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New survey finds that 75% of small business owners say economy is "much worse" than it was five years ago

SBAM's national affiliate, the National Small Business Association (NSBA) today released the 2009 Mid-Year Economic Report. The report illustrates a small-business community barely hanging on in the midst of the worst economic downturn since the Great Depression. According to the report, 94 percent of small businesses surveyed said the national economy today is worse off than five years ago, and those who think the economy is doing much worse jumped from 64 percent in December 2008 to 75 percent in July 2009. (photo by timetrax23)
 
Although there was a slight increase in the number of small businesses who are anticipating economic growth, and a decrease in those anticipating a recession in the coming 12 months, these changes are more likely a reflection of the dismal position in which many entrepreneurs find themselves today, and the feeling that they’ve hit the bottom with no place to go but up.
 
“Nearly half of small businesses, up from a third six months ago, are not confident about the future of their own business,” stated NSBA President Todd O. McCracken. “The ongoing erosion of confidence from traditionally up-beat entrepreneurs is a wakeup call to lawmakers that small business may not be able to tread water much longer.”
 
The report details the ongoing difficulty small businesses are facing as three key indicators—revenues, profits and employee size—all declined between December 2008 and July 2009. The number of small businesses hiring new employees in the past 12 months dropped from 18 percent in December to just nine percent in July. Revenues and profits took an even bigger hit with the majority (62 percent) experiencing a decrease in revenues, and even more (66 percent) reporting a decrease in profits. The one positive: small businesses projected less drastic decreases in job growth for the coming 12 months.
 
Access to capital continues to be a major issue, with 80 percent of small-business owners negatively impacted by the credit crunch—up from 67 percent one year ago. Sixty-eight percent reported worsening terms on their credit cards and 38 percent were subject to a decrease on their lines of credit or credit cards. There was, however, an increase in the number of small-business owners who used a traditional bank loan in the last 12 months. While a positive indicator that bank loans are an option for some small businesses, this increase also reflects the fact that more businesses are turning to outside sources of financing as the difficult economy has forced them to use up business savings and earnings—making access to affordable capital all the more important.
 
“We’re struggling. Despite several economic stimulus packages and lots of talk, only three percent of small businesses reported a positive impact of the stimulus bills on their business,” stated Keith Ashmus, NSBA Chair and co-founding partner at Frantz Ward LLP, Cleveland, Ohio. “America’s small businesses need and deserve better.”
 
The full report can be accessed on-line here.

Sixteen Percent Of High-Impact, High-Tech Firms Founded By Immigrant Entrepreneurs

Sixteen percent of high-impact, high-tech firms have at least one immigrant founder, according to a study released today by the Office of Advocacy of the U.S. Small Business Administration.  Although these firms are concentrated in states with large immigrant populations, in most other respects they resemble high-impact, high-tech firms founded by native-born entrepreneurs.

Moreover, these immigrant entrepreneurs are highly educated and appear to be strongly rooted in the United States.  Roughly 55 percent of the foreign- born founders hold a masters degree or a doctorate.  In addition, they are more than twice as likely as native-born founders to hold a doctorate.  Furthermore, 77 percent of the foreign-born high-tech entrepreneurs are American citizens and, on average, they have lived over 25 years in the United States.  Two-thirds of them received their college degrees here, as well.

“Immigrant entrepreneurs clearly contribute a significant amount to our country’s cutting edge high-tech firms,” said Shawne McGibbon, acting Chief Counsel for Advocacy.  “This report outlines these contributions and delivers important new data about immigrant entrepreneurs.”

High-tech Immigrant Entrepreneurship in the United States, written by David Hart, Zoltan Acs, and Spencer Tracy, Jr. with funding from Advocacy, defines high- impact firms as those with sales that have at least doubled over the 2002-2006 period and which have significant employment growth during that time. The authors defined high-tech industries using research and development employment as a share of total employment as the key criterion.

For a complete copy of the report, visit www.sba.gov/advo.

 


SBAM leader David Rhoa of Lake Michigan Mailers quoted in The Washington Times article on proposed health insurance surcharge

Excerpt from today's (7/16/09) article in The Washington Times "Health care bill would deliver pre-Reagan tax rates -- small-business owners warn of impact"

"That tax is going to be paid for by something, that's going to go right to jobs. That money has to be taken from the employer and given to the government," said David Rhoa, whose Indiana [and Michigan] company, Lake Michigan Mailers, is in the direct-mail business. "While I can't speak for every employer, I can say that many of them are going to take that right from their payroll."

Read more by clicking here.

Small Business Champion Podcast: What the Michigan Legislature Will be Up to This Summer (29:13)

Our show this week is a rebroadcast of a live program we did July 9 on BlogTalkRadio with Dave Palsrok, vice president government relations, and Mike Batterbee, director of government relations, where we talked about what the Michigan legislature will be up to this summer and the impact on small business owners. It’s longer than our usual show, running about 30 minutes, and the audio quality is not up to our usual standards because we had to record it over a phone line. But, it’s full of great information and we hope you enjoy it.

Listen to the podcast by clicking here.

 


SBAM Tells State Senate to Oppose Job-Killing Unemployment Insurance Expansion

Standing united in opposition to a proposed expansion of Michigan's 100 percent employer-financed unemployment insurance system (HBs 4785-86), SBAM and over 1,000 Michigan job providers, employing hundreds of thousands of workers, recently signed a letter to the State Senate urging defeat of this harmful legislative package.

"This letter sends a clear message to legislators that the proposed unemployment insurance expansion is a real threat to Main Street," said Wendy Block, Director of Health Policy and Human Resources for the Michigan Chamber of Commerce. "This proposal would increase unemployment insurance taxes on Michigan employers at a time when they can least afford it, which could lead to further layoffs and other reductions in business operations."

Listen to SBAM's Small Business Champion podcast interview on this topic with Director of Government Relations Mike Batterbee.

 


Wide-ranging Review of Small Firm Financial Markets Features Data from Survey of Small Business Finances

Access to credit, a top issue for small businesses in the current climate, is the focus of a new compendium of studies sponsored by the Office of Advocacy. The structure of small business financial markets has been changing dramatically over recent decades, as large financial institutions have increased in importance. Small Business in Focus: Finance was released today at an Advocacy symposium.

“In this time of financial challenges, it is particularly important to understand small business borrowers and the markets that serve them,” said Advocacy Senior Economist Charles Ou. “We hope that this compendium and today’s symposium will be a starting place for ongoing discussions of the small firm financial markets, as well as the datasets available to understand them.” Dr. Ou will retire in July after 32 years of service.

The studies featured in the compendium are based primarily on the 2003 Survey of Small Business Finances (SSBF). The SSBF has been one of the highest quality data sets for analyzing the credit issues faced by small firms. The Federal Reserve Board conducted the SSBF in 1987, 1993, 1997, and 2003 and will rely on the 2010 Survey of Consumer Finances for future data on business-owning households. Four studies are featured:

A report by Advocacy economists Charles Ou and Victoria Williams provides an overview of small business borrowers, the credit and capital markets that serve them, and small business borrowing patterns.

A paper by George Haynes and James Brown explores in detail small business financing patterns, including the relative importance of banks, thrifts, and finance companies in these markets. The share of small firms using any credit increased from almost 80 percent in 1993 to almost 90 percent in 2003.

A second paper by the same authors looks at the critical importance of internal funding for small business growth and finds that the relationship between internal funds and employment growth is especially important for very small and women-owned firms.

A study by Rebel Cole looks at the credit markets and identifies four kinds of small businesses: nonborrowers, approved borrowers, discouraged borrowers, and denied borrowers. In each of the three SSBFs, Cole finds that firms owned by African Americans are 10 to 18 percent more likely to be rejected than other firms, even after incorporating an extensive set of control variables available from the SSBFs.

The full studies are available online at www.sba.gov/advo/.

SBAM Praises Senate Cuts in State Budget

SBAM supports Senate action that cuts $1.2 billion from Michigan’s proposed 2009-2010 state government budget. “Small business owners across this state have been forced to make difficult cuts within their business operations and it is about time that our state government does the same,” says Rob Fowler, president and CEO of SBAM.

Michigan faces a $1.7 billion budget deficit for the 2009-2010 fiscal year. Compared to the Senate’s $1.2 billion in cuts, Democrats in the state House have proposed $525 million in cuts with more of the budget deficit to be made up with federal stimulus money.

Fowler praised Senate Majority Leader Mike Bishop (R-Rochester) and his Republican caucus for the difficult budget decisions they made this past week. “These are not easy decisions, but the reality of our current economic position demands that our leaders come up with budgets that are reflective of the actual revenues that are currently available,” says Fowler. “It is going to take bold leadership if we are going to find success in our economic recovery, and this week that leadership was demonstrated in the state Senate. We encourage all of our lawmakers to follow their lead all the way through the target setting and final budgetary process.”

Small Business Champion Podcast: Action Center of New SBAM Web Site Makes it Easy to Get Involved with Legislative Issues (6:19)

This week, SBAM's Vice President Communications Michael Rogers talks with SBAM’s Vice President Government Relations Dave Palsrok about the exciting new tools in SBAM's redesigned Action Center at sbam.org. The weekly Small Business Champion podcast is the place where you can get the scoop on what’s really happening in Lansing and what it means to your bottom line.

Listen to the podcast by clicking here.

 

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