If only we could plant money trees

There is an interesting study that was published by the San Francisco Federal Reserve Bank that discusses the difference between job loss of large businesses and small businesses. The report can be found here and, while a bit dry, it’s very interesting.

http://www.frbsf.org/economic-research/publications/economic-letter/2013/september/small-business-job-growth-employment-rate/

The report looks at how businesses, both large and small, have grown and lost jobs over a twenty year period. Its findings show that in both the 2001 recession and the 2008-9 recessions, small businesses have suffered greater job losses and failed to create more jobs than large businesses. The report highlights other research that shows that this may become a big issue in the future as small businesses of today eventually grow into large businesses of tomorrow.

This report provides some new perspective on the importance of supporting small businesses as a formula for economic growth. One aspect the report does not cover is whether systemic changes are driving this.  This could be the growth of shared office spaces where multiple small businesses utilize shared offices and support staff operated by a large business (thus lowering small businesses required admin staff headcounts) or the ease by which small businesses can utilize technology like cloud computing to do more with less employees. The report does cite the challenges for small businesses to secure funding through means such as second mortgages, which is often the source of initial credit or cash flow for many young small businesses.

Either way, the study is a reminder that to grow great jobs in the future, we must plant the right seeds today.

Posted in: Large Business,San Fran Fed Reserve,Small Business