The Lucas Group SMB Job Generation Outlook began in 2013 as the only national report defining the economic and employment landscape for small to mid-sized businesses.

1. Q3 2013
SMB Job
Generation
Outlook

2. 1 | SMB Job Generation Outlook Q3 2013
The Lucas Group Job Generation Outlook is an innovative approach to traditional hiring and employment
surveys, gauging both recent and planned activity in the United States small to mid-sized business market.
This, our Q3 2013 national survey of SMB presidents, CEOs and business owners, examines executive-level
perspectives on critical issues facing the American SMB marketplace, including economic developments,
employment trends, legislative initiatives, political environments, and the tangible impact these issues have
on business and employment planning.
Conducted in coordination with Polaris Marketing Research and Dr. Goutam Challagalla, Associate
Professor at Georgia Institute of Technology College of Business, the SMB Job Generation Outlook is the
only economic and employment survey that captures timely trends—directly from the visions and priorities
of the highest executive offices.
Quantitative results and key findings from the SMB Job Generation Outlook survey were analyzed, and
through a series of graphs and charts, the statistical relationship of trends in the small to mid-sized business
market has been illustrated. A detailed narrative of the data analysis follows the illustration on page 9.
Lucas Group will continue the SMB Job Generation Outlook survey on a quarterly basis via online surveys
with invited top executives from a variety of SMBs around the country and across industry segments.
The Lucas Group survey is set to become the outlook standard for the American SMB market, heralded in
American discourse as the jobs engine for economic revitalization.
We encourage you to retain this report as a reference point. Consider how this information may impact
you­—now and throughout the following year. As always, please feel free to contact us. We welcome your
questions and feedback.
Thank you for your interest in this important analysis of the SMB economic and employment outlook
across major industries and around the nation in Q3 2013.

3. 2013 COMPANY POSITION
SMB leaders continue to report company positions of growth or
stability maintenance heading into Q4. After a Q1 drop to 75 percent,
respondents in Q2 and Q3 consistently reported numbers at Q4
2012 levels near 90 percent. Within that group, the percentage of
companies who report being in a position of growth, however, has
gone from a majority at the end of last year (56 percent growth
versus 32 percent maintaining stability) to an even split in Q3. Similar
to Q2 responses, 12 percent continue to report company positions of
controlled retrenchment or survival mode.
Select the statement that best describes your
company’s position for 2013.
JOB GROWTH PROSPECTS
After a slight reduction in optimism regarding job growth prospects
within the surveyed companies in Q1 (59 percent in Q1 to 51 percent
in Q2), Q3 optimism bumped back up to 59 percent. In Q2, nearly
40 percent reported being neither optimistic nor pessimistic about
their company’s job growth prospects. That number dropped almost
20 points to 20 percent in Q3. While moderate optimism rose, so
did modest pessimism, with 18 percent reporting being somewhat
pessimistic in Q3, up from 8 percent in Q2.
Similar to earlier in 2013, SMB leaders were less optimistic about job
growth prospects on the national stage. Optimism dropped among
SMB leaders in Q3, with only 36 percent feeling somewhat or very
optimistic about job growth prospects of the U.S. market in Q3.
Likewise, moderate pessimism on the national stage increased 8
points in Q3 to 24 percent.
Indicate your feelings about the following:
45%
Maintaining
stability
43%
Growth
7%
Controlled
retrenchment
5%
Survival
2 | SMB Job Generation Outlook Q3 2013
ECONOMIC PROSPECTS FOR
COMPANIES & COUNTRY
Optimism gains made during Q1 and Q2 were erased this quarter,
with Q3 responses closely mirroring lower Q4 2012 levels. After
witnessing two quarter increases, economic prospects cooled in Q3.
Dropping 9 points this quarter, 68 percent of respondents are now
somewhat or very optimistic about the economic prospects of their
own companies. At the other spectrum, pessimism grew 7 points, to
15 percent being somewhat or very pessimistic.
Bullishness on the national economy also retracted in Q3. After
growing 20 points from 37 percent in Q4 2012 to 57 percent in
Q2 2013, respondents reporting being somewhat or very optimistic
about the nation’s economic prospects dropped 13 points in Q3 to
44 percent. While Q3 pessimism numbers rose 13 points over Q2,
the percentage of respondents who report being very pessimistic
rose only 1 point, with the majority of increase falling in the moderate
somewhat pessimistic camp.
Indicate your feelings about the following:
> ECONOMIC PROSPECTS FOR YOUR COMPANY IN 2013
> ECONOMIC PROSPECTS FOR THE UNITED STATES IN 2013
TITLES & COMPANY REVENUE
With a continued focus exclusively on the principles at each
company, the SMB JGO surveys only presidents, CEOs or business
owners. In Q3 2013, we surveyed 100 top executives from around
the nation and across industry segments.
Nearly half of our respondents reported annual revenue in 2012
at $50M-$150M, representing the U.S. small business market.
Another 43 percent reported revenue at $151M-$600M, and the
remaining 11% reported $601M-$1B revenues.
Respondent title:
35%
President
46%
$50M - $150M
21%
$151M - $300M
22%
$301M - $600M
11%
$601M - $1B
2012 company revenues of responding executives:
36%
CEO
29%
Business Owner
> JOB GROWTH PROSPECTS FOR YOUR COMPANY IN 2013
> JOB GROWTH PROSPECTS FOR THE UNITED STATES IN 2013
Very optimistic
Somewhat optimistic
Neither optimistic nor pessimistic
Somewhat pessimistic
Very pessimistic
16%
43%
20%
18%
3%
Very optimistic
Somewhat optimistic
Neither optimistic nor pessimistic
Somewhat pessimistic
Very pessimistic
4%
32%
27%
24%
13%
Very optimistic
Somewhat optimistic
Neither optimistic nor pessimistic
Somewhat pessimistic
Very pessimistic
22%
46%
17%
14%
1%
Very optimistic
Somewhat optimistic
Neither optimistic nor pessimistic
Somewhat pessimistic
Very pessimistic
12%
32%
22%
26%
8%

4. JOB GENERATION
SMB leaders continue to agree with the oft-repeated adage that
small and mid-sized businesses are the job generators of the U.S.
economy. A substantial 81 percent agree with that statement, while
only 6 percent disagree. In terms of their own companies, three-
fourths of respondents report seeing their own businesses as job
generators (up from 63 percent in Q2) despite only half reporting
hiring plans in the next twelve months.
Indicate the extent to which you agree or disagree
with the following statements.
IMPACT OF PATIENT PROTECTION
AND AFFORDABLE CARE ACT
In Q3 the SMB Job Generation Outlook gauged the expected
impact of the Patient Protection and Affordable Care Act (ACA)
on SMBs. A full 70 percent expected a moderate to large impact
on their businesses. One-fifth of respondents expected to see little
impact, and only 10 percent foresaw no impact at all.
Approximately 30 percent of SMBs report having prepared for the
rollout of the ACA. This “ready for implementation” percentage
was up 11 points over Q2. Just over half report that their company
continues to work on ACA readiness. Ten percent of respondents
plan to begin preparation and another 9 percent plan to do nothing
to prepare for the law’s implementation.
How much of an impact will the Patient Protection
and Affordable Care Act have on your business plans?
> SMBs ARE THE JOB GENERATORS OF THE U.S. ECONOMY
> I SEE MY COMPANY AS A JOB GENERATOR
3 | SMB Job Generation Outlook Q3 2013
BIPARTISANSHIP
While down from its Q4 2012 high of 81 percent, the percentage
of respondents who report being somewhat or very pessimistic
about bipartisanship in the federal government continued inching
up, from 62 in Q1 to 64 in Q2 and now 69 in Q3. Only sixteen
percent expressed any optimism on the federal state of affairs. It is
significant to note that the majority of the Q3 SMB Job Generation
Survey was conducted prior to the recent government shut-down
and debt ceiling time stamp.
As with each quarter, SMB leaders were less pessimistic in Q3
regarding state-level bipartisanship (60 percent) than national
cooperation (68 percent), although that difference narrowed
by 3 points. Less pessimism does not however translate into an
increased optimism. State-level pessimism was up 7 points in Q3 to
60 percent, and less than 20 percent of respondents report being
optimistic about either level of government working together.
Indicate your feelings about the following:
Very optimistic
Somewhat optimistic
Neither optimistic nor pessimistic
Somewhat pessimistic
Very pessimistic
5%
13%
22%
23%
37%
> BIPARTISANSHIP IN STATE GOVERNMENTS
Agree strongly
Agree
Neither agree nor disagree
Disagree
Disagree strongly
41%
40%
13%
6%
0%
Agree strongly
Agree
Neither agree nor disagree
Disagree
Disagree strongly
31%
44%
19%
6%
0%
> BIPARTISANSHIP IN FEDERAL GOVERNMENT
Very optimistic
Somewhat optimistic
Neither optimistic nor pessimistic
Somewhat pessimistic
Very pessimistic
4%
12%
15%
18%
51%
A large
impact
Some
impact
A little
impact
No
impact
34%
36%
10%
20%

5. IMMIGRATION REFORM
Reported SMB leader opinions on immigration have remained
relatively steady over the course of the past several quarters.
Respondents continued to share greater support for high-demand
skilled workers than for the larger population of immigrants. While
half of the SMB leaders surveyed agree that the U.S. should
ease requirements for skilled workers in IT, science and other
high-demand fields, less than one-third agree to the same for all
immigrants. Thirty-eight percent of respondents support easing
requirements for immigrants already living in the United States.
How much do you agree or disagree with the
following proposals for immigration reform?
> THE U.S. SHOULD EASE REQUIREMENTS FOR SKILLED
WORKERS IN IT, SCIENCE AND OTHER HIGH-DEMAND FIELDS.
4 | SMB Job Generation Outlook Q3 2013
Agree strongly
Agree
Neither agree nor disagree
Disagree
Disagree strongly
13%
37%
26%
12%
12%
> THE U.S. SHOULD EASE REQUIREMENTS FOR SKILLED
LABORERS IN MANUFACTURING.
Agree strongly
Agree
Neither agree nor disagree
Disagree
Disagree strongly
6%
39%
27%
15%
13%
> THE U.S. SHOULD EASE REQUIREMENTS FOR ALL
IMMIGRANTS, NOW AND IN THE FUTURE.
Agree strongly
Agree
Neither agree nor disagree
Disagree
Disagree strongly
9%
21%
17%
27%
26%
> THE U.S. SHOULD EASE REQUIREMENTS ONLY FOR
IMMIGRANTS WHO ARE ALREADY LIVING IN THE U.S..
Agree strongly
Agree
Neither agree nor disagree
Disagree
Disagree strongly
12%
26%
21%
18%
23%
WORKFORCE RETIREMENT IN 2013
The percentage of SMBs expecting Baby Boomer retirements in
2013 continued to shift slightly, though without a clear pattern.
Respondents expecting a less than 5 percent retirement rate
dropped 7 points to 67 percent in Q3 after hitting a 4-quarter
high in Q4 2012 at 79 percent. While more companies reported
expected retirements between 5 and 10 percent of their total
workforce than last quarter, fewer expected retirement levels
between 11 and 15 percent. The percentage of respondents who
expect retirement rates over 16 percent of their workforce continue
to land at 5 percent or lower each quarter.
Select the percentage of your company’s workforce
that will retire in 2013.
Presidents, CEOs, and
Business Owners
5% - 10%
11% - 15%
Don’t know
16% - 20%
67%
7%
4%
6%
16%
IMPACT OF RETIRING BABY BOOMERS
Although only 8 percent report an expected “very big” impact,
the majority of SMBs (58 percent) anticipate that Baby Boomer
retirements will have at least some level of impact on their
businesses. Just over 40 percent expect no impact at all, up 12
points from a Q2 low of 28 percent.
Describe the level of impact that Baby Boomer
retirement has on your company.
8% Very big impact
50% Some impact
41% No impact at all
1% Don’t know
< 5%

6. 5 | SMB Job Generation Outlook Q3 2013
DELAYED RETIREMENTS
Recent economic concerns have clearly impacted retirement plans
for many workers across the United States, including in SMB
companies. More than two-thirds (78 percent) of the respondents
believe that up to 10 percent of their workforce delayed retirement
over the past three years because of economic constraints, and
another 10 percent feel that more than 10 percent did so. A slightly
lesser percentage anticipate the trend to continue, with 73 percent
foreseeing up to 10 percent of their workforce delaying retirement
in the next three years.
This topic does not appear to be of grave concern to a fair subset of
SMBs, however. Of all the questions asked in the survey, this series
of inquiry has consistently received the highest levels of “don’t know”
responses, averaging more than 13 percent over the past year.
The percentage of employees eligible for retirement
who delayed retirement, during the past three
years, due to economic constraints:
The percentage of employees you expect to delay
retirement, during the next three years, due to
economic constraints:
HOW RETIREMENT IMPACTS COMPANIES
Closely related to the level of impact is the manner in which Baby
Boomer retirement will impact SMBs. The response option receiving
the highest percentage was that Baby Boomer retirement creates
a knowledge gap that’s difficult to bridge, with 60 percent agreeing
with this statement (up from a low of 37 percent in Q1). After
showing a steady increase in Q1 and Q2, the percentage of SMB
leaders who believe Baby Boomer retirement impairs their ability to
compete in the marketplace fell 9 points in Q3 to 14 percent.
While not all SMBs believe Baby Boomer retirement creates solely
a negative impact, the percentage of respondents who foresee
retirement as enhancing their prospects for future innovation and
growth dropped sharply in Q3 to a four-quarter low of 17 percent.
The percentage of SMB leaders who think Baby Boomer retirement
will improve their ability to consider new approaches and processes
also dropped in Q3 to 28 percent, down from a steady 41 percent in
Q1 and Q2.
Describe how the retirement of Baby Boomers
impacts your company.
REHIRING RETIREES
In an effort to bridge that 60 percent perceived knowledge gap,
27 percent plan to hire Boomers back on a contract basis. This
number is up 10 points from Q2 and represents an overall 2013
high. Also reaching a 2013 high in Q3 was the percentage of
companies considering the option (29 percent), while conversely
the percentage of companies who said they are not hiring back
retirees dipped to its lowest levels of the past year at 42 percent.
Share whether your company is hiring retirees back
on a contract basis.
42%
No
29%
Considering it,
but haven’t
decided
27%
Yes
2%
Don’t
know
Presidents,CEOs,
BusinessOwners
Less than 2%
3% - 4%
5% - 7%
8% - 10%
More than 10%
Don’t know
29%
25%
14%
10%
10%
12%Presidents,CEOs,
BusinessOwners
Less than 2%
3% - 4%
5% - 7%
8% - 10%
More than 10%
Don’t know
26%
20%
21%
6%
13%
14%
CONTRACT OR PERMANENT
EMPLOYEES?
Q3 witnessed the highest percentage of companies considering
the addition of a combination of contract and permanent employees
(nearly 50 percent). Down again from 42 percent in Q1 and 35
percent in Q2, 31 percent of Q3 respondents are considering only
permanent employees, whereas 13 percent are looking to hire only
contract staff. Seven percent report no plans to hire either permanent
or contract workers this year, the lowest of the past four quarters.
Describe the type of employees your company is
considering adding in 2013:
Creates a knowledge gap
that’s difficult to bridge
Improves our ability to consider
new approaches & processes
Enhances our prospects for
future innovation and growth
Impairs our ability to compete
Other
60%
28%
17%
14%
5%
*Multiple
Responses were
Allowed
31%
Permanent
employees only
13%
Contract
employees
only
49%
Combination of
contract and
permanent
employees
7%
Neither
contract nor
permanent
employees

7. 6 | SMB Job Generation Outlook Q3 2013
Q4, 2012 Q1, 2013 Q2, 2013 Q3, 2013
PROFESSIONS IN WHICH
COMPANIES WILL HIRE IN 2013
As part of the SMB Job Generation Outlook, leaders are asked each
quarter to segment their hiring plans based on eight key corporate
functions. In each of the last four quarters, Sales took the top
spot with approximately half of respondents planning to hire Sales
professionals. Information Technology and Marketing consistently
held the second and third spots, averaging 33 and 34 percent
respectively, with Manufacturing Management close behind with a
year-long average of 25 percent.
From late 2012 through to Q3 2013, overall hiring plans of surveyed
SMBs dipped and then recovered. Seven of the eight functional areas
surveyed reached their lowest planned hiring percentage mid-year (5
of them during Q2), and each of them experienced gains in Q3. Only
Marketing varied from the others, with planned hiring numbers that
remained statistically consistent throughout the past four quarters.
Over the course of the past year, corporate functions Finance,
Accounting and Human Resources experienced the greatest Q4
2012 to Q3 2013 increases, suggesting the market will see positive
hiring gains in those professions to end the year and into early 2014.
In terms of planned workforce decreases, each of the eight
surveyed functional areas reported a lower rate of reduction in Q3
than they did a year ago in Q4 2012. In alignment with its leading
growth rate, planned decreases in Sales professionals consistently
took the lowest spot, with an average of 8 percent of SMBs planning
reductions in Sales.
For each professional/management area, describe
your company’s planned 2013 workforce change.
CONTRACT WORKERS:
MORE OR LESS ATTRACTIVE
The appeal of hiring contract employees has steadily increased
over the past several quarters. Up from 25 percent in Q4 2012, 42
percent of Q3 respondents now report that hiring contract workers
is more attractive than it was this time last year. Relationally, SMB
leaders reporting that hiring contract workers has decreased in
attractiveness from last year has steadily dropped from its Q4 2012
high of 17 percent to a low of 8 percent in Q3.
Is hiring contract workers more or less attractive to
you now than last year?
> ACCOUNTING
> INFORMATION
TECHNOLOGY
> MARKETING
> FINANCE
> LEGAL
> SALES
> HUMAN
RESOURCES
> MANUFACTURING
MANAGEMENT
25%
Increase
25%
Increase
19%
Increase
10%
Decrease
8%
Decrease
16%
Decrease
65%
Stay the same
67%
Stay the same
65%
Stay the same
35%
Increase
13%
Increase
29%
Increase
12%
Decrease
15%
Decrease
11%
Decrease
53%
Stay the same
72%
Stay the same
60%
Stay the same
33%
Increase
51%
Increase
11%
Decrease
8%
Decrease
56%
Stay the same
41%
Stay the same
Less attractive
More attractive
HIRING DIFFICULTY
The challenge of finding top talent in the marketplace continues to
be an issue for SMB leaders. More than half of all respondents report
difficulty or extreme difficulty in finding qualified professional and
management talent for open positions. Forty percent find it neither easy
nor difficult, and only 9 percent report finding qualified talent as easy.
When asked which functional roles are most difficult to fill with
qualified candidates, Q3 respondents gave a three-way tie with
60 percent saying they had difficulty finding Sales, Marketing and
Manufacturing Management talent. Finance and Human Resources
ranked second with 40 percent each, and all of these five functions
saw sharp increases over Q1 and Q2 responses. Interestingly, in Q3
the only professional sector where SMB leaders report having an
easier time of finding candidates – versus earlier in 2013 – was in
Information Technology.
Rate the level of difficulty your company faces in
finding qualified candidates for professional and
management positions.
Neither difficult nor easy
Easy
40%
5%
Difficult
Extremely difficult
9%
46%

8. 7 | SMB Job Generation Outlook Q3 2013
> NEXT QUARTER
Q3 2013
> NEXT 12 MONTHS
HIRING OR DOWNSIZING IN 2013
Similar to Q2, Q3 SMB leaders reported hiring plans for the next
quarter that were both stable and fairly growth-oriented. The vast
majority of respondents reported plans to either hire (38 percent)
employees to their workforce or make no changes (49 percent)
to their workforces in the coming quarter. Only 12 percent plan to
reduce workforce numbers.
Looking ahead through 2014, respondents reported more positive
hiring plans with 49 percent looking to hire in the next twelve months
(versus 38 percent in the next quarter). Over the course of the next
year, plans seemingly flip, with the percentage of SMBs who plan to
make no changes to their overall workforce numbers during 2014
at 37 percent (as opposed to nearly half when looking quarter by
quarter). Twelve percent continue to report plans to downsize.
Looking ahead, share your hiring or downsizing
plans for the following timeframes:
WORKFORCE, WAGES & SALARY,
AND BENEFITS DECREASES IN 2012
Of those expenses reported to have decreased in 2012 over 2011,
most companies reported those decreases to be in the lower level
bands, with the vast majority reporting decreases of less than 10
percent. One hundred percent of Q3 respondents who reported
decreases in 2012 wages & salaries saw those decreases at
less than 10 percent. Of the respondents who saw decreases in
workforce and benefits expenditures in 2012, 18 percent and 25
percent saw decreases greater than 10 percent, respectively. No
Q3 reporting company saw decreases in benefits expenditures
greater than 15 percent and only 9 percent reported that level in
decreased workforce related expenses.
For those expenses that decreased in 2012,
select the percent they decreased over 2011.
50%
<5% 5% - 10% 11% - 15% 16% - 20% 20% - 25% >25%
0%0% 0%
Percentage of CEOs, Presidents, and Business Owners
> BENEFITS EXPENDITURES
<5% 5% - 10% 11% - 15% 16% - 20% 20% - 25% >25%
0%0% 0%
67%
33%
Percentage of CEOs, Presidents, and Business Owners
> WAGES & SALARIES
<5% 5% - 10% 11% - 15% 16% - 20% 21% - 25% >25%
0%0%
46%
9%9%
Percentage of CEOs, Presidents, and Business Owners
> WORKFORCE
36%
0%
25%25%
38%
Hire additional
employees
12%
Downsize workforce
50%
No change in workforce
or don’t know
49%
Hire additional
employees
12%
Downsize workforce
39%
No change in workforce
or don’t know
CHANGE IN WORKFORCE AND
RELATED EXPENSES
In each surveyed expense area (workforce, wages & salaries and
benefits expenditure) more than 50 percent of Q3 respondents
saw increases during 2012. Workforce related expenses came
in 6 points higher than in Q4 2012, with 51 percent. In Q3 only
3 percent reported decreases in wages & salaries expenses, as
compared to 12 percent in Q2. Similarly, only 4 percent of Q3
respondents reported a decrease in benefits expenditure in 2012,
down from its Q4 2012 high of 10 percent.
Workforce Wages & Salary Benefits
Describe how your workforce and related
expenses changed in 2012.
51%
Increase
63%
Increase
57%
Increase
11%
Decrease
3%
Decrease
4%
Decrease
38%
Stay the same
34%
Stay the same
39%
Stay the same

9. 8 | SMB Job Generation Outlook Q3 2013
WORKFORCE, WAGES & SALARY,
AND BENEFITS INCREASES IN 2012
Of the companies reporting an increase in workforce related
expenses in 2012, approximately 32 percent reported increases
that exceeded 11 percent. More companies saw levels of increased
expenses that exceeded 11 percent in wages & salaries (37
percent) and benefits expenditure (41 percent). While the largest
single grouping of workforce expense increases were found at the
less than 5 percent level (42 percent), benefits expenditure saw the
bulk of its increase in the 5 to 10 percent grouping with 36 percent.
For those expenses that increased in 2012,
select the percent they increased over 2011.
<5% 5% - 10% 11% - 15% 16% - 20% 20% - 25% >25%
6%
26%
42%
20%
Percentage of CEOs, Presidents, and Business Owners
6%
0%
> WORKFORCE
<5% 5% - 10% 11% - 15% 16% - 20% 21% - 25% >25%
3%
35%
38%
15%
6%
Percentage of CEOs, Presidents, and Business Owners
3%
<5% 5% - 10% 11% - 15% 16% - 20% 20% - 25% >25%
> BENEFIT EXPENDITURES
> WAGES & SALARIES
5%
9%
5%
23% 22%
Percentage of CEOs, Presidents, and Business Owners
36%
HIRING VETERANS
The flow of veterans back into the workforce continues to
accelerate and the topic has become a mainstream media and
political discussion. In Q3, 16 percent report having specific veteran
hiring plans, on par with the average of the past several quarters.
However, a full three-fourths of SMB respondents report that while
their companies hire military veterans, they have no specific plans
regarding that recruitment or hiring. Making a slight dip from 80
percent in Q2, this number remains up from its Q1 low of 59 percent
and represents continued growth in the noncommittal middle area.
The percentage of SMBs that specifically said they will not target
military veterans for hiring in 2013 rose slightly in Q3 to 9 percent,
though remains much below its Q4 2012 high of 24 percent.
No, we will not target
military veterans for
hiring in 2013
We hire military
veterans but don’t have
a specific plan
Yes, we have
specific plans to hire
military veterans
16%
75%
9%
Share whether your company has specific plans
to recruit and/or hire military veterans in 2013.

10. Lucas Group SMB Job Generation Outlook Survey
Q3, 2013
The SMB Job Generation Outlook survey evaluates key economic,
employment, and political drivers for the small to mid-sized U.S.
business market. Through detailed analysis, the Outlook provides
timely insight into both recent and near-term planned employment
activity.
This Q3 survey captures visions and priorities of noteworthy SMB
leaders, including Presidents (35 percent), CEOs (36 percent) and
Business Owners (29 percent). From Manufacturing and Health Care
to Information Technology and Construction, the SMB Job Generation
Outlook represents a strong mix of industries, regions, and business
types. Each quarter the survey seeks to identify current and future
trends as they occur within and act upon the marketplace. The majority
of responding SMBs have been in operation for more than 10 years,
report corporate revenue of less than $600M, and employ less than
1,000 people.
SMB Optimism
The inaugural survey conducted in December 2012 revealed a
dichotomy between how SMB leaders viewed their own businesses
and how they viewed the national economy. In Q4 2012, respondents
were confident in the 2013 prospects for their own companies, with 57
percent believing that they would grow and 55 percent planning to hire
new employees. That optimism increased in Q1 and Q2 to a high of 77
percent being somewhat or very optimistic before shrinking slightly in
Q3 to 68 percent.
SMBs are consistently less optimistic, however, about the national
economy as a whole. In Q4 2012 only 37 percent of SMB leaders
reported being somewhat or very optimistic about 2013 economic
prospects for the United States. A similar pattern of change was
noted on the national stage as was reported at the company-level. The
percentage of SMBs who were optimistic about national economics
Continued next page...
COMPANY SIZE
Small businesses are the majority of the survey sample with 53
percent employing fewer than 500 employees and only 8 percent
employing more than 5,000.
Select the number of workers your company
currently employs.
TYPE OF COMPANY
Describe your company’s ownership structure.
58%
Private
19%
Family-
owned
16%
Public
7%
Private equity
portfolio
company
9 | SMB Job Generation Outlook Q3 2013
LENGTH OF TIME IN BUSINESS
The survey group continues to be composed of long-standing
businesses with almost half of the Q3 respondents in business for
more than 20 years. Another 43 percent have been in business from
6-20 years.
How long has your company been in business?
INDUSTRY
Select your company’s industry.
14% Finance, Insurance, Real Estate
7% Healthcare/Medical
12% Business Services
6% Consumer Services
1%
Nonprofit &
Membership
Organizations
10%
Other
5% Automotive
18% Manufacturing
8% Construction
2%
Legal
Services
9%
Information
Technology
2%
Energy, Oil,
Gas & Utilities
1%
Pharmaceuticals
More than 20 years
11 – 20 years
6 – 10 years
3 – 5 years
0 – 2 years
46%
25%
18%
10%
1%
19%
34%
18%
14%
7%
6%
2%
1 – 99
100 – 499
500 – 999
1,000 – 1,499
1,500 – 4,999
5,000 – 9,999
10,000 or more
5%
Transportation
Services

11. 10 | SMB Job Generation Outlook Q3 2013
For more information regarding the
SMB Job Generation Outlook, please visit
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rose in Q1 and Q2 to 54 and 57 percent,
respectively, only to dip to 44 percent in Q3
2013.
SMB optimism regarding job growth
prospects remained relatively steady over
the course of the past 4 quarters, with the
percentage of SMB leaders reporting being
somewhat or very optimistic about their own
companies’ job growth consistently wavering
between 51 and 59 percent. National job
growth witnessed greater swings in optimism,
moving from a low of 28 percent in Q4 2012
to a high of 50 percent in Q2 2013.
SMB Hiring Plans
In Q3 nearly half of SMBs reported plans
to hire within the next 12 months, with the
majority (70 percent) planning to add less
than 10 percent change in workforce. One
interesting trend in hiring considerations
is seen in the attractiveness to SMBs of
hiring contract employees. In Q4 2012, only
25 percent reported seeing the addition of
contract workers as more attractive to their
hiring mix than in the previous year. Increasing
each quarter, 42 percent of Q3 respondents
now report contract hiring as more attractive
than it was a year ago. While only 27 percent
say that are actively hiring back retirees on
a contract basis in Q3, nearly another 30
percent report considering the practice.
Sales, Marketing, Information Technology,
and Manufacturing Management continue
to be the most in-demand professional
segments,withSalesleadingthehiringcharge
at slightly over half of the respondents looking
to increase their sales force. Across 2013,
Legal saw the lowest percentage of planned
hiring, with just over 10 percent growth each
reporting quarter and Information Technology,
Accounting and Human Resources witnessed
the largest jumps in planned hiring. Seven
of the eight surveyed corporate functions
saw growth in planned hiring during the Q3
survey. Only Marketing dipped in Q3, but by
a single point, keeping Marketing as one of
the strongest growth functions quarter after
quarter.
SMBs and Washington
The U.S. small to mid-sized business market
continues to report a general pessimism
about Washington politics and Congressional
actions, though optimism inched slowly
upward during the early part of 2013. It is
significant to note that the Q3 survey was
primarily conducted prior to the governmental
shutdown or fiscal cliff deadline in October
2013, and we look forward to considering
how recent actions in Washington affect
SMB optimism regarding bipartisanship in the
next survey.
Despite lingering concerns over the
Affordable Care Act, minimum wage
considerations, and immigration reform, the
vast majority of SMBs report their companies
in a position of growth or stability, with only
5 percent positioning themselves in survival
mode in Q3. Similarly, over 80 percent of
SMB leaders agree that small to mid-sized
businesses are the job generators of the
U.S. economy.
Lucas Group will continue to survey SMB
leaders across the country about these
significant economic and employment issues
each quarter and will monitor how SMB
opinions and business plans may alter as
Washington politics persist, Congressional
actions occur, and Wall Street responds.
Lucas Group SMB Job Generation Outlook Survey