Survey says businesses see rosy 2017
Area small- and mid-sized businesses report optimism despite challenges of finding talent, covering health care costs.
Small business owners in West Michigan are of two minds: It will be a good year, but it will have some challenges.
In a recent survey, 93 percent of Grand Rapids Area Chamber of Commerce members, two-thirds of which are small- and mid-sized businesses, reported a favorable or very favorable perception of West Michigan’s business climate for the upcoming year.
The figure, based on strong sales in 2016 and rising profits overall, is on par with feedback from a statewide survey, the Michigan Future Business Index (MFBI), in which 62 percent of the 415 respondents said they expect increased sales in the next six months.
Rick Baker, president and CEO of the Grand Rapids Area Chamber of Commerce, said responses to the chamber’s survey came from companies in a wide variety of industries.
“The respondents to our survey were across the board in industry as well as size,” he said, from agriculture to service to financial companies. “All of them were anticipating growth.
“The positive trend is this is the fourth year in a row where businesses have reported hiring. Seventy-seven percent (of businesses in 2016) were adding positions for the growth of their company.”
Baker said the chamber survey asked members to report the challenges they are facing in 2017, and the resounding response was finding qualified talent is the most pressing concern, surpassing unease over the cost of health care, which had been ranked the top issue for the past four years.
Chamber survey respondents also cited regulatory mandates — including compliance with the Affordable Care Act, real estate costs, local road infrastructure, the economic outlook and the tax load — as impediments to business sustainability and growth.
The chamber said 72 percent of the survey’s 600 respondents noted difficulty finding qualified applicants, an increase from 51 percent in 2014.
The MFBI reports the same top challenge.
“While the future looks bright, we can't lose sight of the challenges we face, including attracting and retaining top employees,” said Mike Britt, president of Accident Fund Insurance Company of America, which commissioned the MFBI report.
A slim plurality (48 percent) of the MBFI survey respondents reported their access to qualified personnel is either “only fair” (33 percent) or “poor” (15 percent). Forty-six percent said their access is either “pretty good” (35 percent) or “excellent” (11 percent).
The MBFI report said many businesses are opting to answer the talent question by moving existing employees into new roles or training less qualified new hires.
Baker said the chamber is working to help businesses realize a more diverse workforce is a win-win for companies and their employees when it comes to hiring.
“It’s (been) raised in importance and stature in the community, the importance of diversity, equity and inclusion, which was not always something that was top of mind for business people in the past,” he said. “But more and more businesses are aware of the importance of this to the success of the overall marketplace.
“We are trying to make sure we are providing them the tools to help them be a more inclusive organization.”
Baker said the chamber has a vice president of inclusion, Sonya Hughes, who oversees programs in which businesses leaders can “learn best practices in recruitment, hiring and finding qualified candidates … as they look to diversify their market or talent.”
Regarding health care, rising costs have been a top issue for local chamber members for the past decade. If costs were contained, about 50 percent reported they would increase wages, 28 percent would invest in expansion and 24 percent reported they would hire more employees.
“The message from members has been clear and consistent on health care,” said Andy Johnston, vice president of government affairs for the chamber. “Policymakers need to take note of the impact this continues to have on job providers and workforce, especially given the current discussion in Washington.”
With growing concerns about the Affordable Care Act and the challenges it adds to their ability to run profitable companies, small businesses may not be waiting for the government to fix the ACA, the MFBI report said.
The report said five in 10 Michigan small businesses said they will reduce health care benefits, increase employee premiums or not provide health care benefits at all to employees in 2017.
Despite the challenges, both the chamber survey and the MFBI report agree there is much to celebrate in the current economy.
“Small business owners remain bullish about the future,” said Chris Holman, CEO of the Michigan Business Network, in reference to the MFBI report. “We continue to see great optimism for future growth into 2017 and beyond.”
Baker said the numbers don’t lie.
“I think (it’s) the fact that they’re seeing year over year continued growth in sales, and even in the retail sector, we just saw record numbers in holiday sales,” he said. “We’re also looking at the automotive industry having a positive effect in 2016, which plays out here in West Michigan, as well.
“It seems like the opportunities are consistent across industry types.”