Keeping Small
Business Informed

JANUARY 2006 Edition

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In This Edition

Colorado Small Business Numbers
Tax Time Coming Again
Economy Grows At Brisk 3.8% In Third Quarter
Logical Advertising
TECH Corner
Some Smiles
 

COLORADO SMALL BUSINESS NUMBERS

Small Business Dynamo Powers Colorado
By Jim Henderson, Regional Advocate, Office of Advocacy, U.S. Small Business Administration

They are everywhere.  Drive down almost any street, in any city and town in Colorado and you will see them.  Retailers and manufacturers, wholesalers and contractors, one-person shops and significant employers.  They are small businesses, and they are the dynamo that powers Colorado’s economy.

The Office of Advocacy of the U.S. Small Business Administration recently released its latest Colorado Small Business Profile and what it shows may surprise some people, but others of us have known it all along.  Without its small business owners, Colorado’s economy would not be nearly as strong as it is today.

The report shows that in 2004 an estimated 142,943 or 97.7 percent of the state’s employer firms were small businesses.  And that number does not even include the thousands of non-employer one-person firms scattered across the state.  These businesses generated a sizeable amount of economic activity.  In 2002, small firms (those with fewer than 500 employees) employed 51.3 percent of the state’s non-farm private sector employees.  What is even more remarkable is that from 2001 to 2002 (the latest data available) firms with fewer than 20 employees saw net job gains of 13,690 while firms with more than 500 employees actually lost jobs.

The diversity of its small business owners helps create integrated communities that make the state stronger.  In 2002 (latest figures) women-owned firms totaled 135,224, an increase of 18 percent from 1997, and they generated $16.4 billion in revenues.  Moreover, there were 24,054 Hispanic-owned firms, an increase of 15 percent from 1997; 7,067 Black-owned firms, an increase of 43 percent; and 10,917 Asian-owned firms, an increase of 25 percent.  Clearly small business ownership is drawing more and more of the state’s residents into the economic mainstream.

Main Street is where the state’s citizens go to work, so policymakers should consider just how programs, rules, and regulations will affect the state’s job-creating small businesses.  According to Advocacy research, just complying with federal regulations costs the nation’s smallest firms $7,647 per employee each year.  That is 45 percent more than the per-employee costs of their larger counterparts. 

The uneven burden of regulations on small business is not only a problem at the federal level.  Because state and local regulations can also fall disproportionately on small businesses, Advocacy is encouraging states to pass laws requiring their agencies to consider the impact of regulations on small business. 

To find out just how small business friendly the state’s regulatory process is and what policy makers can do to improve the climate for small business and unleash the job-creating and community-building power of entrepreneurship, visit www.sba.gov/advo/laws/law_modeleg.html.

Small businesses are dynamic, creative, innovative, job-creating, and they are powering the state’s economy.  Take a look around.  There they are, in every city and every town.  They are providing jobs, growth, and economic opportunity for all of Colorado.  So next time you are in a store, shop, or warehouse along with your purchase you just might want to say “thanks.”

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Jim Henderson is the Office of Advocacy Regional Advocate for Region VIII, covering Colorado, Montana, North Dakota, South Dakota, Utah and Wyoming.  He is the direct link between small business owners, state and local government agencies, state legislators, small business associations, and SBA's Office of Advocacy.  Contact Jim Henderson at (303) 844-0503 or james.henderson@sba.gov.

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TAX TIME COMING AGAIN

Here is a refresher course in the tax laws and who really pays the most taxes.  This information is available from the www.IRS.gov web site for anyone who wishes to do the research and learn about it.

Don't forget, corporate taxes are due on March 15, not April 15.

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ECONOMY GROWS AT BRISK 3.8% IN THIRD QUARTER

Friday, October 28, 2005
Associated Press

WASHINGTON  — Economic activity expanded at an energetic 3.8 percent annual rate in the third quarter, providing vivid evidence of the economy's stamina even as it coped with the destructive forces of hurricanes Katrina (search) and Rita.

The latest snapshot of the country's economic performance, released by the Commerce Department (search) on Friday, even marked an improvement from the solid 3.3 percent pace of growth registered in the second quarter.

Growth in the third quarter was broad-based, reflecting brisk spending by consumers, businesses and government.

The expansion in gross domestic product in the July-to-September quarter, the strongest since the beginning of the year, also exceeded many analysts' expectations. Before the report was released, they were forecasting the economy to clock in at a 3.6 percent annual rate.

GDP measures the value of all goods and services produced within the United States and is the best barometer of the nation's economic fitness.

Katrina, the costliest natural disaster in U.S. history, struck in late August; Rita hit in late September. Both hurricanes destroyed businesses and homes and choked the flow of trade. They also hobbled essential oil and gas facilities, catapulting energy prices higher and fanning inflation fears.

An inflation gauge tied to the GDP report showed overall inflation picking up in the third quarter. But excluding food and energy prices, "core" inflation — something the Federal Reserve (search) pays close attention to — actually moderated. Core inflation rose at a rate of 1.3 percent in the third quarter, down from a 1.7 percent pace in the second quarter.

Despite the sting of high energy bills, consumers continued to spend, doing their part to keep the economy rolling in the third quarter.

Consumers' boosted spending at a brisk 3.9 percent rate, the strongest pace since the end of last year. That spending reflected a big appetite for big-ticket "durable" goods, such as cars, which had been discounted and promoted to lure buyers. Some analysts believe consumer spending probably will moderate, but still remain healthy, in the months ahead.

Businesses increased spending on equipment and software at an 8.9 percent pace in the third quarter, on top of a 10.9 percent growth rate in the prior quarter.

Spending by the federal government, which analysts believe included some outlays due to the hurricanes, rose at a 7.7 percent rate in the third quarter, the fastest pace since the first quarter of 2004.

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logical advertising

There is an old, but wise saying, "if you cannot measure it, you cannot manage it" and this is especially true in advertising.

If you plan to spend money on advertising and most companies spend some, you must develop a system by which you can measure the results BEFORE you spend the money.  If you cannot think of a way to measure the effects of your advertising, please hire someone to help you develop a process of measurement.

Virtually every small business I know spends money on advertising and several spend thousands of dollars every month.  Unfortunately, most cannot measure the benefits of these dollars invested.

If a company is a retail establishment, they need to have a computer-based checkout system or a person to cross-reference the receipts with the advertising.  It is necessary to track how many customers entered your establishment, in what time frame and the amount of their purchases.  If you cannot directly tie the purchases of the advertised group to the cost of the advertising then don't advertise!  Develop the measuring system before you advertise or you will likely get yourself into the rut that so many companies find themselves in.  Advertising every month because they feel like they should, but not being able to show an actual financial benefit.

If your company benefits the most from direct mail then put some energy into developing a measuring system to track responses and tie those responses to the actual sales that occur.  Similar to the retail process, there must be a process to measure new customers against the mailing list to measure the actual cost of a new customer.

The real question that must be answered, regardless of what type of marketing is utilized is simple.  How much does it cost to obtain each new customer?  If your process cannot answer this question, then alter it until you can.

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TECH CORNER

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some smiles

Typoglycemia

I cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdanieg The phaonmneal pweor of the hmuan mnid Aoccdrnig to rscheearch taem at Cmabrigde Uinervtisy, it deosn't mttaer in waht oredr the ltteers in a wrod are, the olny iprmoatnt tihng is taht the frist and lsat ltteer be in the rghit pclae. The rset can be a taotl mses and you can sitll raed it wouthit a porbelm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Such a cdonition is arppoiately cllaed Typoglycemia :)-

Amzanig huh? Yaeh and yuo awlyas thought slpeling was ipmorantt

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