Tax Reform Driving Growth for These Two Industries in 2018

The January 2018 Small Business Optimism Index, put out by the National Federation of Independent Businesses, set a record with the number of business owners saying now is a good time to expand. The 32 percent reading is the highest level since the survey began publication in 1973. Fueled by recent tax reform and growing optimism over a more favorable regulatory environment across the board, more and more businesses are tapping the financial markets for additional working capital to fuel this expansion.

Specifically, J.P. Morgan’s 2018 Business Leaders Outlook highlights two industries that most expect to benefit from recent tax reform: transportation and construction. An astonishing 43% of respondents plan to use their tax reform benefits to invest in capital expenditures. According to the survey, while transportation and construction are the two industries that stand to benefit most, they are also the same industries that are struggling the most to find and hire qualified technical trade labor. Fifty-six percent of respondents highlighted technical or trade positions as the most difficult to fill. With unemployment at all-time lows, the competition over these positions is higher, and as a result, costlier than ever before.

Maximize Growth Potential With Tax Reform Benefits

As companies are looking to invest and expand, finding the right capital partner that understands the unique challenges facing their business is critically important. From a capital deployment and expansion perspective, many transportation companies are using their tax reform benefits and readily available financing to add both trucks and additional routes to their businesses. Construction companies are actively focusing on new marketing and business development initiatives to drive growth.

While both industries continue to struggle with finding and hiring employees, many businesses are outsourcing these efforts to specialized recruiters rather than keeping those efforts in-house. Due to the increased demand for these positions, it often takes a full-time, coordinated effort to find the right people for the job.

Handle Unique Growth Challenges With the Right Capital Partner

For the past five years Expansion Capital Group (ECG) has been a leading provider of small business funding nationwide. ECG has provided over $300 million in funding since its inception, and while we work with businesses in nearly all industries, we’ve carved out an industry focus in both transportation and construction. These two industries tend to share a variety of traits that require specialized knowledge in order to properly understand them. Those can include:

•      Seasonality based on geography
•      High customer concentration
•      Specific licensing and insurance requirements
•      Higher than average Days Sales Outstanding (DSO)
•      Significant capital expenditure requirements
•      Milestone-based compensation
•      Large, intermittent deposit trends

These unique characteristics tend to set these businesses apart from the rest of their small business cohorts, and can make it more challenging to secure capital. This is why it’s important to identify a capital partner that understands these issues and who can also be a value-add outside of just the capital they’re providing. As the landscape for transportation and construction remains more positive than ever in 2018, ECG is excited to help these businesses maximize their growth potential.

Whether it’s buying new equipment, hiring additional personnel, expanding the marketing budget, or taking on new clients and routes, this year represents tremendous opportunities for businesses of all shapes and sizes. The growth outlook for small and medium sized businesses remains higher than ever before, which makes now a great time to examine how you could effectively deploy additional working capital to help grow your business.