Chicago entrepreneurs compete for talent as revenue growth drives expansion

Chicago small business owners are optimistic heading into 2019, anticipating year-over-year revenue growth and indicating plans to hire and expand in the year ahead, according to the fall 2018 Bank of America Business Advantage Small Business Owner Report. That said, a historically tight job market is complicating expansion plans as Chicago entrepreneurs find themselves in a competition to retain and hire talent.

The report, based on a semiannual survey of 1,000 small business owners across the country and the greater Chicago area, revealed that 81 percent of Chicago business owners are confident their 2018 year-end revenue will exceed that of 2017. In addition, over the next 12 months:

  • Fifty-seven percent of Chicago business owners believe their revenue will increase (vs. 55 percent in fall 2017)
  • Seventy percent plan to expand (vs. 75 percent in fall 2017)
  • Twenty-seven percent plan to hire (also 27 percent in fall 2017)
  • Fifty-one percent are confident the Chicago economy will improve (vs. 49 percent in fall 2017)
  • Forty-six percent express similar confidence in the national economy (vs. 48 percent in fall 2017)
  • Eighteen percent intend to apply for a loan (vs. 16 percent in fall 2017, and the highest level in Chicago in more than three years)

“Chicago entrepreneurs are confident in their businesses and are anticipating revenue growth over the next several months,” said Drew Piazza, Chicago small business banker manager for Bank of America. “This optimism is also driving expansion plans, with about a quarter of Chicago business owners seeking to bring on new employees. That said, record low unemployment is presenting a challenge for recruiting and retaining top talent.”

Heightened competition for Chicago talent as small business hiring ramps up

As business owners make plans to hire in the year ahead, they acknowledge that identifying and retaining employees has become a significant challenge. In the last year, turnover has affected 25 percent of all Chicago entrepreneurs. Among those who sought to hire new employees, 52 percent had difficulty finding qualified candidates, and 51 percent report that their inability to find qualified candidates has limited business growth.

To adjust to these challenges, business owners who sought to hire in the last year have modified their hiring strategies to find and recruit top talent by:

  • Shifting to a more flexible culture in terms of hours, location and extra time off (21 percent)
  • More actively using social media (18 percent)
  • Offering higher salaries (15 percent)

Concern over most economic issues fade; worry over health care costs reaches five-year low

In correlation with steady business forecasts, the survey found a general trend of declining concern over most economic factors that are tracked. Health care costs remain the top concern for Chicago entrepreneurs at 60 percent, though that fell 13 percentage points year-over-year. Concern over corporate taxes also decreased significantly, with only 40 percent identifying this as a burdensome issue nearly a year after the enactment of U.S. tax reform, down from 54 percent in fall 2017.

Perhaps a result of recent changes to and uncertainty about trade policies, 41 percent of Chicago business owners identify U.S. trade policy as an economic concern, making it the fourth-highest concern for entrepreneurs today. Thirty-seven percent say the latest tariffs/U.S. trade policies have impacted their business, with 18 percent reporting both positive and negative effects, 12 percent reporting a negative impact and 7 percent reporting a positive impact.

Chicago small business owners feel the holiday spirit; recommend entrepreneurship as a career

Chicago business owners are feeling the holiday spirit as 89 percent plan to offer at least one holiday perk to their employees. The top holiday perks planned this year are office closures (49 percent), salary bonuses (44 percent) and a holiday party (44 percent, the highest percentage among all 10 cities).
Finally, despite unique challenges in managing a small business, Chicago entrepreneurs love what they do. Eighty-three percent say the added stress of entrepreneurship has been worth it, and 84 percent would recommend that others follow in their footsteps.

For a complete, in-depth look at the insights of the nation’s small business owners, read the fall 2018 Bank of America Business Advantage Small Business Owner Report and for additional insights, download the Small Business Owner Report infographic.

12/13/18


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