Scientific Opinion Poll Finds Micro Businesses Optimistic about the Future of their Business and Economy

Poll of 470 businesses with 10 employees or fewer shows they’re key drivers of our economy and looking to grow, however nearly six in 10 who need credit to do so say getting it is a serious problem

Washington, DC, Oct. 9, 2012—A scientific opinion poll released today shows the majority of the country’s smallest businesses, those with 10 employers or fewer, are optimistic about the future of their business and the economy, despite recent reports claiming otherwise. What’s more, the survey clearly shows these micro businesses have a significant impact on our economy, with over half reporting increased sales or revenues over the last two years and another 50 percent planning to hire within the next two.

The poll, conducted by Greenberg Quinlan Rosner Research for the Association for EnterpriseOpportunity, the National Association for the Self-Employed and Small Business Majority, alsorevealed that in spite of this optimism, the contribution these businesses can make to our economic recovery is at risk. More than two-thirds report that availability of credit for micro businesses is a problem, and four in 10 who applied for credit last year were turned down, despite the fact that three in five say they need up to, if not more than, $50,000 in the next three years to sustain and grow their business.

 “These smallest businesses make up 95 percent of all small businesses, so they are truly the ackbone of our economy and the ones who will pull us out of this recession,” said John Arensmeyer, founder & CEO of Small Business Majority. “While work has been done to shore up credit for small businesses, these micro business owners are still struggling to get the help they need. It’s important policymakers realize how vital these businesses are to our economy and do what needs to be done to help them succeed.”

The poll also sheds light on who these very-small-business owners are, and how they impact our

economy and its recovery. The poll refutes the perception that micro businesses are merely

hobbyists selling tchotchkes on the Internet. Nearly three-quarters of those surveyed report their

micro business as their sole source of income and 57 percent have been in business for 10 years or longer.

“Microbusiness owners have spoken loudly and clearly. These poll findings are a striking

testament to the vital vehicle microbusinesses are for enduring financial stability for many

individuals and families across the country,” said Connie Evans, CEO of the Association for

Enterprise Opportunity. “These enterprises are a great boon to their local communities, and also

to the nation’s economic and employment health. Microbusiness owners know the power they

carry, and so must we. The heart of America beats on Main Street USA, and that is why it is ever

critical to equip microbusinesses to achieve sustainability and long-term success.”

Despite our overall slow fiscal recovery, 50 percent of these owners say their business is doing

well, compared with only 10 percent who say they aren’t. Additionally, more than half employed a contractor or 1099 employee in the past year, and nearly a third have hired a full-time employee in the past year. These businesses greatly stimulate their local economies, as well, with nearly three-quarters reporting that at least some, if not all of their customers are local.

Additional findings from the poll include:

• A strong majority of all micro business owners surveyed— nearly seven in 10—believe

their business will be faring well over the next couple of years. An overwhelming 81

percent of respondents under 40 feel the same way. What’s more, 67 percent of owners

in that age group say they plan on hiring, along with 58% of minority business owners.

• 67 percent of respondents under 40 say their business is doing well.

 

• Micro businesses are not just hiring part-time, low-paid workers: more than six in 10

spent over $50,000 in payroll this year and 54 percent spend more than $10,000

annually on non-payroll expenses such as equipment, computers, office supplies and

more.

• Businesses that are eager to grow and hire are notably more likely to have trouble getting

the credit they need than businesses that have been around longer and do not need

credit: 58 percent of businesses that actually need credit say getting it is a serious

problem for their businesses.

• 67 percent of respondents view credit availability as a problem for small businesses in

general. But when taking into account only owners who say they need credit, a 58 percent

majority view the availability of credit as a serious problem for their business.

• Nearly half, or 48 percent, said marketing and sales topped their list of services they’re

most in need of, while tax preparation (27 percent) and technology (21 percent) came in

second and third.

• These businesses are politically diverse: 49 percent identified as Republican or lean

Republican; 35 percent identified as Democrat or lean Democrat; 10 percent identified as

independent and 7 percent identified as “other.”

This poll reflects an Internet survey of 470 small business owners, drawn from Research Now

Panel and conducted by Greenberg Quinlan Rosner Research for the Association for Enterprise

Opportunity, the National Association for the Self-Employed and Small Business Majority. The

survey was conducted from Aug 4-8, 2012. The overall margin of error is +/- 4 percent.

 

 

No Extra Credit

By JOE NOCERA
The New York Times
September 20, 2011

What if everything that is happening in Washington right now is just meaningless noise?

What if the Obama jobs plan, the coming deliberations of the supercommittee, the debate over taxing millionaires — what if none of it is likely to make a whit of positive difference for the economy? What if the only thing that matters is something Congress and the president rarely mention, and can do nothing about?

I’ve come to believe this is the case. What is killing the economy is lack of credit. In the aftermath of an asset bubble, invariably the result of too-loose credit, banks don’t just tighten their standards; they practically shut down.

This was true during the Great Depression, and it’s been true during the Great Recession. And until normal credit standards return, economic growth will continue to be stunted. “Overreaction to the credit bubble is now the knee on the throat of the economy,” says my friend Lou Barnes, a mortgage banker at Premier Mortgage Group in Colorado.

Not long ago, Lou sent me a powerful new piece of evidence, a presentation put together by Paul Kasriel, chief economist for Northern Trust. Titled “If Some Dare Call It Treason, Was Milton Friedman a Traitor?” (the title will become clear shortly), it has the force of revelation.

The first part of the paper is spent “dispelling the nonsense” (Kasriel’s words) that factors besides credit are the root of the problem. He persuasively mocks the idea that “uncertainty” is holding back companies from borrowing. (“Uncertainty,” Kasriel told me, “is the last refuge of economists who can’t explain what is going on.”) Ditto for onerous taxes, record budget deficits and lack of demand.

He then documents “a post-WW II record” credit contraction, before moving on to a surprising solution: more quantitative easing from the Federal Reserve, which is essentially the buying of bonds from investors by the Fed, using money it prints, as Kasriel freely admits, “out of thin air.”

That this solution is controversial is not lost on Kasriel; his title is an obvious play on Rick Perry’s comment that continued quantitative easing by the Fed chairman, Ben Bernanke, would amount to borderline treason. But that’s where his reference to Friedman comes in. Kasriel is absolutely convinced that if the great conservative economist were alive today, he would be leading the charge for quantitative easing. It’s all we’ve got left.

In the 1930s, the Fed’s tight money policy compounded the lack of credit and sent the country into the Depression. Decades later, Milton Friedman was the economist who most persuasively proved that point. Bernanke, a student of the Depression, took that lesson to heart; his willingness to flood the system with liquidity during the financial crisis prevented a repeat.

It is also what led Bernanke to try the first two rounds of quantitative easing. “Banking under normal circumstances is a transmission mechanism from the Fed to the economy,” Kasriel told me. “That transmission mechanism is broken.” Quantitative easing is not nearly as efficient at expanding credit as having the banks involved, but it does work. During the decade of stagnation in Japan, Kasriel points out, Friedman urged its central bank to expand the money supply and buy bonds — exactly what Bernanke has been doing.

The main argument against the printing of money is that it raises the odds of inflation; even the esteemed Paul Volcker is worried about it, as he wrote in Monday’s Times. But Kasriel is convinced that the bigger fear right now is deflation, and that the expansion of credit by the Fed should be seen in combination with the contraction by the banks. In that larger context, the Fed’s move no longer looks inflationary. It looks instead like the only means we’ve got right now to create badly needed credit.

There is much resistance to another round of quantitative easing, not just from G.O.P. presidential hopefuls, but from many in the political establishment. Yet it’s worth noting that the reason Volcker is esteemed today is because, 30 years ago, as Fed chairman, he stuck by a monetary policy — a severe tightening, in his case — that he believed in despite fierce denunciations. His willingness to chart an unpopular course led directly to the economic revival of the 1980s.

Today, Ben Bernanke is every bit as vilified as Volcker was back then. Yet the Fed remains politically independent, and like Volcker, he has the right to chart the course he believes best, without political interference. The course he has charted is quantitative easing. Kasriel is utterly convincing that this is the right course. Bernanke should make the Fed’s independence matter.

http://www.nytimes.com/2011/09/20/opinion/nocera-no-extra-credit.html?_r=1&nl=todaysheadlines&emc=tha212

Small business at a crossroads

Below are exerpts of an opinion editorial by Jeff Stibel that appeared in the June 7 edition of Reuters blog.  Jeff Stibel is the chairman and CEO of small business credit rating agency Dun & Bradstreet Credibility Corp.

Small business at a crossroads

by Jeff Stibel

Right now, leading indicators – like lending, hiring and optimism – paint a conflicting picture of the direction of the country’s small business sector. It’s no wonder we’d be confused. It seems one index rises, while another falls.…

.…The irony in our recovery is that a good portion of the government stimulus was aimed at small businesses, including major tax incentives to promote investing and banking regulations to promote lending. But many analysts think institutions still aren’t lending enough to small businesses, even though, in many cases, banks have increased available loans. As a result, it’s a struggle for small businesses to increase hiring, expand their inventory, innovate and grow.

Compounding the problem, many businesses no longer appear creditworthy as a result of the recession, which drove down revenues and profits. Bankers have also increased the level of scrutiny they apply in making lending decisions, making it harder to get a loan.

Right now, we’re at a crossroads. And the question we need to answer is: What it will take to make a small business recovery come full-circle, so that leading indices move together in a positive direction?

Ultimately, lending must flow freely to small business, and much more is needed to make this a reality. While continued low interest rates make credit cheap and available for our largest businesses to get loans, credit remains out of reach for many small businesses. Banks and lending institutions must recognize that their own long-term health is tied to the overall economy, not merely its largest players, and that a sustained recovery ultimately depends upon the recovery of small businesses.

It’s also vital that small business owners continue to proactively build their creditworthiness. Many of them are already rebuilding their credit and reaching out to trade providers and banks to re-establish relationships. We have seen a dramatic increase in businesses that are purchasing credit-building products at Dun & Bradstreet Credibility Corp and many are starting to think about credibility and trust. There’s a recognition that creditworthiness is directly tied to a business’ ability to thrive.

The key now is for small businesses – and those that support them – to maintain the momentum cultivated at the start of the year. It’s something we need to keep up, even if the leading small business indicators don’t always paint a clear picture of where we’re headed.