Small Business - Smiling in the Face of Adversity

While joblessness is on the upswing and reports show that employers shed jobs in March, new data reveal that small firms are hiring.

"It has to be tough to grow a business in this economic climate. It's like being a goldfish swimming upstream into a fire hose," said Michael Alter, president of payroll processing firm SurePayroll. "Yet, despite the odds against them, the SurePayroll small business scorecard data shows definitively that small businesses have been increasing their payrolls."

Alter pegs the data to three factors:

-Small business salaries are down, making it less costly for an employer to hire a worker than one month ago;

-Economic pain is industry specific. Home construction businesses and luxury goods firms are seeing fewer customers, but exporters and businesses that focus on repairing goods like cars are seeing a big uptick in business;

-Large businesses seek out small businesses during an economic downturn. For example, when big businesses cut back on costs and trim workforces, they often outsource the work to small firms. "Alternatively, they stop doing business with other large businesses and look for cheaper equivalents in the small business economy...when large businesses suffer, it can actually help small businesses to grow," he says.

The data also show that for the first quarter of 2008, hiring is up nationally with the strongest growth in the South. However, salaries dipped in March as they did in February. The data show salary increases for the 29 months prior to February.

Lastly, small businesses relied more on independent contractors in March than in any other period that has been tracked by SurePayroll. "Growth in the...index suggests that employers are less willing to hire full-time equivalents," said Alter. "That usually happens when they are not confident about future business levels being strong enough to keep [full-timers] on staff."

SurePayroll's findings are aggregated from payroll data for more than 18,000 small firms, which it defines as having up to 100 employees.

Separately, a study from Intuit released this week revealed that nine out of 10 U.S. small business owners reported seeing opportunities for their businesses in the current recession, and more than 75 percent expect growth. Intuit's study was conducted by market researcher Global Strategy Group last month, sampling 751 business owners with fewer than 100 employees.

By Sharon McLoone |  April 4, 2008; 3:24 PM ET Data Points
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Great news for the American economy!

Posted by: Capsheaf | April 4, 2008 4:32 PM

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Posted by: Punit Sharma | April 9, 2008 8:10 AM

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