Small business report: conditions improving, but challenges persist

While the economic environment has improved, small businesses continue to face lingering challenges from the recession, according to the latest version of an annual report published by the U.S. Small Business Administration Office of Advocacy.

“‘The Small Business Economy 2012’ demonstrates that small businesses have been at the core of our economy’s growth over the past few years,” said Winslow Sargeant, chief counsel for advocacy for the federal agency. “Thanks to hardworking small business owners across the country, 2011 represented the second full year of economic expansion since the peak of the recession in 2009, with small businesses representing half of the private-sector output. We still have a lot of work to do, but this report tells an inspiring story: output, business income and profits are rising for small businesses, and bankruptcies and unemployment are declining.”

“The Small Business Economy,” an annual report published by the Office of Advocacy for more than 30 years, provides detailed information on the performance of small businesses. For the second year in a row,  the full report is available online at

 “This report provides a rich collection of information about small business contributions to the economy and trends over time, and is once again available in an online format, increasing the accessibility and usability of the information,” Sargeant said. 

According to the latest report, manufacturing sales rose 11.7 percent between 2010 and 2011. That’s similar to the 11.2 percent increase in 2009-2010.

After falling from 2005 to 2009, the income of proprietorships increased 6 percent from 2010 to 2011. Corporate profits, which also declined between 2005 and 2009, increased by 7.9 percent in the same period.

Startups of employer firms remained far below pre-recession levels – 533,945 in 2010 compared with 668,395 in 2007 — but increased from 2009 to 2010. The closure of employer firms, which reached a high of 680,716 in 2009, declined to 593,347 in 2010.

Small firms with fewer than 500 workers outperformed large firms in net job creation in three of the four quarters of 2011, similar to a pattern that has existed since 1992 in periods when private-sector employment rose. In contrast, job losses prevailed in almost all firm sizes for the first quarter of 2008 through the first quarter of 2010.

Total business lending continued to increase by June 2012, while the rate of decline slowed for small business loans of all size categories. Funds raised by venture capital firms increased even as disbursements increased to levels comparable to those in 2006.