Small Businesses Plan to Expand

Small business leaders report a growing confidence in the economic environment, which appears to be contributing positively to hiring and investment decisions for their business in the near term.

Over one-third (35%) of the small businesses polled in Capital One’s Small Business Barometer survey plan to add employees to the payroll over the next six months. This number is up six percentage points from the first quarter of 2011 and shows the highest percentage of small businesses planning to hire since the first quarter of 2010.   

The large majority (78%) of those businesses planning to hire over the next six months expect to hire between one and 10 employees. Eleven percent of respondents believe they will hire 10-20 new employees in the near term.   

Including replacing employees who have left the company, 56% of the small businesses polled have hired over the past six months, but only 14% of those businesses have hired more than 10 employees over that time period.   

When asked about the primary factor driving hiring decisions, the top answers were: replacement hires (43%), hiring to support growth or expansion (21%), and increase revenue or sales (16%). Only 8% of the small businesses surveyed report that concerns about credit access is a consideration as they make their hiring decisions.  

In the second quarter, 44% of small businesses polled believe that economic conditions for their business are improving. About half (48%) report that their firm’s financial position is better than it was one year ago. 

The majority (64%) of respondents plan to keep spending at current levels in the near-term. Eighty-five percent report they are able to access the financing they need. Only 16% of small businesses in the survey say that securing the capital needed to continue operations will be one of the biggest challenges they face over the next six months.