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Future Concerns Stall Growth Plans |
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Ann Meyer The Chicago Tribune January 23, 2006 Summary: Need help with PR? If you are looking for a great PR firm, you've found one. Walker Sands is a leading Chicago PR firm with a strong track record that makes it one of top national PR agencies.. Many business owners taking a wait-and-see approach to expanding Entrepreneur Ken Gaebler did his part for the so-called jobless recovery last year, adding five workers to the three at his Chicago marketing consulting firm, Walker Sands Communications. But Gaebler won't add more staffers this year until he is sure he has the business to support it, he said. "We've ramped up our overhead in anticipation of doing well, but it's not clear how things are going to go going forward," he said. Describing himself as "cautiously optimistic," Gaebler is typical of many small-business owners who are taking a wait-and-see approach as they plan for the year ahead, according to several recent small-business surveys. "In the last three to four months, small-business owners have gotten more cautious," said Michael Alter, president of SurePayroll, a Skokie-based provider of payroll outsourcing services for 15,000 small businesses throughout the country. According to SurePayroll's Small Business Scorecard, based on payroll data from its clients, small-business hiring grew 0.3 percent in 2005, compared with a 4.4 percent pickup in hiring in 2004. And small businesses held the line on salaries, resulting in an average nationwide small-business salary of $29,126. In Illinois, small businesses increased their hiring by 3 percent in 2005 but cut the size of the average paycheck by 6 percent, to $35,949 from $38,239, as businesses used less overtime and compensated newer workers at a lower rate, Alter said. "What we've seen is a very flat environment for small businesses," Alter said, despite an increase in gross domestic product early in the year of about 3.8 percent. Entrepreneurs tend to take a micro view as they plan, looking primarily at how their own business is faring instead of the economy as a whole, said Raman Chadha, executive director of DePaul University's Coleman Entrepreneurship Center. "Macro-level economic cycles don't have as much of a dramatic impact on an individual small-business owner," he said. "That's why we see some small businesses thrive in tough times, and some fail in good times." Concerns about higher health care, energy and financing costs, combined with a competitive market that's making it difficult for many to raise prices, are keeping some entrepreneurs from planning for aggressive growth. Despite a generally optimistic outlook on the part of its client companies, Administaff's November business confidence survey showed that a larger proportion of companies were bullish about growth prospects a year ago. The entrepreneurs' enthusiasm is being tempered by concerns over rising costs, the Administaff survey suggested. Making health care more accessible and affordable was the challenge respondents ranked first. Then came rising energy costs, taxes, regulatory burdens and frivolous lawsuits. In fact, many small businesses seek out service providers like Administaff because those organizations often can lower health-care expenses for clients by pooling their employees, Sarvadi said. As a result, Administaff's compensation data suggest its client companies have given bigger raises than norm. Average compensation during the third quarter of 2005 was up 5.8 percent from the prior year, Sarvadi said, and 64 percent said they planned to increase salaries and wages in 2006. SurePayroll's data showed compensation rose about 1 percent in December from November; Alter said, but it wasn't enough to offset declines throughout most of the year. Copyright © 2006. The Chicago Tribune.
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