Two Challenges Facing Small Businesses

I talk with small business owners everyday.  Anything that I learn is clearly anecdotal, but trends can emerge over time.

Today, it seems like everyone is optimistic.  Business owners want to grow, and they are confidently trying to invest in the future.  However, they seem to be facing two real pressures right now:

  1. Businesses are worried about finding enough good talent.  Regardless of the industry, it seems that wage pressures are real.  Employees are leaving one job for another at a higher rate, there are more unfilled job openings, and wages are creeping up.  In some areas wages are increasing faster than “creeping.”
  2. Business owners are having trouble accessing the capital they need to grow.  Granted this may be totally self serving on my part (we lend money to businesses) and what I want to hear.  However, I found the chart above interesting and consistent with what I’m hearing from business owners and commercial bankers.  Banks are saying they are more optimistic.  The regulatory environment hasn’t really changed for banks even though the government has said it will, bankers expect it will, and investors have already bought billions worth of bank stocks believing that it will.  Yes, this chart shows that bank lending is increasing.  It’s just increasing at a slower rate than it has for the last few years.

Fundamentally, businesses use assets (human resources and financial assets) to become larger and generate more profits.  It seems right now that small businesses want to grow, but they are having trouble accessing the resources necessary to grow.

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