Friday, January 27, 2012

Small Business Start-ups Aid Economic Recovery

Written by Otis White
Business and Management faculty chair at Rio Salado College

Otis White

During National Small Business Week last May, Brian Morris, a leading small business and entrepreneurship blogger reported that there were more than 27 million small businesses in the U.S. He also reported that between 60 and 80 percent of all new jobs, depending on the industry sector, would be created by small and medium sized businesses that will hopefully startup operation after the recession is over. Well, it is after the recession and the country is looking for those new businesses.

What worries researchers and small business advocates is that the nation’s confidence in starting a business is actually slipping to lows not seen in years, according to the National Federation of Independent Businesses. Many blame the housing crash as home equity is a major source of funding for new businesses. Bank lending for new business is at an all-time low and venture capital sources are becoming more and more selective.

In Arizona, statistics show that small business drives 26.1 billion in payroll or 28.8 percent of the state’s total payroll. In the United States more than 30 percent of all payroll ($1.5 trillion) and 21 percent of all business revenue ($7.8 trillion) is driven by small and medium sized business. We cannot afford to lose the will and drive to create new business ventures and there has never been a better time to do so.

A recent Intuit report ranks the U.S. as the fourth lowest in start-up costs of the eight leading economic opportunity countries in the world, and third in ease of operation. It costs less to begin a business today than it has over the past 15 years and the ability for anyone to start a business has never been easier from a regulatory and operations point of view. In addition, the time could not be better with the expanding “buy local” movement that is spreading across the country.

It is entrepreneurship and risk taking as said by economist Joseph Schumpeter, “which creates the new and vibrant economy out of the ashes of the cold stagnant one.” Our nation has lots of ashes
.
All successful companies began with an idea. For those who have ideas and are interested in starting a new business the possibilities are endless and might even be able to help sweep up some of the ashes. Here’s to a growing and prosperous 2012. Let’s start something.

Supporting the Entrepreneur Process
• Frequent local businesses who are shouldering risk. Revenue which flows through local businesses expands payrolls, creates jobs and strengthens the fundamental base of consumers which is the bedrock of our economy.

• Make small business growth a legislative imperative. Support candidates who favor small business growth in all state-wide elections and make it a requirement for that support.

• Encourage high schools, community colleges and universities to take the leading role in supporting startups and growth companies from all business sectors and infuse curriculums with entrepreneurship content across all disciplines.

• Fund education supporting entrepreneurship and small business creation and the free enterprise system by making courses and resources abundantly available to all citizens whether young or old, at low or no cost.


This article appeared in the Tempe Republic, Jan. 25, 2012

103 comments:

James Henry said...

Operating a small commercial and residential interior and exterior painting business has been a challenge, especially in this economy. Coping with various fees, taxes and regulations places a unique burden on small businesses that are principally operated by one or two people. In addition, most loans and grants are not geared to help these kinds of businesses.

Like larger businesses, we, too, hire people and create prosperity for others. It is my hope that those in the legislative and related processes will come up with ideas and programs to help really small businesses.

student UII said...

nice article,
thanks for sharing.. :)

Kurt said...

I can tell you from first hand experience that larger companies...when they do hire in the last couple of years, are for minimum wage jobs at best.

What people used to get hired for at $15 per hour is now down to $8 an hour at a local big box retailer.

I firmly believe, and agree with this post that small business and entreprenuers are what are going to drive the economy, much as they have done in the past.

Equity said...

Larger companies have the resources to sift through all the CVs of disinterested people who are prepared to work for minimum wage if only for financial release.

Efoghor Joseph Ezie said...

The big companies can only employ a percentage of the populace. When you put the small businesses together you discover they are contributing highly to GDP and that several hands are employed through them.

To start up a small business one needs ideas, managerial skills and availability of funds. When the people have the basic skills and the monetary support is provided by government and other financial institutions, they will be willing to take the risk to start up something that should fend for them and their families.

There are actually a lot of Small Business Investment Opportunities here and there; but putting the right legislative backup and financial support in place would go a long way at encouraging people to start their own businesses and depend less on goverment and the big firms.

Sarah said...

Nice article! Small businesses are the only hope our country has of making a economic comeback. I really hope that our politicians start making it easier for small businesses to thrive and hire more workers so our economy can recover. The current tax structure is not small business friendly and restricts businesses from growing.

Mike the Albany Oregon Real Estate guy said...

You said "Fund education supporting entrepreneurship and small business creation and the free enterprise system by making courses and resources abundantly available to all citizens whether young or old, at low or no cost. "

DECA is a great example of a program that does work to educate kids in high school about running a business. For the most part, it is a self supported program-i.e. the kids raise the money needed, and grow as a result.

yigal lampert said...

Here is another angle we should be thinking of. Employers that want to hire better manpower but can’t afford to do so through payroll can get health insurance tax credit through the state.

Robert said...

As a start up/small business owner I'm always interested in how the U.S. government's policies will affect me and my employees.

Some of the "lack of confidence" mentioned in the article stems directly from uncertainty out of Washington...we need for regulators to step aside and let us do what we do best...create opportunities.

--Robert http://vvego.com/index.htm

Granny Flats said...

Could'nt agree more with your article, and totally agree with Robert.

Relationship Banking said...

For those who have ideas and are interested in starting a new business the possibilities are endless and might even be able to help sweep up some of the ashes. And to sum it up, it could really help the economy.

Business For Sale Canada said...

Small-business owners were hit hard by the recession. Financing is still hard to find and the unemployment rate continues to suppress the pool of potential customers. The outlook may seem dismal, but a recession should never justify putting your business on hold. Working with financial hardship and holding onto customers in any crisis will put your business on more competitive footing once the crisis is past.

Josh said...

Small business is a great start up because soon it will become a big business. We could only consider that legitimate home based business and small businesses are the only hope our country has of making an economic comeback.

Melissa said...

"All successful companies began with an idea. For those who have ideas and are interested in starting a new business the possibilities are endless and might even be able to help sweep up some of the ashes" I love this statement. I keep telling that to people that having an idea and the firm solid belief that you can achieve anything, and it will breed successful results. Thanks for sharing this.

Shawn said...

A new business can be opened by anyone with the capital and time to do it. Nevertheless, businesses that will be successful for years to come must maintain a certain level of financial soundness. Among the first questions an entrepreneur should ask are those that explore the potential profitability of the venture. The entrepreneur should be able to estimate sales and selling expenses as well as other costs of doing business.To do that, you must be prepared. So in entrepreneurship, just like any other profession, luck is where preparation and opportunity meet.

Business For Sale said...

Starting a business is never easy specially a small scale business.The risk involved in small scale business are much higher than in the case of large business. Small scale business are affected most my recession and any change in policy. Its is true that government are motivating small scale business but they are not doing much in providing favorable environment in which the can grow.

business for sale said...

agree with this post that small business and entrepreneurs are what are going to drive the economy .
When the people have the basic skills and the monetary support is provided by government and other financial institutions, they will be willing to take the risk to start up something that should fend for them and their families , and going to drive the economy .

Real Estate Investment said...

Like larger businesses, we, too, hire people and create prosperity for others. It is my hope that those in the legislative and related processes will come up with ideas and programs to help really small businesses. businesses that will be successful for years to come must maintain a certain level of financial soundness.

Cheapest Auto Insurance in Florida said...

I am well known for telling anyone who will listen that wages are too high & working conditions too generous. Small business is almost impossible at present to make ends meet, let alone make a profit..

The overheads are simply too high for a flat economy. These current wages grew too strongly during the artificial boom years and cant be sustained in these more frugal times. Something is about to give or is giving.

I suspect 10000's of small to medium size businesses are hanging on by a thread and it wont take much for the thread to snap. No too many businesses or sectors can afford these high wages as the heavily subsidised industries will attest.

I think wages will need to fall by at least 20% and I would think 4 weeks leave will become 2 and the 8 public holidays will drop back to 2 or 3. It will be jobs or no jobs soon.

I give the economy 6 months tops before the whole place crumbles. The vicious cycle is about to accelerate imho.

Crude oil tips said...

This was a Great stuff Otis!
I specially liked the contents in this sections "Supporting the Entrepreneur Process"
Thanks.

Sell House Nashville said...

I couldn't agree with this more. There are several schools that are starting up that actually teach entrepreneurship as the core method of making money/succeeding, and I think that if this takes over, our economy has a chance of recovering and we can again re-establish ourselves as undoubtedly the greatest country in the world! :)

Atlanta Hardwood Floors said...

the only real way to make money in this world is to own your own business

Anonymous said...

every large-scale business rises from small-scale.in every country big part of the population is middle class that's why they play small businesses play a vital role in economy build.

link building packages said...

Business establishments, big or small, contribute in the economy as they impact in the GNP of a certain country. My mother was once saying that when I was a child rice was just 10 PHP but now it increased to 40-50 PHP with no or very little increase in the wage particularly in our country, and this exactly is another primary challenge for every business.

limited liability company llc said...

Great informative site. I'm really impressed after reading this blog post. I really appreciate the time and effort you spend to share this with us!

terrenos enelperu said...

I agree with Atlanta, having your own business and being your own boss is pretty much the only way to succeed.
Real estate in Peru

Anonymous said...

Nice article. This is very useful for small businesses users.
Angkor wat

Teodor said...

Hi there. First I want to thank you for the article. Nowadays it is very important to get as easy as possible to the end user. With Responsive design your sites can be opened and formatted equally well in phones, tablets, desktops and laptops. What we want more :) With the advent of mobile technology is a must for any business.
Greetings: Theodora

Grow Box said...

VERY INFORMATIVE BUSINESS INFO U HAVE SHARED VERY HELPFUL TO LEARN SOME THING NEW THANKS FOR SHARING WITH US.

Chequesnow.ca said...

As a small business owner myself we started with two of us, and now there are 7 employees we are responsible for. In Canada we joined the CFIB to help us stay current on business news that effect our cheque printing company. It also supports Canadian Businesses and lobbies the government on our behalf.

Joe D said...

Washington should always work to make entrepreneurship easier. Small businesses provide more personal service and cannot be replaced by large corporations.

Mike said...

I agree that small businesses and even small entrepreneurs plays a huge role in the economy. If these small business combined all their earnings through paying taxes, this will solve the problem on limited budget.

Online surveys for money said...

I also have a small business it is a coffee shop but there are only 4 employees as it is a quite time during the recession. Found this business information really helpful thanks.

Top Internet Business 2012 said...

Starting a new business is not really much of a challenge anymore - the technology that w carry today is allowing entrepreneurs work smarter rather than harder.

Being so... this eliminates a huge piece of the challenge to make it a successful business. Thanks to the internet of today - anyone can build a business from scratch and help others by creating jobs!

Great post by the way!

Thanks for sharing!

Bookmarked :)

John Lewis said...

Thanks for this sharing.
It is very informative business info.!!

KJ said...

Those who have ideas and are interested in starting business the possibilities became incredibly large. Everyone can do it.

billy said...

The current tax structure is not small business friendly and restricts businesses from growing. I really hope that our politicians start making it easier for small businesses to thrive and hire more workers so our economy can recover.businesses are the only hope our country has of making a economic comeback.

ryan said...

great article i've learn a lot

Oxford Business Group said...

Yes! I tend to agree with the point that small and medium businesses effect economy more positively than the large organizations.

GMR Transcription said...

I’m currently in charge of a transcription service and would love helping our transcriptionists start their own business – most of whom do it from home. The unfortunate thing is that the government isn’t stepping up to the plate to support those with small start-ups. I’ve been researching it a lot lately and it seems that fees and licenses and initial costs are way out of line. Everyone wants a piece of my pie before I even get a bite. Sure people are talking about more support and everyone agrees that it is paramount to a growing economy, but talking about it as far as anyone gets. The concrete action steps are missing.

Hotels in UK said...

This is a great article for small businesses.

Gary Bowers said...

Great article. I'm a small business entrepreneur myself. A REALLY small business. I currently am a business of only one person that runs a website selling swimming pool filters.
After 3 years, I am at a point where I am at the cusp of enough growth that I will need to hire an employee or two....which is great. But, I still don't have enough profit to further drive growth in sales high enough to justify hiring.

I entered a contest earlier in the year, Mission Small Business, that was giving away 12 grants to lucky small businesses to help them grow their businesses. Winners haven't been announce yet...I have my fingers crossed.

Even with no employees I pay what I feel is too much in taxes which, honestly, is contributing to the delay in reaching that point of being able to hire.

I seem to be at a point where this is just a second income stream and/or a hobby. I really don't want to be stuck here. That won't help the me or the economy very much.

Business News said...

Nice article.

Christina Nolen said...

A 2011 study by Forrester showed that “78% percent of very small businesses in the U.S. (VSBs) expect their businesses to grow in the next two years, and 39% of those expect that growth, by number of employees, to be double.” But this really isn’t surprising. Small businesses, in a variety of industries, are the job creators of the United States and have been for some time; according to the U.S. Small Business Administration, small businesses represent 99.7% of employers’ firms and have created 64% of the net new jobs over the past 15 years.

frede said...

Financing is still hard to find and the unemployment rate continues to suppress the pool of potential customers. The outlook may seem dismal, but a recession should never justify putting your business on hold.

bloggy said...

I agree with this post that small business and entreprenuers are what are going to drive the economy, much as they have done in the past.

Kredyty Firmowe said...

There are a number of available programs to assist startups, micro businesses. It is good at the beginning when we start own business.

Streamline Painting said...

I totally agree with the comment of James Henry at the top. Hope a painting business like us will be given proper aid to help us prosper more given that we are striving hard. :)

etkili ilanlar said...

Very informative business info, you have shared very helpfull content, thank you so much.

title loan guy said...

It's time that the tax code starts helping small businesses thrive, not burden them with more regulations and economic frustration. Small businesses are the backbone of the economy and until more people in Washington start to make policy to help us, our "growth" is going to be at a slow pace.

The Mind Manual said...

Thank you Mr.White for this fantastic article. I agree with your main argument that it is the small businesses that mostly contribute to creating a better economy. Many people do not realize that starting a business is not as hard as it used to be back in the old days. Nowadays with the technology that we have, starting your own business has never been easier. Those who have the determination to do what they think is right will always succeed.

kindle said...

Very informative and nice design. I really like your posts and your style.

short term loans said...

Great post! Definitely the small businesses can make gargantuan significance to our economy today. I hope that they will learn to appreciate the hard work that small businesses have to go through especially in a very demanding world that we have right now.

http://www.12-monthloans.co.uk/ said...

Thanks for sharing this great content, I really enjoyed the insign you bring to the topic, awesome stuff!


Thanks for sharing this great content, I really enjoyed the insign you bring to the topic, awesome stuff!

mike said...

the only real way to make money in this world is to own your own business,that is my goal in life to work for myself and not have a boss.

Thegary scottgroup said...

Thank you for sharing this information. The information was very helpful and saved a lot of my time.

Rancho mirage real estate

Jesica Aniston said...

There's a big hope here but I was alarmed upon reading an article posted in Fox Business News by Ed Butowsky, entitled "Obama Chose Monetary Policy - And You're Feeling It". Economic conditions are getting worse as you can see it.

short term loans said...

Thanks for the good read. A long as we HOPE and we work hard we can lift up our living.

michael said...

The start up capital is the hardest part.I think a lot of people would start a new business if they only had the capital and the nerve to start a new business.

new business said...

I agree with your main argument that it is the small businesses that mostly contribute to creating a better economy. Many people do not realize that starting a business is not as hard as it used to be back in the old days.

David said...

Looks like we need a lot more start ups to get this economy moving more! Don't forget to diversify your income if you are able to.

website design company said...

It's truly an honor to be subjected to thoughtful and unbiased writing like this. The writer is clearly knowledgeable and balanced in my humble opinion.

Ahman Adam - Webzemini Software

Online High School Diploma said...

I was extremely happy to locate this website.I wanted to thank you with regard to this terrific read!!

Consumer Forum UK said...

I appreciate your efforts in the post and do agree with you that small business may helps a lot.

Frank Davidson said...

Purchasing an existing business with a built in revenue stream is an excellent way to keep the economy moving and stimulate it as well. Oftentimes, seller financing is available so be sure to check out biz for sale websites!

seo services dublin said...

yes, we should promote all these new business, it will provide opportunities to many students to find their carrier and job through these business.

Okto said...

Internet marketing could be a great small business that help elevate national economy.

Some people succeed in it. Thus it has all the potential to reduce unemployment and aid economic recovery. I am also noticed that many start-up business using online media to grow fast.

Marius said...

I do agree that small businesses are actually contributing and help sustaining the economy in USA and all over the world.

Brilliant ideas brings life as small business at first...

San Diego Reverse Mortgage Lenders said...

Getting a loan from a bank to start a business has never been easy. With tighter lending requirements, banks are having trouble lending to start-ups and other businesses. A lot of business owners would borrow against their home to get a loan but many people are not buying any more and simply renting. You can always go the SBA 504 route should you want a small-business loan.

Guarantor Loan said...

The start up capital is the hardest part.I think a lot of people would start a new business if they only had the capital and the nerve to start a new business.

PLG said...

I always enjoy coming back to this blog for posts like this; thank you...

Willian Fernandes said...

It is difficult to get capital today to start a new business beyond the courage to invest is also important

Catherine Trebble said...

Thank you for this great article. I agree with your points here. Small business play a very big role in the economies all over the world which is why I make it a point to help small businesses to effectively advertise themselves and become successful.

Dorian said...

There are banks for the purpose.You just need to believe in what are doing.

free bets said...

A lot of business owners would borrow against their home to get a loan but many people are not buying any more and simply renting. You can always go the SBA 504 route should you want a small-business loan.

Screen Doors said...

I congratulate, what necessary words…, a magnificent idea

Sidney said...

A lot hinges on the upcoming election (this comment is written in late October 2012). One candidate has no experience in any business, small or large. The other has experience in business. I wonder who will win and how small business will fare with the winner.

Nick said...

Great article. I also agree that the small business is going to be the help to the economy.

ibalancedbs said...

nice post. now a days becoming an entrepreneur & starting new business plays a big role to drive economies all over the world.
very nice info on business solutions

Harrison said...

Micro and small business start-ups become the backbone of this countries future economy. Why not invest in their, and subsequently our future.

zaenal abis said...
This comment has been removed by a blog administrator.
Rakuten.co.id: Toko online murah, serba ada Barang unik Jepang said...

Excellent blog and very informative. Great information has been shared. I would like to share it with others.
Thanks for sharing it with us. Looking forward to more of the updates from your end.

recycle said...

Ten times better than the last article!

Affiliate Marketing said...

Years ago Small Businesses is quite unheard of when talk about economic recovery.

But now, and in the future, these start-up small business will make wave in our economic recovery.

Cheers.

Sim said...

It's the education system. It's making the youths more fearful of the uncertainty and makes them want to chase job security rather than start out new small businesses. Something has to change!

Ultimate WordPress said...

Thanks for sharing. This was very informative.

Premier Insurance said...

I totally agree that small business will be the only thing that can save America. We need to focus on our entrepreneurs getting the funding and support they need from their prospective states nd the federal government.

Philadelphia Real Estate said...

Great post! I'm hoping the fiscal cliff negotiations and ultimately the agreement doesn't derail small business.

Ern said...

Getting into business at an early stage is better. Rio Salado should be applauded for this initiative.

Try The Scoop said...

Starting a business isn't the hard part as much keeping it afloat against mega giants like Wal-Mart.

Carpets Online said...

Most of the biggest companies in the world used to be startups and they may not have been as successful if they were not supported enough during their first times. When someone has a good idea I find it correct to help economically and let the business grow, but unfortunately it's not always so obvious.

Spattnaik said...

Great advice, soon so called 'niche' markets will explode because of the wider distribution provided by the web, and in order to take advantage of it you have to build one customer at a time.

Online Suvreys for money said...

Small-business owners were hit hard by the recession. Financing is still hard to find and the unemployment rate continues to suppress the pool of potential customers. The outlook may seem dismal, but a recession should never justify putting your business on hold. Working with financial hardship and holding onto customers in any crisis will put your business on more competitive footing once the crisis is past

Stacey Sanders said...

You must go through painstaking investment to make something out of nothing. My sister is not that good in managing a business so she would want to wholeheartedly give it to me since I have a major in business. It's goo because we hired one of those reliable conveyancers in town.

Mike said...

Starting a business nowadays is a real pain...
Help is always appreciated

Kelly said...

Appreciate the interesting post. . Interesting point of view and I like this blog so much.

Laura said...

My grandfather founded a small business for over 75 years, the company has maintained a small size, spending and investing in their measure, and I can proudly say that in 75 years have never left a default to another company, undoubtedly small business is a vital part of the fabric of any society.

p4propertytrades said...

This is very encouraging post for new business and I know there are thousands of difficulties in small business. great job..

Motivated Property LLC said...

I definitely agree with the comment on how most start up capitol derives from the housing market. When housing suffers and your house goes down in value, that can really limit a person from obtaining the start up capitol needed.

Title Loan said...

Small business are what drives the economy. Every successful business ventures started with an idea. I think in a down economy, risk is a huge factor for many.

JanesReeves said...

Frank

I can tell you from first hand experience that larger companies...when they do hire in the last couple of years, are for minimum wage jobs at best.

What people used to get hired for at $15 per hour is now down to $8 an hour at a local big box retailer.

Lenard Vandelweur said...

Some credit firms allow enterprise start-up loans to be classified as a personal loan for lower monthly amortization. It also highlights low start-ups as capitals.

peluang usaha said...

yes sir you absolutly correct!!