When I need a barometer of the nation’s economic health, I read the news and talk to analysts. But if I want to know what’s happening locally, I have a simpler method of economic analysis: I examine storefronts.
As helpful as traditional sources can be, they often don’t say as much about the local economy as an “Under Construction” sign in an industrial park or an “Everything Must Go” sign at a furniture store. As a banker who works with small businesses, I’d argue that these are some of the best economic indicators available. Signs like these say something about business owners’ past successes and future plans.
They also make a statement about their communities. That’s because the health of the local economy is closely tied to the health of its small businesses. This is only logical, given that 99.7 percent of the Healthnation’s 27 million businesses have fewer than 100 employees, says the U.S. Census Bureau. The trouble is, large corporations get most of the media attention. Small businesses rarely make the news. It’s easy to understand why. The media can’t track every computer repair shop or landscaping service. Besides, who cares if a six-person business adds an employee, or a small manufacturer obtains a patent?
These companies care, of course. I’d argue the rest of us should care as well—considering that, added all together, small businesses represent the majority of new hires. This past July alone, small businesses created 50,000 jobs (ADP’s National Employment Report). They also produce 13 times more patents per employee than larger firms.
Here’s something else I’ve learned: many small businesses are doing better than you think. Some industries and businesses, of course, are suffering. They’re in the news daily. But many small businesses remain optimistic. They still believe in their ability to succeed. One recent survey shows that seven of 10 entrepreneurs would consider taking on new staff in the current economic climate.
Many small businesses, in fact, believe others have it worse than they do. A July 2008 survey by The Economist confirms this phenomenon. Business leaders were asked about their expectations for future business conditions. Almost universally, their confidence in the global or U.S. economy was down. When asked about their own industries, however, they were usually more hopeful. You can look at a survey like this and conclude that businesspeople are just optimists. The grass is always greener on their side of the fence. There may be some truth to that. Rather than assume the worst, many small businesses instead think of ways to deliver greater value. They are willing to take a leap of faith.
I’m reminded of the university track coach who, in the 1970s, wanted to make a better running shoe. On a whim, he poured urethane into his wife’s waffle iron. The result was a sole that could better absorb a shoe’s impact hitting the track. That invention led to Nike’s founding. A Small Business Administration loan helped the company grow and succeed. And that’s the thing about small business: you never know when one good—even crazy—idea might change the course of history.
So, no matter what the state of our economy, let’s not forget about our small businesses. They’re here to serve you. And when we support them, it’s a sign of good things to come. iBi