Bank of America's small business chief tells us the common challenges and opportunities facing her 9 million clients, like growing your team in a tight labor market
Courtesy Bank of America
- The unemployment rate is at record lows, and small businesses are struggling more than ever to fill essential positions.
- Bank of America's head of small business says that small firms think creatively about their health care and benefits offerings in order to attract and retain key talent.
- Local business owners continue to report high levels of confidence in their own future growth, even as talk of a recession clouds the national forecasts.
- B of A internal metrics show that consumer spending remains strong in spite of other economic indicators, and that bodes well for local businesses' bottom line.
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Business owners may represent a wide spectrum of categories and backgrounds, but they often face a common set of fundamental challenges - and increasingly, they're working with the same bank.
Bank of America serves more than 9 million small business clients, and it is growing where its competitors are flat or declining. That means one of every 3 small businesses in the US is in the portfolio of Sharon Miller, Bank of America's head of small businesses. The bank recently surpassed Wells Fargo to become the largest lender for the category, with more than $37.8 billion in outstanding loans under $1 million, according to FDIC data.
In an interview with Business Insider, Miller highlighted several issues that unite small- and medium-sized business, or SMB, owners - starting with a need to be creative about providing healthcare and benefits in order to compete in a tight labor market.
Finding the right people
For SMB owners, the most pressing issues are "how do I find the right people are going to come into my company, and how can I set up the right benefits to compete with major corporations," Miller says.
Even as the pace of job creation slowed down in September, the US unemployment rate is still at record lows. For the past quarter, small and mid-sized firms' hiring outpaced that of larger companies. Still, small businesses are struggling more than ever to fill open positions.
"What I hear from business owners is, 'We can't find the right skilled talent to fill the roles that we have open,'" Miller said.
From her conversations with business owners in general and health services providers in particular, Miller says that most small firms are focused on optimizing their health care and benefits offerings to attract and retain key talent. For a local dental clinic or veterinarian's office, everyone from reception to technicians to managers is part of a close-knit team, and the cost of labor turnover can be especially painful.
"Health care costs are something that comes up, whether it be the complexity of getting that done for their business, the cost for getting that done," Miller said. "And I bucket that into more of a benefits conversation because you're competing against big corporations for talent."
While Bank of America doesn't offer health insurance, it is developing specially tailored financial products with its partner Merrill Lynch to provide small businesses with more options for savings and retirement accounts.
Shaping the team
Employee fit is especially important for companies with fewer than 50 people, where each individual contributes a greater share of the skills and culture than at large firms. Finding a good fit can take more time, and keeping key players on the team can be critical for success.
"When you have ten employees and you have one leave, that's a big deal," Miller said. "How am I going to replace that skill that they brought to the table? And small businesses - unlike big corporations - those 10, that's the culture."
Miller points to Bank of America's Pathways program as a model that other businesses would be wise to develop to improve their own recruitment pipeline. The initiative is on track to meet its 2019 goal of re-training and hiring 10,000 workers from other sectors who would otherwise never had the opportunity to join the company.
According to recent small business surveys from Bank of America as well as other institutions, business owners continue to report high levels of confidence in their own future growth and hiring plans, even as talk of a recession clouds the national forecasts.
Consumers are shopping local
Miller attributes entrepreneurs' optimism largely to the fact that consumer spending remains strong, which bodes well for local businesses' bottom line. According Miller's interpretation of the bank's data from 90 local US markets, consumers continue to support their local businesses at a healthy clip.
"We see strength in the consumer, which carries right into what's happening in small business and the local economy," Miller said. "You may hear some different data coming out saying business confidence is down, but when you think about where we've come [since the 2008 Recession], we're still at historic highs, just like we're at historic lows in unemployment."
A retreat from hiring by larger firms presents an opportunity for small businesses who are looking to recruit the skilled workforce they need to meet the steady consumer demand. A calculated investment now in benefits like healthcare and retirement plans could help small businesses tip the labor market trends in their favor.
'Business owners don't stop'
Another reason business owners are confident, Miller says, is because entrepreneurs have especially high levels of determination and attachment that comes from building their personal vision into a functioning businesses. For many owners, it isn't just a job.
"It's your life," she said. "I noticed immediately that business owners don't stop and say, 'Oh I'm a business owner. Now I'm the CFO, I'm the CEO, and now I'm going to go home and be the mom. I'm the same.'"
Hiring is hard. Benefits are complicated. Economics are uncertain. Nevertheless, Miller feels strongly that her clients have what it takes to meet those challenges.
"What I see in my portfolio is strength," she said. "Whatever noise is going on in the media, what we're seeing through the data, and what we see happening in consumer spending - which directly ties to what's going on in local economies and businesses - there's strength."
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