Welcome to Luca!globe
SMALL BUSINESS SAYS Current Issue!    Navigation Tips!
Main Menu
CPA Journal
Professional Libary
Professional Forums
Member Services


For the fifth year in a row, Arthur Andersen's Enterprise Group and National Small Business United (NSBU) have conducted a nationwide survey of small and mid-sized businesses. There are significant findings in a number of areas:

* The Economy. More optimistic than ever, small and mid-sized businesses are focusing on beating the competition.

* Growth. Small and mid-sized businesses are gearing up for long-term growth and not settling for short-term fixes.

* The Workforce. A lack of qualified workers continues to be a challenge, but small and mid-sized businesses are finding rewarding solutions.

* Technology. Small and mid-sized businesses are getting "wired" by learning to use computer technology as a strategic asset.

* The Government. The enterprise sector has a "simple" message for government, particularly the IRS.

* Strategic Planning. A profile of tomorrow's successful companies emerges from this year's survey.

* Fraud. Which businesses are most vulnerable? And how can a company manage the risk of employee fraud?

Economic Outlook Is Brighter than Ever

Small and mid-sized businesses anticipate a good year ahead, with increases expected in revenues, profits, employee compensation, and new hires. More than three-quarters, 76%, expect revenues to increase, and 70% expect profits to rise. More than half, 58%, expect to increase employee compensation, and more than a third, 39%, expect to increase the number of people they employ.

Although small and mid-sized business owners are optimistic, caution still rules. Small and mid-sized businesses' forecasts for hiring and employee compensation continue to lag behind forecasts for higher profits and revenues. On average, small and mid-sized companies expect a seven percent increase in revenues and a six percent increase in profits, a slight rise in expectations compared to last year's forecasts of six percent and five percent increases, respectively. However, these employers expect only a two percent increase in the number of people they employ, and a three percent increase in employee compensation. A lack of qualified workers, among the top concerns in 1995, continues to be a significant challenge to 24 percent of small and mid-sized companies in 1996.

Increased Competition Now the Number-One Concern

With sales, profits, compensation and hiring at more optimistic levels than in the early 1990s, small and mid-sized businesses say increased competition is the number-one challenge to their future growth and survival.

Financing Remains a Concern

Challenges, such as taxes and access to capital, that threatened small business survival in previous years have become relatively less significant this year. The credit crunch of the early 1990s is easing, with access to adequate capital a challenge for 22% of these businesses, down from 29% in 1994. However, access to adequate capital may not be keeping pace with economic growth.

About one-quarter of small and mid-sized companies applying for loans continue to be turned down, while about 26% of all owners lack the financing they need. Until the investment community addresses this need with creative solutions, many entrepreneurs will continue to look to friends and credit cards for cash, sometimes at a very steep price.

Recent Success Offers Reasons For Optimism

Overall, the optimism is supported by small and mid-sized businesses' steady growth pace since the early 1990s. Nearly three-quarters, 74%, posted a net profit during the last 12 months up from 67% in 1993. Only 17% posted a net loss, down from 22% in 1993. Revenues increased by an average of five percent--up from the two percent increase reported in 1993. Profits increased by an average of three percent, continuing the upward trend that began after the one percent low reported in 1993.

Hiring and compensation growth continued during the last 12 months, with 52% of small and mid-sized firms reporting increases in employee compensation, and 26% hiring additional employees. Small and mid-sized companies increased their workforces by an average of one percent, while compensation increased an average of three percent.

Study results are based on 966 surveys of owners of small and mid-sized businesses. Results were weighted using U.S. Bureau of the Census business establishment data.

National Small Business United, founded in 1937, is the nation's oldest small business advocacy organization. It represents the interests of more than 22 million small businesses through its grassroots network of more than 65,000 members. The bipartisan association is governed by a 32-member volunteer board of trustees.

Arthur Andersen's Enterprise Group specializes in helping owner managed and mid-sized businesses to increase their competitiveness in the marketplace. *

The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.

©2009 The New York State Society of CPAs. Legal Notices

Visit the new cpajournal.com.