The latest reading of small business optimism conducted by the National Federation of Independent Business (NFIB) was not very positive, falling from an index level of 92.2 in May to 89 in June. This does not bode well for the nation’s job seekers, as small businesses represent more than 99 percent of all U.S. employers and account for about 60 percent of gross job creation. The NFIB optimism index found that a net of just 1 percent of small firms are planning to hire in the coming months.
Making matters worse for small business owners is a dramatic decline in the amount of lending to these firms. The New York Times cited federal data showing that lending to such small businesses fell more than $710 billion in the second quarter of 2008 to below $670 billion in the first quarter of this year.
The tough business environment certainly is not attracting new entrepreneurs into the game. A quarterly Challenger survey of jobless managers and executives found that an average of 3.7 percent started their own business in the first half of 2010. That was down from 7.6 percent in the first half of 2009. Challenger will release a more detailed report on start-up activity on Monday, July 19. What will small business owners need to see before their confidence level and hiring begin to increase? What are the biggest obstacles to starting a business?
Yesterday’s announced acquisition of human resources consultancy Hewitt Associates by the Chicago-based insurance-broker Aon Corp., is undoubtedly creating some anxiety among the employees at both firms. The Chicago Sun-Times reported that the 4,500 people employed by Hewitt in the Chicago area will become part of 6,300-employee Aon Consulting unit. While both companies said it was too early to anticipate the need for or extent of job cutting, such measures are typical in the wake of corporate marriages. Indeed, Aon said it expects the deal to save $355 million annually beginning in 2013, primarily from reducing back-office areas, management overlap and public company costs and utilizing technology platforms. According to Challenger tracking, mergers and acquisitions have resulted in 27,880 planned job cuts through June of this year. That is down 40 percent from the 46,448 merger-related job cuts announced in the first six months of 2009. Will merger activity increase as the economy improves and will it lead to more job cutting? What challenges do companies face when combining varying corporate cultures? What can workers at merging firms do to protect their jobs?