Small Business: Still Waiting for Recovery
(Businessweek) — The recovery that began in the middle of last year hasn’t reached small businesses yet. While corporate profits approach pre-recession levels, income at small private companies is recovering much more slowly, according to data from the Bureau of Economic Analysis. Proprietors’ income—the profits of unincorporated businesses such as partnerships or individuals who work for themselves—is down nearly 5 percent from two years ago, while corporate profits have jumped 21 percent in that period, the BEA reports. The uneven recovery of small companies stems partly from the diverging fortunes of the U.S. and faster-growing countries. Many big corporations are seeing strong sales from their overseas operations while smaller companies tend to sell primarily to customers in the U.S., says Drew White, chief financial officer at accounting software company Sageworks, which collects and analyzes financial data from hundreds of thousands of private companies. “Small businesses are probably going to get revenue later in the business cycle than the big businesses that are exporting to growing markets internationally,” White says. “[Large companies] have the ability to shift markets if they see demand.”
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