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Small businesses created 65 percent of all new jobs in recent years

According to the Office of Advocacy at the Small Business Administration, small businesses created 65 percent of all new jobs in the private sector in the United States over the last 15 years.  The data comes from a new report, “An Analysis of Small Business and Jobs”. 

Many of the new jobs are in new business start-ups, but a larger share come from established firms in the 20 to 499-employee range.  The data show that from 1993, 31 percent of net jobs gained came from new establishments and the remaining 69 percent came from existing firms of all sizes that expanded.  During this current economic downturn, firms with fewer than 20 employees began losing jobs in the early second quarter of 2007. Until the second quarter of 2009, these smallest firms accounted for 24 percent of net job losses, while the larger firms accounted for 36 percent. The remaining 40 percent were in the very largest firms of more than 500 employees.

 

See the full report here: http://www.sba.gov/advo/research/rs359tot.pdf

More about the Office of Advocacy:  www.sba.gov/advo.

Call them the "homepreneurs"

They are the people who have created home-based businesses. They account for more than half of all the businesses in the U.S. And they employ more people than venture-backed companies.

According to a BusinessWeek.com account, the rise of home-based businesses can be traced to the early days of telecommuting in the 1980s and the mass adoption of the Internet in the 1990s. Cloud computing (think Google Docs), online collaboration, and smartphones have accelerated the trend.

Beyond the technical aspects, according to the BusinessWeek.com story, is the greater acceptance of the legitimacy of a home-based business.

You don't necessarily need an office. Homepreneurs meet clients at their offices or at coffee shops, and -- when there's a need -- most areas have on-demand office space, where a conference room can be rented by the hour. Certainly, that makes for lower operating costs.

The BusinessWeek.com story cited a 2006 study by the Small Business Administration that compared tax returns of homepreneurs who deducted home-office expenses with those who deducted commercial rent. The SBA found that home businesses, on average, had lower sales and net profits than companies in commercial spaces, but the profitable home-based ventures retained a greater share of their total receipts as net income: 36 percent vs. 21 percent for non-home-based businesses.

The trend of home-based businesses is seen as continuing to rise, perhaps doubling within the next 20 to 30 years.

Will there be a new wave of young entrepreneurs?

This article from Crain’s of New York  indicates that young people may be the next wave of new entrepreneurs.  The Kauffman Foundation predicts a “coming entrepreneurship boom” among people ages 20 to 34 because young people have been inspired by the likes of Google, Facebook and Twitter—successful businesses all started by very young adults—and because they see the “traditional” job market just as risky for them these days. Young adults seem to benefit from having smaller companies and fewer financial responsibilities, which leads them to taking innovative risks.

Do you know successful, very young entrepreneurs in New Hamsphire? Write us here with a mention of them.

Rise in home-based businesses expected to continue in struggling economy

Home-based businesses have been on the rise for some time and now account for nearly half of all businesses in the United States, according to this article. These businesses are not just hobbies, but are providing a significant or majority share of household income. With a struggling economy, technological advancements and the lower costs of operating out of one’s home, it’s expected that more and more people will choose self-employment at home.

The article identifies 10 trends for home-based entrepreneurs in 2010: 1. A job-challenged economy 2. Bootstrapping (cost containment; cash flow adjustments) 3. Home-based artisans 4. Cloud computing (access to advanced computer capabilities) 5. Mobile computing 6. Social computing 7. Analytics—Tools are becoming more sophisticated; easier to use 8. The New Local movement 9. Boomers—Aging baby boomers are flocking to home-based businesses 10. Work/life balance.

Are you home-based or planning to be?

Write us with your comments using the “comment” feature just below.

How will New Hampshire's small businesses do in 2010? Take our poll

In this end-of-the-year article from the New Hampshire Business Review, business owners proclaim that "Flat is the new up"--meaning if they don't lose money or business in the new year, it will be a good thing. The economic recovery is slow and sputtering. Housing sales in New Hampshire are up, a fact that most experts agree is a good sign. Will your business benefit this year? Take our two mini-polls, above and below, and let us know how you're feeling as 2010 opens.

Survey: New Hampshire business confidence up for 2010

Though they say their employment ranks are likely to stay flat, New Hampshire business owners are more confident than in the past about their prospects for 2010, according to a new survey.

The Business and Industry Association of New Hampshire collaborated with Portsmouth-based RKM Research and Communications for the sixth annual business outlook survey.

It showed:

• New Hampshire businesses expect overall economic conditions to improve in 2010;
• Despite an improved economic outlook, the majority of businesses don’t expect to add more workers;
• Future revenue expectations, which have diminished sharply since 2006, are slightly higher going into 2010;
• Expectations for future capital expenditures are similar to last year, suggesting businesses are still cautious and will probably not seek to grow much in 2010.

“The situation is still tough for most businesses. We’re still facing a very challenging economy and businesses continue to struggle to remain competitive and make payroll in the midst of diminishing revenues, well-below-normal business activity and high unemployment,” Jim Roche, BIA president, said in a statement. The full survey is available for downloading from the same page as the statement.

“Now, more than ever, it is crucial to maintain and support business-friendly policies and initiatives in our state.”

Study looks at factors that cultivate an entrepreneurial spirit

What are the factors that cultivate and support entrepreneurship?

A new study from the Ewing Marion Kauffman Foundation, "Making of a Successful Entrepreneur," tries to outline what types of things actually influence the success or failure of a start-up business.

The full study, in PDF format, is here.

The study surveyed 549 company founders of successful businesses in high-growth industries including aerospace, defense, computing, electronics and health care.

According to a summary, 98 percent of these founders ranked prior work experience as an important success factor. In addition, learning from both successes (88 percent) and failures (78 percent) also played a key role in respondents' current successes. Forty percent cited lessons learned from failures as extremely important -- the second-highest "extremely important" rating.

"Entrepreneurs tell us their ranks remain small because others fear the risk and time required to start a venture," Vivek Wadhwa, leader of the research team, said in a statement. "But the current economy has given us an opportunity: We could harness the energy of the many workers who are now unemployed, teach them how to be entrepreneurs and provide them with seed financing for their ventures. These workers have nothing to lose, and the economy has a lot to gain."

Risk, said the study, is the biggest factor that holds people back from starting a business of their own.

Other factors include the time and effort of starting a new business, the difficulty raising capital (most in the survey say they used their own money--primarily savings), and family pressures to keep a steady, traditional job.

Some of the other factors cited by those whose businesses have been a success include the importance of faith and God, hard work, perseverance/determination, timing, spouse forbearance and support, optimism, naivety, and willingness to risk everything.

 

NH profile of small business offers insights

The new Small Business Profile from the Small Business Administration's Office of Advocacy offers some interesting insights into the small business climate in New Hampshire.

For example, the demographics of the small business owner as of 2002 (the latest year of data available in the study) show that 60.4 of the small businesses are male-owned, 24.7 percent are female-owned, 1.2 percent are Asian-owned, 0.7 are Latin-owned, 0.4 percent are African American-owned and 0.4 percent are Native American/Alaskan-owned.

Even though the total percentage of businesses was low for African Americans and Asians, they had the highest rate of growth between 1997 and 2002, according to the data from the October 2009 profile. The number of African American-owned businesses grew by 44.2 percent in that period and the number of Asian-owned businesses grew by 37.2 percent.

The number of small employers in New Hampshire was 32,103 in 2006, accounting for 96.6 percent of the state's employers and 54.9 percent of its private-sector employment, according to the profile.

The complete New Hampshire profile can be found at:
http://www.sba.gov/advo/research/profiles/09nh.pdf

A state by state listing can be found at:
http://www.sba.gov/advo/research/profiles/

Responding to the release of the latest Small Business Profile, Susan Walthall, acting chief counsel at the Office for Advocacy in Concord, told the NH Business Magazine:

"New Hampshire continues to depend on the health and ingenuity of its small business sector for the state's economic growth. In today's economic climate, it is especially important for policymakers to keep small business concerns in mind as they formulate policy.

Entrepreneurship learning should reach back to college

Entrepreneurship shouldn't start at the point of a business creation, according to academic researchers, it should start as part of a college education.

According to a new study supported by the Small Business Administration's Office of Advocacy, students who took an entrepreneurship class were more likely to have engaged in three types of “innovation” -- offering new products or services, obtaining patents or copyrights, and using production techniques -- that were different from what was already in the field.
 
The survey was funded with a challenge grant from the Ewing Marion Kauffman Foundation to the Berkley Center for Entrepreneurial Studies of New York University. It shows a strong correlation between respondents having taken an entrepreneurial course and their self-reported skill in identifying new business-related opportunities.

The full study is available here as a PDF.