Between the rising prices of dwelling, blended perceptions of the financial system, and extra, monetary uncertainty impacted us all final yr. Small enterprise homeowners aren’t any exception to those monetary stressors, making them conscious about the influence these challenges can have on each their enterprise and workforce alike.
Contemplating this panorama, let’s discover a number of the prime considerations small companies skilled in 2023, how employers can assist their workforce with these challenges in thoughts, and predictions for 2024, based mostly on insights from MetLife and U.S. Chamber of Commerce’s Small Enterprise Index.
2023: A Yr in Assessment
In early 2023, many small companies have been involved concerning the influence of inflationary pressures on their enterprise. In reality, in accordance with the Q1 Small Enterprise Index, 54% of small enterprise homeowners cited inflation as their prime concern. By Q2, small companies once more reported inflation as the highest problem, this time for the sixth straight quarter. The variety of small companies citing inflation as their primary problem has held regular since late 2022, remaining a prime enterprise concern in This fall, and more likely to proceed into this yr.
For small enterprise workers, however, MetLife’s deep-dive into small enterprise tendencies knowledge reveals inflation was additionally a driving supply of monetary stress, with 45% of people with poor monetary well being reporting considerations about shedding the worth of their financial savings because of inflation. With these considerations in thoughts, it’s not stunning to study that by Q3, 56% of small companies reported that they discovered it difficult to maintain up with workers’ wage expectations and calls for – a sentiment that was echoed within the This fall index as nicely.
This fall knowledge additionally confirmed that small companies see a weakening financial system at each the macro and micro degree. Solely 30% of small companies say their native financial system is in good well being, and that quantity declines to 25% for the U.S. nationwide financial system, which might by why small enterprise homeowners are cautious of what’s to come back. Certainly, on the finish of 2023, small enterprise proprietor confidence remained cautious, as indicated by a Small Enterprise Index rating of 61.3 out of 100.
Supporting Your Workforce
Small enterprise leaders and hiring managers can stand out by taking the time to grasp and make adjustments based mostly on the exterior components which can be impacting their workers’ wants.
To start out, employers have to take stock of their workers’ monetary considerations; as an illustration, 81% of small employers say their workforce is financially wholesome, whereas solely 53% of small enterprise workers report good monetary well being. Allow us to additionally think about that monetary well being amongst small enterprise workers has plunged 10% year-over-year. That is 1.5 instances the speed skilled by workers at bigger organizations. Gaps like these underscore that many small enterprise employers are overestimating their workers’ monetary wellness and highlights the necessity to alter.
Notably as the price of turnover ranges from one-half to 2 instances an worker’s annual wage, funding into voluntary office advantages can go a good distance for worker monetary wellness and employer budgets. Further prices and staffing considerations are the very last thing any small enterprise chief wants – and so, by offering sources that assist the monetary well being of your workforce, you may place what you are promoting to retain staff for the long run.
The Street Forward
On the similar time that small enterprise leaders reported extra pessimistic-leaning views concerning the nationwide and native financial system, knowledge from the This fall index means that small companies are nonetheless hopeful about the way forward for their companies. Take into account these key indicators:
- 65% of small enterprise anticipate income to extend in 2024
- 64% of small companies say the general well being of their enterprise is considerably or excellent
- 42% of small companies say they plan to extend funding within the subsequent yr
- 40% of small companies report that they plan to extend workers within the subsequent yr
That mentioned, it’s clear that attracting and retaining expertise will proceed to be a problem for small companies this yr, notably as near half of employers who regarded for brand new expertise final yr mentioned it’s laborious to supply aggressive pay and advantages. On account of this, many small companies are contemplating new methods to supply a aggressive edge, with options starting from versatile work schedules, hybrid or distant work choices, and paid sick go away.
Ultimate Ideas
2023 offered a singular financial panorama, leaving employers tasked with supporting worker monetary wellness, whereas they labored concurrently to beat trials and tribulations going through their companies. With ever-rising worker expectations, sustaining and retaining expertise has been and can proceed to be a precedence, in the end pushing small companies to contemplate other ways to maintain present staff happy and potential expertise . Towards this backdrop, what adjustments is your group making to maintain tempo with worker calls for?
By Cynthia Smith
As Senior Vice President of Regional Enterprise at MetLife, Cynthia Smith performs a number one function in serving to small companies discover the correct mix of advantages to assist entice and retain prime expertise.