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.

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