SmallBizResource Blog -- SmallBizResource

What is the State of Small Business?

Posted by Benjamin Tomkins Monday, Apr 21, 2008, 09:28 AM ET

The 45th annual Small Business Week kicks off today (April 21-25). Before joining in the SBA's fête, it's high time to review some of the recent data that offers a glimpse into the state of small business today.

Before diving into any gloomy stuff, let's begin with the glass-half full prospect of starting a new business. According to Fortune Small Business, almost 40 million Americans move each year. It stands to reason that a percentage of those will be entrepreneurial, leading to a listing of the 100 Best Places to Launch a Business. Feel like pulling up stakes, here's a hit list of places to consider, starting with the top 10:

1. Bellevue, WA (no corporate income tax)
2. Georgetown, TX (270 new businesses in the last two years)
3. Buford, GA (potential 100 percent sales tax break)
4. Marina del Rey, CA (deep talent pool)
5. Bethesda, MD (highly educated labor)
6. Portland, OR (2,571 start-ups in 2007)
7. Denver, CO (strong regional economic development)
8. Charlotte, NC (national banking hub)
9. Fort Worth, TX (small business tax incentives)
10. Franklin, MA (savvy workforce)

And as with most of these lists, some slicing and dicing gets us to more targeted lists, including the top six places to launch a tech venture (a bit skewed toward the Pacific Northwest):

1. Bellevue, WA
2. Portland, OR
3. Boise, ID
4. Blacksburg, VA
5. Bethlehem, PA
6. Folsom, CA

Now on we go to the other side of that start-up bravado to the state of our economy right now. But wait! According to a recent survey client survey of 310 small and midsize businesses conducted by B2B CFO, small business owners and CFOs aren't as glum as you might think. Among the findings:

--Less than 10 percent of business owners and CEOs of small and midsize business are concerned about the economy

--Companies surveyed plan to add 3,246 new in 2008

--Businesses participating project average sales growth of 27.8 percent (from an average of $9 million annually to $11.6)

--29.4 percent cited growth as their key concern for 2008

--25.5 percent identified cash as their prime worry for 2008

--9.7 percent named the economy as a top fear for 2008

Smaller businesses, at least the ones in that survey, may be clinging to cockeyed optimism, especially when you consider the findings of an insurance survey that underscore the thin margin for error that are normal operating conditions for many small businesses. Among the finding of a report from the National Association of Insurance Commissioners survey:

--71 percent of small businesses depend on one to two key people for their success; 22 percent have insurance covering those key people

--48 percent of home-based businesses depend on homeowners insurance to protect their business; 22 percent of the small business survey sample are home based.

--59 percent of small businesses with fewer than 20 employees have workers compensation insurance

--35 percent of small businesses have business interruption insurance

And to keep the progression in a downward slide, the National Federation of Independent Business' Index of Small Business Optimism was down 3.3 points in March to 89.6 -- that's the lowest monthly reading since the surveys began in 1986.

Another recent survey from SurePayroll, an online payroll service provider, found that 50 percent of small businesses don't offer healthcare plans to employees because of high costs. In and of itself not surprising, but the eye catcher is the slump from the 2006 survey when 32 percent more small businesses offered health insurance than do today.

If we continue to plumb the SurePayroll well, we find top 10 list of the best states for small business. The results are based on payroll; the calculation being that hiring means healthy for business (according to the March scorecard from SurePayroll, small businesses are hiring). Note that neither Utah, nor New Jersey cracked the FSB list for top places to launch a business.

1. Utah
2. Washington
3. New Jersey
4. North Carolina
5. Oregon
6. Ohio
7. California
8. New York
9. Georgia
10. Colorado

The slice of optimism from SurePayroll is not the only light in are a dark economic thicket. There's also the QuickBooks Back to Business Survey (conducted by Global Strategy Group) that found a bushel of bullish small business perspectives, including

--91 percent of small business owners see opportunity despite the economy

--Almost 80 percent expect their business to grow
How will these small businesses come through the current slowdown in good trim? They'll do it by focusing on customer retention and reducing costs, according to 63 and 52 percent, respectively, of the survey participants.

Now about this National Small Business Week. The annual event is happening in Washington, D.C, and New York. So unless you're already there, it's wait until next year for you, unless you take advantage of the event Webcast that will give you limited access to some of the events.

SmallBizResource

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