The State of the Union for Small Businesses is... Good!
Coming out of the 2023 State of the Union address by President Joe Biden, small and medium sized businesses (SMBs) can be encouraged. But more importantly, there are some instructive takeaways that can drive your decision making in the coming months.
1. Unemployment is near an all-time low
Right now, unemployment in the U.S. is at a 50 year low, with only 3.4% of eligible, job-seeking workers unemployed. While this is something to be celebrated on behalf of those additional millions of Americans who were looking for work back in 2021, for employers, it means that the available pool of potential new hires has shrunk significantly. In other words--the reason for all of the "Help Wanted" signs in store windows is not that people today are lazy and entitled (as my dog groomer tried to convince me). It's that they are already employed somewhere else.
This can be frustrating for employers, and has driven up costs via wage growth.
What you can do about this: Cash and culture vie for the role of king in today's workplace. One way to attract employees is simply to pay more than the competition. This works (up to a point) if you are cash flush. But if you are in a highly competitive market, it may not be enough. Also, a race to the top with pay can lead to hiring people who are willing to jump ship the moment a competitor offers something better--not a good way to maintain sustainable growth at your company. Another option (that is not antithetical to raising total pay) is to focus on culture. Increasingly, employees are choosing workplaces that allow them to maintain work/life balance, and that allow them to holistically embrace causes they believe in. A company that maintains competitive wages, but has a healthy culture is likely to attract and retain top talent.
2. The government is investing in infrastructure, manufacturing, healthcare, and research at home
For at least the next two years, the United States is focusing on much-needed infrastructure projects, a cancer moonshot, and cutting the cost of prescription drugs. Businesses already working in these fields, and entrepreneurs looking for high growth areas of the economy to work in should explore the ways new bills will be directing federal and state funding. As with the funding that was unlocked during the pandemic for PPE and other COVID-19-related purposes, opportunities are being created on a daily basis that savvy business people should take advantage of.
What you can do about this: Business owners interested in getting government contracts need to first be registered in the System for Award Management (SAM). If that process is too cumbersome, it is also possible to partner with companies who are already registered and become part of their fulfillment. You can also research and invest in services and products further down the supply chain, say, in manufacturing goods that will be vital in largescale infrastructure projects.
3. Oil and Gas Have a Future... But for How Long?
Despite California's ban on the sale of gas powered vehicles, Biden made it clear that oil and gas have a future in the U.S... at least for the next decade. Most experts agree that the timeline for moving off of a carbon-based energy economy is still a long way off, but some will be disconcerted by President Biden's mention of a 10 year timeline (others point out that it seemed to be an arbitrary number, and that 10 years is an eternity in the business cycle).
What you can do about this: Whether you're an oil company experiencing record profits, or an alternative energy company looking to take advantage of skyrocketing growth, energy is still an industry with plenty of potential. For new entrants, solar and wind likely offer the most potential over the long haul, and the easiest access.
4. Large Profitable Companies May Be Paying More Taxes
While this is unlikely to affect small and medium sized businesses, Biden did act to ensure that large, profitable businesses pay at least a minimum 15% tax. This does not close all loopholes, but will affect corporate behavior.
What you can do about this: If you are concerned that your business will be affected, contact a tax professional who will be able to help you navigate the complexities of federal tax law.
5. Policing is in Need of Reform
Always a controversial subject, the recent police killing of Tyre Nichols meant that police reform was again a major part of the conversation during Biden's State of the Union. Note that what was called for was not "ban the police" or other similarly irrational cries. Instead, it was a call to reform and improve policing in the United States to help law enforcement better serve our populace in just and equitable ways.
What you can do about this: If you are a mental health provider, there are ample opportunities to serve police and law enforcement clients through trainings, therapy, and assessment and selection contracts.
In every economy there are opportunities that business leaders can capitalize on if they are well informed, have a streamlined strategy, and clear messaging both internally to staff and externally to customers. Even with some signs still pointing towards recession, there are plenty of reasons to be optimistic. What are you doing to prepare your company for growth?