Smaller, getting bigger

Business at Rhino's Turf Equipment in Las Vegas is off to a strong start in 2007.

Sales at the company are up 30 percent this spring when compared with spring 2006, as developers, builders and landscapers scoop up utility carts, lawn mowers, hedge trimmers and tractors for property construction and maintenance. To help handle the surge in orders, Rhino's Turf Equipment added 10 percent to its 10-employee work force when it hired a service manager in early 2007.

Rhine Preas, the company's president and owner, attributed the improved business to sustained growth in Las Vegas' commercial sector.

"(Developers) have a lot of building licenses pulled and things are happening on the Strip," Preas said. "Those things directly affect demand for utility carts, which is one of my areas of business."

Rhino's Turf Equipment is just one of thousands of Nevada small businesses reaping the rewards of growth in the Silver State.

A report from SurePayroll, an Illinois payroll service, found that small businesses in Nevada added 1.3 percent to their staffs in the first quarter of 2007.

The average size of a small Nevada company rose from 4.9 employes to 4.96 employees from Dec. 31 through March 31, according to SurePayroll's statistics, which come from a nationwide survey of more than 18,000 companies with 100 or fewer employees.

Nevada's job gains are higher than the 1.1 percent increase small companies experienced nationwide, but lower than the 1.8 percent growth smaller operations posted in the West.

Credit the hiring increases to entrepreneurs' optimism about the economy's future, said Michael Alter, president of SurePayroll. Staff rosters among smaller companies were mostly flat nationwide in 2005 and 2006, Alter said, as businesses waited to see how strong and enduring the national economic growth spurt that began in 2003 would be. Now, small businesses are making up for the slower growth in recent years.

"As company owners get more comfortable that orders are real and business is growing, they're jumping in with both feet," Alter said. "They're hiring for positions they should have filled last year, and they're also hiring for new growth this year."

As employee counts have grown, Alter said, the number of independent contractors in the small-business labor force has fallen. At the end of 2006, 3.41 small business workers out of every 100 were independent contractors rather than full-time employees. That number had dropped to 3.4 workers out of every 100 by the end of March. The drop-off in independent contractors was even greater in Nevada: At the end of 2006, 4.06 small-business workers out of every 100 were independent contractors, compared with 3.36 workers out of every 100 at the end of the first quarter.

"When hiring is up and contractors are down, that's a sign of a strong economy," Alter said. "It shows small-business owners have strong confidence in the direction of the economy. They've chosen to add full-time people to their payrolls. That has longer-term costs and implications, such as paying the employer's portion of a worker's Social Security contributions and perhaps providing health insurance."

Business expansion is begetting more business expansion at Premier Office Systems in Las Vegas. Company President Colin McTernan has added three people to a year-end staff of 10 to help serve a 20 percent jump in orders for office equipment. Especially popular this year are multifunction machines, such as combination copier-printer-scanner machines.

Bill Werksman is also both witness to and beneficiary of a flourishing small-business sector.

Werksman, managing partner of Las Vegas staffing firm Resource Partners, said his company's business is up 35 percent this spring when compared with spring 2006. So he's looking to augment his five-person staff by 20 percent to 25 percent in 2007. Demand for the company's services will mean new jobs for several recruiters.

"We have more (employee) searches right now than we can realistically handle," Werksman said.

So Werksman isn't surprised by SurePayroll's data. He said the 1.3 percent gain Nevada's smaller companies reported in the first quarter seemed a little low to Werksman based on anecdotal experiences with his clients. The gaming sector is performing well, he said, and the gaming industry supports small businesses ranging from commercial builders to information-technology companies.

"I see small, medium and large companies across the board hiring pretty aggressively right now," he said.

For small companies in Nevada, that hiring is coming at a stiff price.

The average paycheck for employees of small businesses in Nevada jumped 5.3 percent from December to March, from $28,647 to $30,154, SurePayroll's numbers show. Nationally, the typical small-business paycheck grew 1.6 percent, from $31,292 to $31,791. Paychecks in the West grew 2.5 percent, on average.

The first-quarter increase in salaries in Nevada suggested that small businesses face a tough time competing for workers, Alter said.

Werskman agreed.

"Small businesses have a difficult time competing against larger businesses in recruiting," Werksman said. "Larger businesses often have a well-established name, and they have reputations for offering huge benefits packages that small businesses can't necessarily offer. Smaller businesses make up for that by offering an enhanced pay package or more flex time."

Preas, of Rhino's Turf Equipment, said his payroll is up 15 percent to 20 percent this year, partly because he brought his accounting functions in-house and hired a full-timer to crunch numbers.

But Preas is also goosing pay in 2007 for his existing employees to help with retention.

"It's extremely hard to find and keep people," Preas said. "We have an industry that not a lot of people are trained in or involved in. So many times, we have to hire people and train them. To get people, you have to pay them a journeyman's salary, but they not might not have a journeyman's knowledge."

Rising salaries shouldn't spur substantial inflation in Nevada because the Silver State's average small-business paycheck remains below the national average, Alter said.

"You don't need to be too concerned about inflation," Alter said. "Although, if you're trying to grow your business quickly, you should be concerned about where to find good workers in Nevada. Too few workers could hinder small-business growth there."