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Small Businesses Still Struggling To Reach Revenue Levels Prior To Recession
Written by Tim Morral
Despite steady growth, Intuit's May index shows that small business revenue and employment are still below 2007 pre-recession levels -- and full recovery could take up to two more years.
Slow and steady seems to be the name of the game when it comes to small business revenue and employment growth.
Intuit's May Small Business Employment and Revenue Indexes revealed that although small business revenues are moving in the right direction, more growth is needed to reach 2007 pre-recession revenue levels.
According to the Employment Index, small business hiring grew by 0.2 percent in May (2.5% annualized growth). On the revenue side, small businesses located in the retail, professional services, construction and real estate industries saw increases in May.
"The employment and revenue indexes tell a consistent story," said Susan Woodward, the economist who worked with Intuit to create the Intuit Small Business Indexes. "Both indicate there is a recovery underway. We need growth at this level for two more years for small business employment to return to the level we saw in early 2007."
Woodward added that despite May's moderate gains, the construction industry continue to be extremely depressed, with single family construction running at less than half the pace of a typical economy.
Intuit's indexes also showed that small business employees are experiencing decreases in compensation and hours worked. In May, small business hourly employees worked an average of 106.4 hours (a 24.6-hour workweek), down from 107.1 hours in April. Average monthly pay for all small business workers also decreased by 0.13 percent in May to $2,688 or $32,300 per year.
In a sluggish economy, it's more important than ever for entrepreneurs to conduct planning for business growth. Despite the gradual improvements indicated by Intuit's May indexes, it may even be appropriate for entrepreneurs to continue to target business growth strategies for a difficult economy.
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