Autumn is here, but my mind refuses to let go of the summer memories of the beach and ocean waves. One wave that is continuing to crest, even past the months of summer, is small business confidence. The MetLife & U.S. Chamber of Commerce Small Business Index for Q3 shows Main Street confidence at an all-time high. Over 70% of small businesses have a positive outlook on their companies' financial future and business environment.
When we dig deeper into the survey's responses from 1,000 small business owners, recorded by IPSOS, the news gets even better:
- Small business owners feel increasingly positive about their local economies, up five percentage points from last quarter.
- Minority-owned businesses are the most optimistic about hiring, registering more than 10 percentage points higher than non-minority owned small businesses (38% versus 27%).
- Millennials are in growth mode, with 43% planning to grow their staff compared to baby boomer or older small business owners (27%).
Small businesses are optimistic about growth
We're seeing small business optimism across the country. The small business owners that I meet with consistently share stories of expansion, acquisition, and product and services diversification – all code words for "growth."
I met with Natalie Kaddas, CEO of Kaddas Enterprises recently before our CO Regional Forum for Small and Growing Businesses that was hosted by the Salt Lake Chamber of Commerce. It had been 13-months since my first visit to Kaddas Enterprises and at that time, Natalie had moved into a new 50,000 square-foot building that was three times larger than her old place. Kaddas Enterprises creates plastic products through a thermoform process. (And, in case you're curious, thermoplastic molding looks identical to freezing Han Solo in carbonite.)
The company is a family-owned business that was started in 1966 by Natalie's father-in-law, John Kaddas, who vacuum-formed lightweight parts for Boeing airplanes to replace stainless steel. Fast forward to today, the company's catalog features over 280 products. The most popular are the BirdguarD products that prevent "explosive encounters" between large birds and power lines. Yes, that's correct – Kaddas's products protect energy infrastructure from wildlife.
When I visited last summer, I was so impressed by Kaddas's technology, workforce and the space it had in its new facility to grow. Now, Natalie tells me it needs to expand again. It needs more space – for a second time in less than two years!
Growth means more than a bigger building. There is more to it than just increasing the square footage of Kaddas's manufacturing floor. During this year's visit, Natalie talked with me about what businesses like hers need to grow. Here's a summary of what she shared with me, from the uniqueness of growth-oriented small and midsized businesses to the impact that the uncertainty around trade is having on international sales to finding and keeping good employees.
Small businesses need capital to help them grow
Capital is the fuel that drives entrepreneurship and economic growth and last year's Small Business Index for Q3 focused on access to credit. We found that one-fifth of small businesses had applied for a business loan or line of credit and about two-thirds received the full amount. Our survey also showed that the longer a business has been in operation, the more likely it is to receive the full amount of financing.
That does not mean that accessing capital for growth-oriented Kaddas Enterprises, a 53-year old company, is easy. Natalie and I sat down with a representative from Zions Bank during my Salt Lake City visit. They are grateful to be Kaddas's bank of choice, however, they are not beyond admitting that financing the transition of a traditional small business into a high-growth to midsized business does not fit neatly into most banks' strategic organization.
Natalie's advice for herself, in hindsight, and to other growth-minded businesses is to become a partner with a bank, not just a customer. What does that mean? For Natalie, it meant that Zions Bank needed to know that Kaddas Enterprises was entering a growth mode and Natalie needed to know what types of information the bank needs to help propel that growth. As a partner, Zions Bank realized Kaddas's trajectory and recognized that the company needed a higher level of support within the bank with additional customer focus. As part of the U.S. Chamber of Commerce's Small Business Council, Natalie is committed to sharing the lessons she has learned (and continues to learn) with other small businesses. Zions Bank wants to be part of that conversation too.
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International trade policies are slowing small business growth
When it comes to international markets, a direction Natalie gained from her experience with the Goldman Sachs' 10,000 Small Businesses training program, Natalie recognizes that trade uncertainty has made it more difficult and Kaddas has seen international orders drop because of it. But that isn't slowing her down. Last week, Natalie was at an Africa Power Infrastructure conference in Houston and she is meeting with Department of Commerce officials during her next visit to Washington, DC.
Natalie knows the statistic that 96% of the world's customers live outside of the United States and she wants to capitalize on global market demand. By passing trade measures such as USMCA, more opportunities are opened for small and midsized businesses like Kaddas Enterprises.
Small businesses are invested in employee growth
And, what about Natalie's employees? Did I fail to mention the climate comfort in Kaddas's workspace? Or, the diversity on the shop floor? Or, the upcoming 7th annual Kaddas pumpkin carving contest?
At Kaddas Enterprises, Natalie strives to attract and keep quality workers. She is proud of the opportunities available at Kaddas and is committed to her employees' growth. The company partners with Salt Lake Community College to offer personal and professional development classes and the company has four-day work weeks, which means Fridays can be enjoyed in the picturesque mountains that surround the city.
If you haven't yet been sold about working at Kaddas Enterprises, Natalie will remind you of the company's "why," which is so important to attracting, hiring and keeping qualified and willing employees. Kaddas Enterprises manufactures plastic coverings that protect wildlife from electrocution. Animal-caused outages account for 18% of all blackouts. Sure, energy company executives appreciate Natalie's products, but more importantly, her workers don't just see plastic moldings being shipped in boxes. They see coverings that will protect wildlife, like America's beloved bald eagle, from getting electrocuted and that makes a difference in the happiness and workplace satisfaction at Kaddas Enterprises.
How do we take the lessons learned from our Small Business Index and from Natalie to keep this wave of economic confidence on Main Street going? Here are two tips for policymakers and two tips for small businesses themselves.
Tips for policymakers
Help businesses find the talent they need. Our Small Business Index shows that small businesses need to find qualified and willing employees in order to grow. That means Washington needs to keep pushing for immigration reform that results in good employees for growing businesses. Our elected leaders also need to focus on the affordability and accessibility of healthcare and retirement benefits so that employers on Main Street can compete with their larger business competitors for talent.
Address the trade uncertainty. We are seeing troubling data in the Small Business Index in the manufacturing sector, where trade uncertainty is causing a dip in confidence (69% positive in Q2 slipping to 63% in Q3). Passage of the U.S.–Mexico-Canada Agreement (USMCA) will give a much-needed boost to the manufacturing sector and it will certainly keep Main Street's wave of confidence going.
Tips for small business owners
Partnering with a bank can help you gain access to capital. Natalie Kaddas learned that relying on a bank for capital when you are in growth mode is very different than accessing working capital or seeking startup funding. The lesson Natalie wants other small businesses to learn from her experience is to push the bank (sometimes at the CEO-level) to become a partner versus just treating the business owner as a customer.
Incorporate your business's "why" into recruitment and work culture. Natalie's "secret sauce" for attracting and keeping top talent is celebrating her individual workers through strong benefits and personal and career development opportunities. Kaddas Enterprises is proud of its commitment to environmental groups who are working to educate and protect biodiverse ecosystems around the world. The connection between their products and the environment answers the "why" and helps generate a consistently strong workforce at Kaddas.