The Small Business Administration (SBA) keeps statistics on small businesses in the United States. Recent data from the first quarter of 2014 show positive results for small business growth after a period of stagnant growth since the recession of 2009. Across the United States, Small Business accounts for a majority of job growth so when the small business sector took a hit in the last recession, it had a significant impact on the economy as a whole. For instance, in 2009 the "birth rate" of new small business was at it's lowest point in the last 10 years. This rate has been on a slow, but steady, increase since early 2010. When you combine that with the "death rate" of small businesses (again at a peak in 2009) there are some positive indicators. The death rate has declined more rapidly over the last several years, meaning more small businesses are surviving. The amount of income from small business has steadily increased since 2009 showing again a positive indicator for this sector. Finally, the hiring rate for small businesses is above the separation rate (indicating a positive gain in employment) and the gap appears to be the largest gap for several years. Take Colorado for instance, there are almost half of the state's private workforce employed by small business concerns. This percentage is not too far off of the national average. Further, almost 98% of all employers in the state are small businesses. It is also interesting to see that the largest gain in new jobs was from firms in the 1-4 employee size category.
What does all of this mean? Well, it means that the economy is improving. Perhaps not rapidly but it is improving. We know that for some time the jobs growth in the United States has been fueled by small business. One of the main goals of the SBIR program is to create jobs. As the percentage funding for the SBIR program increases (the last increases specified by the Defense Authorization Bill of 2012), we should expect to see more small business success and, therefore, more jobs. Now, not all of the growth in small business is a result of the SBIR program but certainly programs like the SBIR program help this effort.
So back to what it means. If some of the largest gains in employment are from the very small firms, like we saw in Colorado above, do these companies have the savvy to succeed and survive? Many small businesses this size are similar to the SBIR sponsored companies I talked about earlier. This means they are usually founded by a scientist or technical expert that has a marketable idea or new technology. By definition, most of these founders do not have a background in accounting or business administration. Without these skills, the companies may lack the resources to seek additional funding to fuel the company growth at strategic times. They also may lack the expertise to analyze the financial strength of the company and plan for the future success of the company. That is where an outsourced CFO can be invaluable to a small business. An outsourced CFO has the experience, has the savvy and the knowledge base to help the small business plan for success. At ReliAscent we provide this service, mainly for SBIR firms but also for small businesses that are government contractors using other award vehicles. Not only do the ReliAscent CFO advisers provide the financial planning necessary for success in the small business, but they also provide the needed consulting relative to the regulations and compliance issues related to government contracting.