Small Business Center

America has lost more than 8 million jobs since the Great Recession began. And even though most economists believe the recession ended last summer, unemployment remains at 9.7 percent. We clearly need more job creation.

Because half of all jobs in the U.S. are in businesses with fewer than 500 employees, small businesses need to begin creating jobs if we are going to replace the millions of lost jobs. So are small businesses hiring yet?

Recently, I took a look at some key data sources to answer that question. While a couple of indicators suggest an answer of “yes,” most do not.

Let’s start with the most positive measure. As you can see from the figure below, the Intuit Small Business Employment Index, which is based on “online data from approximately 50,000 small business employers with fewer than 20 employees who use Intuit Online Payroll,” shows that small businesses have been hiring since mid-2009. According to the Intuit Index, small businesses have added 150,000 jobs since last summer.

However, the ADP Employment Report, which measures the number of people employed in establishments of fewer than 50 employees using numbers from ADP’s payroll data, doesn’t show the increases seen in the Intuit data.

(The difference between the two measures might indicate that small businesses have begun to hire, but small establishments that are not independent businesses have not yet started to take on more staff, or it might show that small businesses with between 30 and 50 employees aren’t yet adding employees, while the smallest businesses are.)

Two other sources – Discover Small Business Watch and the National Federation of Independent Businesses’ Small Business Economic Trends – don’t look at actual payroll data, but instead survey small business owners about their hiring plans. The Discover Small Business Watch, which is a monthly survey of a representative sample of 750 business owners with fewer than five employees, includes a question about hiring plans over the next few months. The figure below shows the percentage of respondents who say that they plan to hire minus the percentage that say they plan to play off workers in coming months. While the figure shows that the declines in the measured experienced over 2007 and 2008 have stopped, the measure currently remains in negative territory.

The National Federation of Independent Businesses (NFIB) creates a similar measure from surveys of its members, who tend to run larger small businesses than the respondents to the Discover Card survey. The figure below shows two of the NFIB’s measures. Its job openings measure captures the percentage of responding small businesses with jobs that they cannot find candidates to fill, while its hiring plans measure calculates the percentage of small businesses that plan to increase hiring minus the percentage that plan to decrease hiring in the following three months. The NFIB data show a slight increase in the percentage of companies with job openings since December of 2009, but indicate that as many small businesses still plan to decrease hiring as plan to increase it.

Compensation and work hours at small businesses also remain weak. The Intuit Small Business Employment Index shows no increase in compensation or work hours since September of 2008. The NFIB measure of the percentage of small businesses increasing compensation minus those decreasing it over the previous three months has been largely flat since February of 2009, having declined dramatically from January 2007 until that time.

In short, while there are a couple of indicators that small businesses are starting to hire again, when taken together, the different measures don’t show any evidence of a clear revival in small business hiring.

Having good perspective is an important quality for small business owners. Small business people must see opportunities at the same time they keep a practical realistic view. They must be optimistic while being realistic and most importantly they must be able to see the forest despite the trees not distracted from seeing the big picture because of the many small details that go into running their business. For April 20, Small Business Trends looks at the blogs and news sources that follow the unique perspective of the small business owner and the entrepreneurial journey.

Strategy

That big picture thing. “It’s easy to forget you’re working on a car when your head is under the hood… ” Sometimes Internet marketers can get everything technically right and still miss the mark. Small Business CEO

So what is the real purpose of your business? You may think you know, but you may want to think again. The wrong answer may threaten your future. The Loft Group

Don’t have a Facebook fan page? You may be overlooking a HUGE opportunity to promote your business.  Albany Insurance Professional

Book Shelf

Marketing to the African American consumer. Pierre DeBois reviews Black is The New Green. Small Business Trends

Eco Trends

How green is your office? Watch this brief video survey of the latest eco friendly products that are good for the environment and even save you money. Open Forum Innovation

Operations

No new hires. Why, even with signs the economy may be rebounding, many small business owners may be reluctant to bring on additional staff. CFO Wise

Social media will change the way you run your company. It’s time to get into conversation mode and that means always responding. Flying Pig Communications

Sales

Five steps to endless prospecting. How to keep your business focused on always getting new clients. Sales Tip A Day

Looking for more customers in tough economic times? Uncle Sam may not be your best bet these days, according to one recent news report. WSJ

How selling your idea is like stand-up comedy. Here’s a great look at the perfect sales pitch…from a slightly cockeyed perspective. Right Ideas/Bright Ideas

Policy

What is the VAT or Value Added Tax? And why is it bad for both small business and America? Jim Blasingame

Forget Goldman Sachs. The government is scrutinizing small mom and pops instead. A study shows that despite pledges to crack down on big business excesses, the agency is targeting small business instead. NYTimes.com

Startups

Putting landlords and small business together. How one business is helping others find each other in the largest city on Earth. Is this the pattern for success elsewhere? WSJ

There are new rules for funding startups. After the financial crisis, investors will likely be writing smaller checks for smaller ventures. BusinessWeek

Events

How can small business use social media? What if you had at least one new prospect looking at your Website every day? The SmallBiz Social Media Summit will show you how, sponsored by both Small Business Trends and BizSugar.com. BizSugar Blog

The recently passed health care reform legislation will have an effect not only on millions of existing small-business owners and their employees., but also on an untold number of businesses that haven’t yet started. At least, that’s what some experts contend, such as in this MarketWatch article by Kristen Gerencher.

The issue is so-called “job lock” – people who stay in their corporate jobs to keep their health insurance coverage, rather than starting businesses of their own or going to work for small businesses that may not offer insurance today.

Will the health care overhaul propel more people to become entrepreneurs—or to work for entrepreneurs? According to the Kaiser Family Foundation, in 2008, 28 percent of self-employed Americans were uninsured; so were one-third of employees at companies with fewer than 25 workers. Overall, the proportion of uninsured Americans is much lower (15 percent), suggesting that being involved with a small business puts a person at greater risk of being uninsured.

Robert Fairlie, an economics professor at the University of California-Santa Cruz, told Gerencher job lock is hurting business creation and job mobility. “We’re finding reasonably consistent evidence that people who are employed are delaying or not starting a business because of their fear of losing health insurance,” he said.

According to Fairlie, government data shows the likelihood of starting a business increases by some 10 percent during the month when Americans turn 65 and qualify for Medicare. His research also showed that people who get health insurance through their spouses are more likely to start businesses than those who don’t.

Fairlie says the lack of affordable health insurance is causing a “brain drain” of sorts among young Americans who have families and can’t afford to leave their jobs to start a business if it means losing their health coverage.

A study by John Schmitt, senior economist with the Center for Economic and Policy Research, found that the U.S. has among the lowest share of small-business employment among its international peers. “The data don’t support the idea that universal health care is bad for small business,” Schmitt told Gerencher, “because almost every country that has universal health care has a demonstrably larger small-business sector than the United States.”

Economics professor Scott Shane, at Case Western Reserve University in Cleveland, said in the article he thinks the impact of job lock may be overstated. Shane says just 30 percent of people who plan to start businesses actually get their ventures off the ground.

I’m not surprised by these different opinions. I will go out on a limb and make a prediction. I predict we will see only a minimal uptick in startup rates once the healthcare reforms kick in.

That because healthcare is just one of many risks involved in starting a business. Startups by nature are risky. Entrepreneurs know this. Even if healthcare risk lessens under the new reform legislation, that doesn’t mean all the other uncertainties and challenges of a startup magically go away. You will still have to find customers and sales. You will still have to develop and enhance your products and services. You will still have to compete in the marketplace. You will still have to find cash flow for operating expenses and to grow your business. And the list goes on.

On the one hand, I know some of you are aspiring entrepreneurs who would make GREAT business owners, if you didn’t have to worry about putting your own and your family’s healthcare at risk. Up to now you may have held back from making the entrepreneurial leap due largely to health insurance (or at least, the fear and uncertainty of the situation). You may have to wait a while longer before acting on your dream of starting a business, since some key provisions don’t go into effect until 2014 – and some provisions could still change during the Reconciliation process.

On the other hand, many who mentally were ready to take that big leap didn’t let the insurance issue stop you. Somehow you found a way. You may have researched, for instance, the existing tax benefits available to the self-employed in the form of the Federal income tax deduction for health insurance premiums. Also, high deductible plans coupled with health savings accounts have been available for several years – such plans provide tax benefits for setting aside money toward deductibles and out of pocket expenses. These tax benefits do not address every issue – for instance, they don’t address pre-existing condition exclusions – but they have made the transition to self-employment easier for many.

However, let’s not get overly comfortable with this concept of “help.” There’s a lot of talk in the media and among policymakers these days about “helping” small businesses. But if you go into a startup with the idea that society needs to “help” you, how are you going to deal with the endless stream of challenges of running a business? You know and I know — help won’t always be there. Ask any successful entrepreneur: in the end, you have to rely on your own resourcefulness in your startup.

Editor’s Note: this article was previously published at OPENForum.com under the title: “Will Health Care Reform Mean More Startups? Probably Not” It is reprinted here with permission.

Social media feels good, but bringing money and new customers into your business feels even better. Thankfully, a new feature from the Facebook application Payvment can help small business owners to bridge the two loves for a very profitable (and effective) solution.

Though you may not be familiar with it (I wasn’t), the Payvment app itself is not new. It’s been around since last year and allows users to build a retail store (or to connect an existing one) directly onto any Facebook page. Once you download and install the application, you can build a store directly onto your page to include all your products, photos, shipping information, categories, etc. [there’s a how-to video for those who need help getting started with Payvment.] Once you set up your online shop on Facebook, it will show up in a separate tab on your profile called Storefront where users can go to make purchases directly from your Facebook page. They can also leave the shopping cart open while they shop on other Facebook stores. It’s a new twist on that old, static shopping cart. Pretty cool, but that part isn’t new.

What’s new is the Facebook Fan Incentive feature from Payvment.

If you’re a SMB owner in social media, there are probably two things you’ve found to be true:

1. Getting people to fan you on Facebook is hard.
2. Coupons breed customer loyalty.

That’s where the new feature comes in. The Facebook Fan Incentive feature allows business owners to offer special promotions to anyone who becomes a fan of (or now “likes”, thanks to a recent change) their Facebook page through the storefront. Businesses can set it up so they’re offering either a specific percentage off or another type of coupon.

According to Payvment:

A new “Promotions” area has been added to your storefront admin that enables you to turn on the feature, then set a percentage discount you’ll offer just to those who are “Fans”. After this feature is enabled for your storefront, Facebook users are prompted to become a Fan of your Facebook Page to get special storefront-wide “Fan Only” pricing.

Payvment is also adding the ability to let users leave comments and reviews about your products to encourage others on your page to make a purchase. Page owners will have full control over the comments/reviews that appear and will have the ability to remove comments, if needed. Though, I’d be careful doing that. Angry commenters may simply take their complaint somewhere else and add more fire to it now that they’ve been silenced. Use the same best practices when managing reviews.

I think the new Payvment feature is worth SMB owners taking a look at. It’s the first real attempt we’ve seen to bridge relationship building with commerce, and it does so in a way that I feel customers will find “useful” instead of “invasive”. And because customers will be automatically prompted to become fans to receive the discount, it’s going to help SMB owners to naturally grow their networks and their reach to help better market to people. It’s similar to offering a discount to someone who signs up for an email newsletter, but you’re targeting people on a much more personal platform.

It will be interesting to see how users interact with the new feature and if they’ll accept commerce on a personal social networking site, but I’m inclined to think that they will. Payvment combines brand awareness with brand loyalty and creates a real incentive for why someone should join your Facebook page. As a small business owner, this is one to watch and get in on. It’s a hint at where social media could really be going in the future.

Whether an elaborate 30 page opus or a couple of ideas scribbled on a cocktail napkin…or something somewhere in between…a business plan may take a wide variety of forms. But one thing all have in common is that they make you think about your business. From how to fund your business to who you will sell your product or service to, there are plenty of questions to ask. In this business roundup, the Small Business Trends team looks at posts and news that make you make decisions about your business both before and after you get things rolling.

Strategy

Will the Small Business Lending Enhancement Act help your business? Or more importantly, as Small Business Trends Anita Campbell asks, do small businesses even care? Open Forum Money

Are you taking advantage of Facebook? A new study suggests the social media giant is getting increasing online business traffic. What are you doing to take advantage of this trend? Online Media Gazette

Want to cut payroll expenses without sacrificing talent? A podcast from the Wall Street Journal recommends offering equity instead but cautions that this decision can have consequences down the road. WSJ

Are you developing a big idea for your advertising campaign? Better to develop an advertising campaign for your big idea. Here’s the difference. BusinessWeek

Startups

Knowing your market and watching your overhead. Lani Hay, CEO of Lanmark Technology Inc., gives some great advice to Dow Jones Newswires on getting started even if here at Small Business Trends we wouldn’t necessarily recommend your first stop for funding being the SBA. WSJ

Who says a good business plan couldn’t translate into big investment dollars? Try $1.07 million in investments, cash and business services handed out as prizes in the final round of this business plan competition. You’re The Boss

Why your bookie wouldn’t bet on a startup. We here at Small Business Trends believe there are synergies to working with other startups, this post adequately spells out the risks. Corporate Raiter

Operations

What’s your business model? If you can’t explain your model simply and aren’t modeling off of others’ success, you may be missing great opportunities. Chris Brogan

Marketing

Can ethical marketers learn lessons from spammers? Yea, Daniel Scocco of Daily Blog Tips hates spammers too, but when it comes to online marketing, sometimes you’ve got to give the devil his due. Copyblogger

You don’t need to be a hard drinker to understand the Vodka test. But marketer Josh Black insists that when trying to sell your product or service even teetotalers would do well to heed this advice. The Underdog Millionaire Blog

The best of 2009. Tom Pick reviews top e-mail marketing strategies and tactics from last year with links to the full overview. Webbiquity

Networking

What’s the key to successful networking? It’s all about cool shoes, the right underwear, forgetting your business cards and keeping up with current events. The Woo

The ultimate business networking experience. What’s your philosophy when using LinkedIn to connect? America’s Best Business Practices

Customer Care

Forget that ideal customer. Is there someone you definitely DON’T want to do business with? Why not figure this out ahead of time before being faced with an agonizing decision down the road. M4B Marketing

Asking predictive questions. How a seemingly unrelated inquiry can help you serve your customer better. Small Biz Survival

What’s new in your small business? Whether it’s a new launch, an updated Website, a new product or service or a new marketing technique to bring it all before the customer that much better than before, one thing is certain. Your business is always changing. In this small business roundup for April 19, 2010 at Small Business Trends we’ll do a bit of catching up.

Patterns

Many good businesses are created to address a customer or client’s pain. But are businesses preying on a customer’s fears really a positive trend for entrepreneurship? Yahoo! Finance

Does your business profile need a tune-up? Facebook and other social media are exploding in popularity, so make sure your business profiles are up to date. Small Business Loan Blog

BlogHer announces a brand new look. An online social media community for women bloggers announces changes including improved profiles, improved blogging tools, improved blog listings and improved search. BlogHer

Moves and Launches

Sometimes you’ve got to follow your heart. When making a change in your business or career, sometimes it’s about more than just dollars and cents. Social Media Handyman

A new startup is giving a whole new meaning to online real estate. Now you can put your small business on the “Streets of the Internet.” Killer Startups

Sency for Cities launches this week with Sency/Atlanta. Founder Evan Britton says the new real time search engine will eventually be rolled out in 20 U.S. cities in the near future. Sency.com

Operations

Sometimes success is about handling slip ups. Renegotiating after missing on commitments should be more than just damage control and can be one of the most important tasks for any small business owner. The Sales Blog

Are you winning over your harshest critics? Improve your business by really listening to those critical voices and deciding how to address their concerns. Bloggertone

Slicing through the Gordian Knots of management. How to confront the largest problems in running your small business and find the leverage points to make things better. The Alchemist Entrepreneur

Marketing

More on the importance of business blogging. If you’re in business and want to know how blogs can help you and how to do them right, read on. The Yonatan Maisel Blog

What are your top marketing mistakes? Here are some major mistakes many small technology businesses make when marketing their product or service online. Cloud Marketing Labs

How to attract customers to your Website. “People hate sales pages on social media” so here are some alternative approaches you may wish to consider. MyWifeQuitHerJob.com

Mother knows best. And so do the people marketing directly to her. The Lunch Pail

Policy

One private equity investor argues for “rescue loans” to SMBs. But we at Small Business Trends ask ourselves whether it is really good policy to funnel $50 million in U.S. taxpayer dollars to guarantee loans to small businesses in such deep trouble other lenders have given them up as dead. SME Rescue Loans Program

Book Shelf

A review of Making Things Happen. Our own Anita Campbell has a look at a new book on business from Scott Belsky about taking a great business idea from dream to reality. Small Business Trends

Two reports released recently by the SBA and spotlighted in The Entrepreneurial Mind blog confirm what many small-business owners may already know:  Entrepreneurs and their employees aren’t saving enough for retirement.

Saving for Retirement: A Look at Small Business Owners (PDF), written by SBA economist Jules Lichtenstein, assesses how well entrepreneurs are preparing for their own retirement. Among the results:

• Just 36% of business owners have individual retirement accounts (IRAs). Of those, one-third contributed during the 2005 tax year (latest data available). Only 18% of business owners have a 401(k) plan, and less than 2% have a Keogh plan.

• The business owners most likely to have and contribute to retirement accounts are non-minority, older, have higher education levels, own more established and more profitable companies and are more likely to own multiple businesses.

• The overall asset ownership of entrepreneurs affects how they save for retirement. Those who own homes and have other retirement accounts are most likely to have IRA, Keogh or 401(k) participation (in other words, those who have one type of retirement account are likely to have more than one.)

• Business owners who own micro-businesses (less than 10 employees) are less likely to own or contribute to retirement accounts.

The second SBA study, Small Business Retirement Plan Availability and Worker Participation (PDF), assessed participation in retirement plans by employees of small businesses. Among author Kathryn Kobe’s findings:

• Nearly 72% of employees at small businesses did not have a company-sponsored retirement plan available. Nine percent had a company-sponsored plan available, but do not contribute to it. Just 19.5% of small-company employees both have and contribute to a company-sponsored retirement plan.

• Employees who are older, married and better-educated are more likely to participate in company-sponsored plans.

• Of the small businesses that have retirement plans for employees, 25 percent offer defined benefit plans and 75% have defined contribution plans.

• The costs of instituting and running the plans are the primary reasons small businesses don’t offer them.

In his study, Lichtenstein concluded there’s a need to develop “ways that help the owners of the smallest businesses, especially home-based businesses and sole proprietorships, increase their retirement savings. Developing ways to help minority, especially Hispanic, business owners increase their retirement savings is also a policy goal suggested by this study’s results. In addition, there is a need to better coordinate employer-based retirement accounts with individual-based accounts like IRAs and make plans less complex and burdensome, especially for owners of micro-businesses.”

With small businesses employing so many Americans, it’s more important than ever that those business owners and their employees have retirement options available.