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A Sinking Economy Reveals Small Business' Strengths

Posted by Naomi Grossman Monday, Nov 12, 2007, 10:37 PM ET

Between rising oil prices, a sinking housing market, and a growing credit crisis, the economic picture isn't pretty. But apparently, small businesses are doing their share to keep the economy humming.

An article in the New York Times notes that a recent monthly report released jointly by Automatic Data Processing Inc. and Macroeconomic Advisers "showed an increase in private sector employment in October of 106,000. That included a surge of 63,000 at businesses with fewer than 50 employees, a gain of 50,000 at businesses with 50 to 499 employees — and a loss of 7,000 at companies with more than 500 employees."

It's the small businesses that are creating the most jobs in an increasingly tough economy, and it is only in this most recent economic downturn that the power of small businesses is most evident.

The article quotes Carl Schramm, an economist who is chief executive of the Kauffman Foundation and author of "The Entrepreneurial Imperative, who said "the figures indicate that the role of small businesses as an engine of job growth is gaining force, especially in troubled economic times." He continues: "In the last recession, young and small businesses created fewer jobs than they do today." And small businesses' ability to create jobs in the next recession, will be even stronger because "of the inroads they have made over the last decade into the services sector and the global economy."

But it is one of the article's conclusions that will resonate the most with those running small businesses as it speaks to the flexibility and entrepreneurial spirit necessary for a small business to succeed -- and, in this case, outrun larger competitors.

The article notes: "One reason small businesses may be outpacing big corporations in the uncertain environment is that they are run by entrepreneurs who are known for their knack of spotting money-making opportunities and acting quickly on them."

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