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Report: Small businesses account for most job growth in the state of
Alabama
Businesses with fewer than 20 employees accounted for the bulk of
Alabama job growth, according to a profile issued by the Small Business
Administration. The smallest of small businesses, those with up to 19
workers, created 26,100 jobs in 2004, the latest year for which detailed
data is available. Overall, Alabama grew by 32,100 non-farm jobs that
year, meaning small businesses created more than 81 percent of new jobs.
The SBA classifies any business with fewer than 500 employees as a small
business, but its report showed that businesses smaller than that had a
significant impact on Alabama's economy. Companies with fewer than 100
workers employed almost 593,000 workers in 2004. The state's total
non-farm, private work force was 1.63 million then. "What it really says
is that we are the job creators," said Rosemary Elebash, executive
director of the Alabama Chapter of the National Federation of
Independent Businesses. "We create jobs one or two or three at a time.
They have consistent growth, not the huge numbers at one time.“
Jackie Alexander DiPofi, director of the Small Businesses Development
Center at Auburn University, agreed the report painted small businesses
as important, but she said other numbers illustrate the risks involved
in starting a businesses. According to the SBA, 10,096 new employer
firms opened in Alabama in 2006. About 11,100 job-creating firms were
lost in the state the same year. "It has always been extremely difficult
to make it," she said. "It is very easy to go into business for
yourself. That does not mean you are going to ever have a customer, and
if you do have customers, it doesn't mean you are going to make a
profit."
DiPofi said small businesses, especially start-ups, fail most often
because of a lack of financial planning. "Owners don't think to allow
for overhead," she said. "And there is that real time lag." That lag is
the time between when a product or service is delivered and when payment
is received. It can reach a couple of months if a company has a 30-day
billing cycle and a 30-day payment period, DePofi said. That company
must have a plan to pay the bills while waiting to get paid if it
expects to survive, she said.
Elebash said at least some of
the job growth at small businesses is related to Alabama's growth in
major employers. "It is a real big factor," she said. "When
manufacturing does well, small businesses do well. We are the service
providers to factories." Overall, the report painted a picture of small
businesses as important, but struggling. However, Elebash found one set
of numbers that made her particularly happy.
According to the report, women made up almost 30 percent of the
self-employed workers in Alabama. That is a 12 percent jump over 2005.
Montgomery
Advertiser Business Section – October 31, 2007
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