Small Business owners are getting more optimistic about the economy

I wouldn’t exactly say this is a cause to celebrate, but any increased optimism in this economy is good. And that’s precisely what small businesses are experiencing right now.

Small-business owners showed more confidence in the economy this month as a Discover Financial Service survey posted its biggest one-month gain since April.

The four-year-old monthly index rose to 84.2 in October, up 10.4 points from September. In August, it fell to 73, the lowest point in 1 1/2 years.

In the latest poll, 28% of small-business owners surveyed said they expect economic conditions for their businesses to improve in the next six months, up from 20% last month. That figure reached 30% earlier this year before sliding. The portion who said conditions will worsen was 43% this month, down from 55% in August and September.

This month, 31% of respondents said the overall economy is getting better, up from 26% in September and the highest level since May. The portion who said the economy is getting worse, 48%, was the smallest reading since February.

Of those surveyed, 9% said they are hiring, up from 6% in the past two months and the highest percentage since June. About 15% said they are laying off workers, up from 12% last month but down from 20% in August.

Regarding plans to spend on business development, 22% plan to increase spending, up from 16% last month, while 46% plan to decrease spending, down from 57% in September.

Discover’s survey polled 750 owners of businesses employing fewer than five people.

So what does this all mean? That things are moving slowly, but they seem to be headed in the right direction.

[Wall Street Journal]

Good news down in LA. Nearly 170,000 construction jobs will be created over the next 10 years.

Robert Carlsen who does the blog Vertically Speaking over at California Construction has a recent post that is great news for the construction industry in the LA area.

Through the Department of Transportation’s Federal Highway Administration’s Transportation Infrastructure Finance and Innovation Act (TIFIA), a loan of $546 million, along with a recent TIGER II grant of $20 million, will go towards the construction of the proposed $1.9-billion, 9-mi Crenshaw/LAX light-rail extension project. Considering how desperately LA needs to expand public transportation,

The construction is part of Mayor Antonio Villaraigosa’s 30/10 plan, which was unveiled earlier this year. The plan is to condense three decades worth of transit projects into 10 years with the help of federal government loans and taxes.

Overall, the plan is supposed to create nearly 170,000 construction jobs over the 10 years.

The federal investment is expected to create 5,000 jobs, according to a study by the Los Angeles Economic Development Corp. The entire Crenshaw/LAX project will create more than 15,000 jobs, according to the mayor’s office.

I also highly advise you reading Carlsen’s blog Vertically Speaking, as it has great California specific construction news.

A reminder about the October 21st construction webinar

We did a post on this last week, but with it happening on October 21st (tomorrow) and construction being one of our focus areas, it seems like a good idea to remind everyone. If you’re in the construction industry, make some time on October 21st, because on that day – at 2pm EST – expert economists from Reed Construction Data (www.reedconstructiondata.com), the Associated General Contractors (AGC) of America (www.agc.org) and the American Institute of Architects (www.aia.org) join forces to host After the Fall: When and Where Construction Will Rebound a webcast focused on key factors affecting the recovery of the construction industry. This is especially important with the industry currently sitting at a 17.2% unemployment rate.

The webcast will follow chief economists Jim Haughey, Ken Simonson and Kermit Baker as they discuss and analyze:

– In which geographic areas has the economy started to improve, and which areas will be next?

– What construction sectors are likely to see the most growth during the next upturn?

– When will the nonresidential building starts pipeline refill and lead to a pickup in jobsite activity?

– Will the November mid-term elections slow or speed the construction recovery?

– What has happened to Federal stimulus dollars and can contractors expect to see more?

Registration is complimentary for all participants; pre-registration is required. Moderators will accept questions during the presentation from the internet audience and the webcast will also be archived for later viewing. Registrants may also receive 1.5 AIA CEU credits for attending this webcast.

To reserve your space at the October 21st webcast, register at: http://www.reedconstructiondata.com/events/2010/10/after-the-fall-when-and-where-construction-will-rebound.

Can rebranding green upgrades for homes produce an actual impact?

Our friends over at Green Goddess have a very interesting article for those in the green construction industry. Recently a study was conducted by the Berkeley National Laboratory that found that the term “audits” or “retrofits” made people think negatively about improving residential energy efficiency. The results, they say, should serve as a guide to the more than 2,000 towns, cities, states and regions with stimulus funding to spend on clean energy programs and with minimal experience to draw from.

A key partner for these programs should be the contractor workforce, the authors of the study said, because contractors know the marketplace for residential construction work and will be the “face” that customers see when they interact with the program. Ensuring that contractors are well-trained, they added, can help to avoid problems and consumer backlash.

But while the suggestion is that offering “energy assessments” and “upgrades” sounds good, will this change in branding make any difference for businesses?

Well, Tanya Stock of Green Goddess has some very keen thoughts on this question, which I’d advise you reading on Green Goddess. Her basic synopsis is that while such changes sound good on paper, the challenges for a business to totally change their style of branding (and possibly even their name) may come at a very high cost. In other words, things are not always as simple as they look. Not to mention that a fair number of potential customers already see energy improvements as costly improvements, even if in the long run they benefit from them.

Which leaves us with the question of what can the government and businesses do to better streamline green upgrades? Is this study enough to change things? That’s harder to answer. But if you are a green business or a business looking into getting into that field, I recommend viewing the study here and then reading Green Goddess’s good critical take on it.

Bank of America will be expanding services for small businesses

Bank of America has gotten some grief that it doesn’t help small businesses enough, so they’ve decided to do something. The bank said Thursday that it was hiring 1,000 small-business bankers to work in branches throughout the country.

These new bankers aren’t going to be simply loan officers, they’ll be doing a fair amount for small businesses. According to BofA, they’ll reach out to local businesses with a variety of financial products and services, including bank accounts, payroll systems, pension plans and credit cards, along with loans.

“We really are expanding our capabilities and enhancing the service to small businesses,” Kerrie Campbell, Bank of America’s top small-business executive, said. “These folks will be in our local communities, living and working in the communities that they serve.”

The move is one of several such initiatives announced by the bank recently, including promising to increase lending to small and medium-size companies, and choosing its own contractors more frequently from among the ranks of smaller businesses.

In hiring the new bankers and placing them in branches — rather than in the office buildings where its commercial banking operations are located — BofA will be competing with the regional banks that currently serve most small-business needs.

The BofA pilot small-business programs will roll out over the next few months in Los Angeles, Dallas, Baltimore and Washington.

Most of the 1,000 bankers will be new hires to be brought on board in the next several months. They will be targeting companies with revenue of $250,000 to $3 million.

[LA Times]

$1.5 billion headed to states to help small businesses

Missed this late last week, but the Treasury Department on Friday announced a $1.5 billion lending initiative meant to help spur small businesses at the state level.

To receive funding, states have to demonstrate that for every dollar the federal government provides, they will generate $10 in new private lending, which will create an impact of $15 billion on the economy, the Treasury said.

Among the six states receiving the biggest allocations, California has the largest at $168.62 million, followed by Florida at $97.66 million. Michigan can receive up to $79.16 million and Illinois up to $78.37 million. Both New York and Ohio will each receive slightly more than $55 million.

This is of course in addition to the Small Business Jobs Act which went into law recently, creating a $30 billion small business lending fund for community banks and offering tax cuts for small businesses.

So is throwing more money at the problem a good idea? Let’s certainly hope so. As the old saying goes, you’ve got to spend money to make money.

Great news for those in the construction industry: A webinar on when the industry will rebound

It’s not often you have the chance to hear economic experts of your industry speak, so if you’re in the construction industry, mark down October 21st on your calendar right now. On that day expert economists from Reed Construction Data (www.reedconstructiondata.com), the Associated General Contractors (AGC) of America (www.agc.org) and the American Institute of Architects (www.aia.org) join forces to host After the Fall: When and Where Construction Will Rebound a webcast focused on key factors affecting the recovery of the construction industry. This is especially important with the industry currently sitting at a 17.2% unemployment rate.

The webcast will follow chief economists Jim Haughey, Ken Simonson and Kermit Baker as they discuss and analyze:

– In which geographic areas has the economy started to improve, and which areas will be next?

– What construction sectors are likely to see the most growth during the next upturn?

– When will the nonresidential building starts pipeline refill and lead to a pickup in jobsite activity?

– Will the November mid-term elections slow or speed the construction recovery?

– What has happened to Federal stimulus dollars and can contractors expect to see more?

The webcast will be broadcast live starting at 2 p.m. (EDT). Registration is complimentary for all participants; pre-registration is required. Moderators will accept questions during the presentation from the internet audience and the webcast will also be archived for later viewing. Registrants may also receive 1.5 AIA CEU credits for attending this webcast.

To reserve your space at the October 21st webcast, register at: http://www.reedconstructiondata.com/events/2010/10/after-the-fall-when-and-where-construction-will-rebound.

The recession is officially over, and has been for a while. But how are small businesses doing?

Research has come out recently from the National Bureau of Economic Research (NBER) that the recession ended in June 2009, which means we’re just over a year into the economic recovery of the United States. But how are small businesses doing? Well, that seems to be incredibly tough to answer. Scott Shane of Small Biz Trends, and Professor of Entrepreneurial Studies at Case Western Reserve University, looked into it over the weekend and the data he pulled was pretty scary when it comes to small businesses. Here is Shane’s quick summary about his study:

I’ve pulled together some statistics that show that:

  • Self-employment and new business creation are down
  • Fewer people are working at new and small businesses
  • Owner pessimism is up, with fewer business owners expanding sales and more experiencing cash flow problems
  • Fewer owners are making capital investments, hiring, or increasing compensation
  • More businesses are going under
  • Fewer businesses are having their borrowing needs met, and trade credit is down
  • Angels are financing fewer companies
  • Venture capitalists are investing less money in fewer deals
  • VC deals are smaller and valuations are rising at fewer companies
  • VC-backed companies are experiencing fewer exits and at lower valuations

His ultimate conclusion was pretty straightforward:

The story is very clear. Recovery or not, the economic situation for small businesses is still considerably worse than before the recession began.

Here’s Shane’s full PDF if you want to read the whole thing.

The problem is we’ve seen other studies that suggest pretty much the exact opposite thing. Intuit has a study saying there was modest growth in small businesses employment across most of the United States in September. Vistage, which is an organization of 14,000 small businesses CEOs, also had a study which said many small businesses are cautiously optimistic right now.

So who’s right? Every day we seem to get news that it’s one or the other. I think the problem is that it’s impossible to answer, but the good news is that the economy seems to be starting to move in the right direction. As that happens, the hope is that small businesses will follow suit. And with the increase in government loans, hopefully more and more small businesses will get jump started and back on track.

Construction Industry Hits 17.2% Unemployment Rate in September

Some sobering news for the construction industry has just been released. The number of people working in construction is approaching a 14-year low after the industry lost 21,000 jobs in September. The current unemployment rate for the entire industry is at a stunning 17.2% according to an analysis of federal employment figures released by the Associated General Contractors of America.

So how bad is it?

“It has taken less than four years to erase a decade’s worth of job gains as the industry suffers from declining private, state and local construction demand,” says Ken Simonson, the association’s chief economist. “No other sector of the economy has suffered as much for as long as construction.”

Simonson also said that the 5.6 million people working in construction today is barely higher than the 5.59 million people who were working in construction in August 1996. Not much to show for in 14 years.

Most of September’s construction job losses came from the nonresidential sector as demand for commercial facilities and infrastructure projects remains weak. Residential construction lost 2,500 jobs last month while nonresidential construction lost 18,100 jobs. Nonresidential specialty trade contractors were the hardest hit, having lost 19,500 jobs in September.

While federal rollouts have assisted the construction industry, their benefits are basically temporary, and questions remain about when and if construction companies will start hiring again.

“Construction firms aren’t going to start hiring again until they can predict how busy they’ll be,” says Stephen E. Sandherr, the association’s CEO. “Frankly it is hard for contractors to make any business decisions when they don’t know how much they’ll make or how much they’ll owe.”

There was additional bad news in San Diego at the 11th annual survey of owners conducted by the Construction Management Association of America and FMI. According to the survey, America’s construction owners have significantly reduced their in-house design, engineering and construction management staffs during the recession, and don’t expect to return to prior staffing levels for many years, if at all.

This is without question a very difficult time for the construction industry and begs the question, what can the industry do?

Construction Employment in US Near 14-Year Low [California Construction]

17,000 more businesses are now eligible for SBA programs

Some tremendously good recent news for small business owners. Yesterday, the Small Business Administration instituted changes in small business size standards for the retail, hospitality, restaurant and “other services” industries. This change will make 17,000 more businesses eligible for SBA programs, including loans and preferential treatment for federal contracts.

According to the Washington Business Journal, this change in small business size standards for the service industry is a part of the SBA’s new approach in better defining who exactly is considered by the federal government to be a small business. Over the next two years, the SBA will complete its update in the rules, which have not been overhauled since 1980s.

The question now is who is going to benefit the most from this?

According the Journal, car dealers will be a major beneficiary of the change in size standards. The standards for dealers will be shifted from a maximum sales-based measurement (previously $29 million in average yearly sales) to an employee based number of 200 workers. The Journal estimates this will make 5,700 more dealerships across the country eligible for the SBA’s programs.

The SBA has also adjusted upwards the size standards for hotels, (limited-service) restaurants, cafeterias and food service contractors with the effect of making more than 2,000 businesses in these sectors into eligible small businesses.

So what does this all mean? Well, more more money for more businesses means more hiring and more growth. That’s always excellent to see.

[At the SBA, Size Definitely Matters]

%d bloggers like this: