William C. Dunkelberg, chief economist for the National Federation of Independent Business, issued the following statement on December job numbers based on NFIB’s monthly economic survey.

“Despite the holiday season, December didn’t put small business owners in a hiring mood. Last month, small business owners reported a decline in average employment per firm of 0.5 workers reported during the prior three months, not much of an improvement from November’s loss of .58 workers per firm.

“Ten percent of the owners increased employment by an average of 4.2 workers per firm, but 22 percent reduced employment an average of 3.5 workers per firm (seasonally adjusted).  Growth from new firms will provide a positive nudge to the macro BLS numbers. But overall, the job-generating machine remains in reverse.  

“A slowdown in firing will also help job creation, but there is no real strength in job growth because there is no real strength in spending.  It is picking up, but not returning to the levels that supported the employment levels of 2007.  Employment reductions have proceeded faster than the decline in GDP (thus strong productivity numbers), creating the possibility that employment could respond faster in the early part of the recovery than many expect.  However, there is no indication that job growth will be strong enough to dramatically reduce the unemployment rate.

“Ten percent (seasonally adjusted) reported unfilled job openings, up two points from November, a good sign.  Over the next three months, 15 percent plan to reduce employment (down two points), and 8 percent plan to create new jobs (up one point), yielding a seasonally adjusted net-negative 2 percent of owners planning to create new jobs, a one-point improvement, but still more firms planning to cut jobs than planning to add.  Not seasonally adjusted, net job creation plans were positive in the professional services and the wholesale trades, negative in all other industries.”

I have been writing about how so many of our students when after assessing the current economy decide that they want to go it on their own rather that search in vain for a traditional job. 

Matt Nicholson passed along an article by Toddi Gutner in the Wall Street Journal that addresses this trend:

Andrew Levine knew he wouldn’t find a job in investment banking when he
graduated with an M.B.A. from the University of Miami in 2008. Wall Street was
in the midst of a financial collapse. So instead the 24-year-old focused his
efforts on launching a start-up. “I figured that starting my own company was the
best use of my time while I waited for the market to thaw,” says Mr. Levine.

Young adults ages 20-24 are facing unemployment rates of 16%.  No wonder those with initiative and motivation are bypassing the traditional job market and creating their own employment.

In my column for the Tennessean I offer the following suggestion for the new year:

With the new year upon us, I’d like to offer a resolution.

Support small-business owners with your business.

History shows us that it’s small-business owners who have led us out of our past recessions. Entrepreneurs are the job-creating engines that generate sustainable economic growth.

But, they can’t do it alone. They need us to give them a chance to earn — and I do mean earn — our business.

Here are just a few of the small businesses that have earned my business, and how they won my loyalty.

I get my hair cut every month at Genie’s Barber Shop in Franklin. Genie offers quality haircuts for men at a great price. She is able to offer her customers a value haircut in large part by keeping her overhead low.

She has a simple little shop, no fancy décor, no plasma televisions and thankfully no ear-popping stereo systems. Genie earned my business through great quality at a value price.

When it is time to get service done on our cars, we go to Moody’s Tire and Auto on Columbia Avenue in Franklin (www.moodystire.com). When we first moved to town we heard from several neighbors that if you need service on your car, go to Moody’s.

Businesses that have customers willing to recommend their service to others through word of mouth are not all that common. It didn’t take long to see why customers are eager to talk about Moody’s, though. It comes as a result of its honesty and integrity.

Just as one example of its integrity — on many occasions I have seen Moody’s employees talk customers out of getting new tires because the tires on their cars still had plenty of life left in them.

We recently wanted to put in some new tile floors in our home, and replace carpet with hardwood. I asked people whom I trust in the construction business where to call, and the name Wilkerson Tile and Stone came up.

Communication is key

Beyond great quality at a fair price, Jim Wilkerson knows the importance of communicating with his customers. While this may not seem like a big deal, it’s always a source of frustration for me when service providers don’t communicate well or at all.

Running behind on the project before ours? Just let us know. Can’t make it out today because of a scheduling conflict? Give me a call.

Wilkerson keeps us informed every step of the way — a small thing that goes a long way with most customers.

There are many other small businesses that have earned my loyalty, such as Bongo Java Coffee, where I hold court several times a week; Evans Glass, which will be installing new shower doors in our home; and Lee Company for the quality of its service on heating and cooling systems.

I’m sure you have your own favorites.

I hope you join me in supporting entrepreneurs by making a new year’s resolution to give more small businesses a chance.

I had the pleasure once again to talk with Barbara Weltman from Build Your Business radio show.  This time she wanted to know my thoughts on small business and the economy.

Listen to segment 1.

Listen to segment 2.

According to the November SurePayroll Small Business Scorecard small-business hiring is up in November from October, bringing us to a 2.6 percent increase year-to-date (based on aggregated data from 25,000 small businesses).

Unfortunately, any increase is not a sustainable and permanent uptick in jobs.  The increase is due to a continued reliance on independent contractors for the majority of new jobs.  These are temporary jobs with no benefits or long-term stability.

Small-business salaries continue to decline, with a national year-to-date drop of eight percent. On average, the small business employee earned nine percent less year-to-date in ’09 than during the same time period in ’08.

What is Thanksgiving?  It has become a day to be with family, overeat just a bit on turkey, watch football, and plan strategies for Black Friday shopping. 

Each year I share the original proclamation for our American
Thanksgiving holiday to remind us of the original intent for this national holiday — to give thanks to God for our many blessings.  It is my own contribution to helping us remember the original intents of our founding fathers.

Even in difficult times we have so much to be
thankful for.  But, we should never take for granted the blessings that have been handed down to us through the generations. 

“Whereas it is the duty of all nations to acknowledge the providence
of Almighty God, to obey His will, to be grateful for His benefits, and
humbly to implore His protection and favor; and Whereas both Houses of
Congress have, by their joint committee, requested me to recommend to
the people of the United States a day of public thanksgiving and
prayer, to be observed by acknowledging with grateful hearts the many
and signal favors of Almighty God, especially by affording them an
opportunity peaceably to establish a form of government for their
safety and happiness:

“Now, therefore, I do recommend and assign Thursday, the 26th day of
November next, to be devoted by the people of these States to the
service of that great and glorious Being who is the beneficent author
of all the good that was, that is, or that will be; that we may then
all unite in rendering unto Him our sincere and humble thanks for His
kind care and protection of the people of this country previous to
their becoming a nation; for the signal and manifold mercies and the
favorable interpositions of His providence in the course and conclusion
of the late war; for the great degree of tranquility, union, and plenty
which we have since enjoyed; for the peaceable and rational manner in
which we have been enable to establish constitutions of government for
our safety and happiness, and particularly the national one now lately
instituted for the civil and religious liberty with which we are
blessed, and the means we have of acquiring and diffusing useful
knowledge; and, in general, for all the great and various favors which
He has been pleased to confer upon us.

“And also that we may then unite in most humbly offering our prayers
and supplications to the great Lord and Ruler of Nations and beseech
Him to pardon our national and other transgressions; to enable us all,
whether in public or private stations, to perform our several and
relative duties properly and punctually; to render our National
Government a blessing to all the people by constantly being a
Government of wise, just, and constitutional laws, discreetly and
faithfully executed and obeyed; to protect and guide all sovereigns and
nations (especially such as have shown kindness to us), and to bless
them with good governments, peace, and concord; to promote the
knowledge and practice of true religion and virtue, and the increase of
science among them and us; and, generally to grant unto all mankind
such a degree of temporal prosperity as He alone knows to be best.

“Given under my hand, at the city of New York, the 3rd day of October, A.D. 1789.”

George Washington

A couple of interesting studies came out this week that help us better understand the direction of entrepreneurship in our economy.

A study by Microsoft suggests the most of the new entrepreneurs today are either accidental entrepreneurs or at least not folks who had aspired to become an entrepreneur before the recession.  The study found that about 70 percent of the respondents left their jobs to start their own businesses in the midst of the current recession.

The latest Global Entrepreneurship Monitor (GEM) report that looks specifically at the U.S. was just released by Babson College.  It gives a very interesting snapshot of the real face of today’s American entrepreneurs.

The GEM study found that the total entrepreneurial activity actually increased in the US to 10.8% in 2008 from 9.6% in 2007.

Even though we know many of today’s entrepreneurs came to starting their ventures due to the economy, they are still seeking ventures out of opportunities they have observed rather than just starting something to make ends meet.  The study found that 87% of US entrepreneurs started their businesses because of a business opportunity while only 13% started their businesses simply out of necessity.

However, even though these entrepreneurs see opportunity, they also see an increased risk of failure, which increased in 2008. 

A finding that caught me somewhat by surprise was that the typical entrepreneur is getting older.  The GEM study found that boomers are become more entrepreneurial, while the Millennials and the Gen X-ers are becoming less likely to start a venture. The results indicate a marked reduction (around 8% to 9%) in entrepreneurial activity for individuals in the 18-44 age group and an increase of a similar amount in the 45-98 age group.

The study did not differentiate the Millennials from the Gen X-ers.  My anecdotal observations from our program and others is that the Millennials seem to be holding their own, and show signs of increasing their entrepreneurial activities over the coming years, while the Gen X-ers seem to be hunkering down trying to make ends meet through employment.

In a finding that sent chills down my spine, the study found that the size of the ventures entrepreneurs are thinking about is changing.  From 2007 to 2008, the number of jobs entrepreneurs expected to create from their start-ups decreased among the smaller firms.  Not a good sign of long term employment growth.

The GEM results indicate a continuation of the trend toward a business service- and away from a manufacturing-economy. Looking at particular sectors of entrepreneurial activity, U.S. activity is more concentrated in the business services sector and less concentrated in the transforming sector than the activities of other countries in the innovation-economy group, for both early-stage and established firms.  Another bad sign for the long-term economic outlook in the US.

Finally, in terms of financing, the number of adults reporting that they had invested in someone else’s business increased (to 5%), as did the amount they financed ($17,500); yet those numbers are countered by the precipitous decline in SBA lending.  It is the private sector, not the government, that is keeping the entrepreneurial engine running in our economy.

My colleague Joe Alexander passed along a map developed by Latoya Egwuekwe that gives a very stark visual display of the spread of unemployment.  Go to this site, press the play button and watch employment spread across the country over the past three years.  You may want to watch it a few times.