Although the economy has been showing signs of improvement this year, many small businesses don’t plan on hiring in 2013.
However, economic growth is expected to pick up by the end of the year, which could lead to increased hiring to begin 2014. Should this be the case, these companies will likely want revisit their small business insurance needs to ensure they have the proper coverage.
According to the Sage SMB Hiring Outlook Survey, 24 percent of small and midsized businesses said that they have hired or will hire in 2013. Nearly half said their staffing levels will remain the same, while 7 percent said they will reduce their payrolls.
When considering whether or not to hire, 81 percent of SMBs cited increased demand for products or services as the driving factor. Meanwhile, lack of demand was the biggest factor to not hire new staff.
“If you ask small or midsized business owners, they will tell you that demand is one of the primary drivers behind many of their business decisions, including hiring, and the Sage SMB Hiring Outlook Survey highlights this sentiment,” said Connie Certusi, executive vice president and general manager at Sage Small Business Solutions.
Economic growth expected to accelerate as 2013 ends
With economic growth projected to pickup as the year ends, many SMBs may begin to hire additional staff.
Between the fourth quarter of 2012 and the same three month period in 2013, the National Association of Business Economists projects 2.4 percent growth in real Gross Domestic Product. Additionally, real GDP will grow to 3 percent in 2014.
Economists also project that consumer spending will improve, another positive sign for the economy. In 2013, the NABE projects spending will jump 2.3 percent, followed by a 2.6 percent bump in 2014. This is an improvement over the 1.9 percent growth in spending seen in 2012.
The housing market is also expected to contribute to economic growth, as it pulls itself out the hole created during the financial crisis.
Should economic growth lead to more hiring small businesses would be wise to re-visit their insurance portfolio. For example, additional professional liability insurance might be needed, as more employees could increase the risk of a mistake occurring that leads to a lawsuit.
Without the necessary insurance coverage, small businesses could be forced to close their doors for good when hit with a lawsuit.