comfortable surrounding yourself with people who are smarter than you. And learning from those people is even smarter. Now that's the sign of true intelligence!

Will I ever be a Rhodes Scholar? No way. Will I get into a big time business school? I doubt it. For me, life is too short for two more years of school. I'd rather dive in and learn. This scrapper has her sleeves rolled up.