What's Hot in Small Business – Chris Crum
|Chris Crum has been a featured writer with the WebProNews.com team and the iEntry Network of B2B Publications since 2003. Chris writes for Small Business Resources about social media, search, and what’s new for small business. Hundreds of publications link to Chris’ articles including the Wall Street Journal, USA Today, LA Times and the New York Times.|
U.S. Small Business Activity Up After Six Years of Decline
Things are starting to look better for small businesses, that is, if new research from the Kauffman Foundation is any indication.
The Kauffman Foundation recently released its Main Street Entrepreneurship Index, which it considers to be the first in-depth analysis of small business activity in the country. According to this, activity in established small businesses increased last year, reversing a six-year downward trend.
The report, which tracks small business activity and ownership across the country, found that though the number of established small businesses is increasing, the increase is still below pre-recession levels. The foundation says it's just above the historical norm.
The organization believes its index is an indicator of main street business activity as it presents trends over the past twenty years while focusing on established businesses. Specifically it focuses on those older than five years with less than 50 employees.
The index measures activity in terms of the rate of business owners in the economy. This refers to the percentage of adults in the country who own a business in a given month. It also measures the ratio of established small employer businesses to the person population in the economy.
The Foundation's director in research and policy, E.J Reedy, says, "The combination of these two distinct components provide a unique and important view of small business activity in the country, across national, state and metropolitan-area levels."
"This is the first time that a snapshot of this kind has been taken of America's Main Street businesses," says Arnobio Morelix, the Foundation's senior analyst in Research and Policy. "Small businesses and their owners play an important role in the U.S. economy, with these main street businesses making up 63 of all employer firms. As such, understanding these trends offer substantial policy implications."
According to the Foundation, recent increases in business activity were the result of an increase in established small firm density. The rate of small business owners in the country has remained pretty much unchanged for the past year, but the density has risen to an all-time high with 1,006.6 businesses per 100,000 people (3.16 million businesses).
There has been a significant increase in what are considered to be "micro-enterprises," which are businesses operating for over five years with fewer than ten employees. The number of these grew by 3.6% from 2014 to 2015. That's compared to 1.2% growth across the rest of established small businesses.
While much of what the index shows seems encouraging, it's worth noting that since 1996, the rate of small business owners has declined from 7.8% to 6%. The density of small businesses has held steady since the mid 2000s.