Small business development is an important contributor to national growth. Recent polls by the Fargo/Gallop Small Business Index and the HR services company TriNet show that small businesses are more optimistic than at nearly any time since the recession started. At present the trend appears to be growing and small businesses will need additional access to credit, investment, and other financial services to ensure their businesses continue to grow.
A Fargo/Gallop Small Business Index of 600 small business owners conducted on March 31st, 2014 indicates that small business owners are more optimistic now and for the next 12 months than at any other time since 2008. The numbers help support the idea that small business owners feel their chances of growth are improving and may be willing to invest more of themselves into their businesses to further their opportunities.
The numbers have been generally rising since 2010 but are now at a level that indicates optimism is growing at a significant rate. This positive momentum is still about half what was experienced during the pre-recession times of 2004-2007 but do highlight the idea that there is still plenty of room for economic growth. You may obtain more information HERE.
Another recent metric called the Small Business Confidence Survey conducted for TriNet by Harris Poll found that 74% of small business owners feel that their business will grow in 2014 (2). Of the 206 small participating businesses who have10-49 employees 50% indicated they plan on hiring more employees in the next year. They were generally concerned with obtaining new business, controlling expenses, and ensuring steady cash flow.
Why foster small business? Small business has a huge impact on economic growth in society. According to the Small Business Administration 66% of all new jobs since the 1970’s and 8 million jobs (big business eliminated 4 million jobs) since the 1990s were generated from small business (3). Small business has the mobility to adjust to the market even though they often lack the financial resources found in investment capital and credit.
Research by Lahm, et. al (2011) shows that a lack of capital for small businesses during the recession has forced many small entrepreneurs to rely heavily on credit cards. Changes within the cash equivalent market have impacted their ability to maintain that credit which further hampered their growth. Finding methods of improving small business credit scoring and access to capital helps in furthering the economic recovery.
The optimism within the small business market and difficulties in securing credit to expand their businesses help emphasize the problem that small investors and larger pool investors may benefit by being connected to small business entrepreneurs. Risk can be hedged over many small businesses in multiple sectors while new technology makes it possible to pool many small investors that seek to grow their portfolios. New technology is changing the way investment and business is conducted. When proper tools are available and well known it very well may have an impact on the economy.
Lahm, J. (2011). Small business and credit cards: new rules for plastic in an economic recession. Journal of Marketing Development & Competitiveness, 5 (5).