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October 23, 2011

BUSINESS CENTS: Despite odds, smaller businesses finding ways to hang on

TERRE HAUTE — It is definitely a tough time to be a business owner right now.

Though the bigger companies are slowly bouncing back, it is taking the smaller ones a bit longer to rebound. The main problem is people are still not spending money as they once were.

The National Federation of Independent Business stated that small-business optimism fell for the sixth straight month this past August. The biggest issue that small businesses cited was lack of sales.

Meanwhile, unemployment continues to hover around 10 percent. It is the high unemployment rate that has created unlikely entrepreneurs. Many have started a business in a field they are familiar with only to realize that being their own boss doesn’t result in a high amount of income and the new business owners are forced to settle for a mere fraction of what they used to earn. The odds of a small business succeeding have slimmed down even more since the downturn in the economy. Since 2005, only 47 percent of businesses have survived for five years, compared to 50 percent from 10 years earlier according to the Kauffman Foundation out of Kansas City, Mo.

Despite the odds, businesses are finding ways to hang out and hope for the best. According to the Small Business Administration, companies with fewer than 500 employees created 64 percent of net new jobs in the U.S. from 1992 to 2010, they employ 55 percent of the workforce. 

Firms between:

• 1–9 employees account for 13 percent of net new jobs

• 10–49 employees account for 19 percent of net new jobs

• 50–99 employees account for 10 percent of net new jobs

• 110–499 employees account for 22 percent of net new jobs

• 500–999 employees account for 7 percent of net new jobs

• 1,000 or more employees account for 29 percent of net new jobs

The main key to success will be increasing sales. Is your company doing all it can to survive? Have you looked at untapped markets? Festivals, if applicable, for new revenue streams? Grassroots marketing? Although all the above are labor intensive, one or more may prove to be fruitful in attracting and retaining new customers to make your company more sustainable.

Heather Penney is the regional director for Indiana State University’s Indiana Small Business Development Center.

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