Small-business Owners Reluctant to Expand Staff

While [the] majority of small-business owners are optimistic and expect to expand their businesses this year, few plan to add more employees, according to a new survey.

In lieu of an added headcount, small-business owners should consider giving their employees overtime or bring in temporary workers, say some Valley businesspeople.

Richard Quiroz, Vice President of Perma-Finish Inc. in Phoenix, concurs with the poll, which was conducted by DollarDays. His company powder coats decorative metal products in high-volume production. Quiroz said he already pushed Perma-Finish’s production up from one shift to two 12-hour shifts because of increasing business. His “core group” of 60 employees are getting overtime, he said. The company supports the extra production with temporary workers.

“As our customers’ needs peak, we can respond by using temps,” he said.

Quiroz also said using temporary workers is a hedge against the current economic upswing turning flat. “We don’t know if this is a temporary spike or just a trend,” Quiroz said. “All indications are that it is a trend.”

DollarDays, an Internet-based product wholesaler to small businesses, conducted the poll during April on its website,

“Small-business owners often are the first to see the economic trends ahead,” said Marc Joseph, COO for DollarDays. “After the past few years of tough economic results, it is significant that so many small-business owners expect to make gains this year.”

The poll found that 57% of those surveyed describe themselves as “generally optimistic” about the economy. It also found 70% of small-business owners expect to expand their business this year.

Gil Padilla, a business analyst with the Maricopa Community Colleges Small Business Development Center, said it might be unrealistic to increase business without hiring new employees.

“My experience has been that if sales or revenue are projected to increase, it also requires new laborers,” he said.

In addition, he said any expansion in volume puts more demand on small businesses for the cash to increase inventory and add equipment.

“The optimism reflected in the poll needs to be reflected in a company’s operational strategy,” Padilla said.

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