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Venture Capitalists Pushing Bill That Would Help Small Businesses Create New Jobs
- GoingConcern
- March 23, 2010
This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.
With all the talk lately about how small businesses are vital to job creation, turns out it’s a relatively small number of high-growth entrepreneurial firms creating much of that employment. And, now, there’s pending legislation, pushed heavily by venture capitalists, that could encourage the growth of such companies.
First, about those high-flying startups. According to recent research from the Ewing Marion Kauffman Foundation, fast-growing relatively young firms generate about 10 percent of all new jobs in any given year. That includes what the study calls “gazelle” firms–enterprises three to five years old. And, these ventures create all those jobs even though they’re less than 1 percent of all companies. The average firm in the top 1 percent contributes 88 jobs per year; most end up producing between 20 and 249 employees. The average firm in the economy as a whole adds two or three net new jobs each year.
Of course, these findings have important implications for government policy and what types of small business it should focus on. Among other recommendations, the study urges the passage of legislation just introduced in the Senate, informally known as the “Startup Visa Act.” Sponsored by Senators John Kerry and Richard Lugar, the bill would address the problem facing many foreign entrepreneurial wannabes who can’t get a visa to come here and start a company.
To that end, it would create a new visa for such entrepreneurs who are sponsored by a US venture capital firm or angel making an investment of at least $100,000 in an equity financing of no less than $250,000. The legislation would modify the EB-5 visa program; that requires recipients to invest at least $500,000 in a US company and create no fewer than 10 jobs.
The bill is the product of heavy lobbying by such investors as Brad Feld, who is with the venture capital firm the Foundry Group. Of course, they have their own business reasons to push this legislation but there seems to be sound research to back it up.
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Small Business Still Not Showing Signs of Life
- GoingConcern
- May 11, 2010
This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.
Don’t look for small businesses to lead the economic recovery.
The monthly reading from the National Federation of Independent Business Index of Small Business Optimism clearly shows little optimism among small business.
Sure, nine of the 10 components that comprise the index rose from the prior month.
However, some of the critical factors that would indicate whether small business owners plan to invest in their firms did not show encouraging results. The NFIB’s job measures barely moved and capital expenditure plans were flat.
More specifically, according to the survey average employment per firm was negative in April. What’s more, since July 2008 employment per firm has fallen steadily each quarter, logging the largest reductions in the survey’s 35-year history.
If small business is key to job growth – as some pundits think – then this does not bode well for our economy.
And the jobs small businesses create are not exactly great ones. They are more likely to come without benefits and less time off for vacation.
Meanwhile, the Index does not suggest that small businesses will be investing heavily in non-personnel. It noted that plans to make capital expenditures over the next few months were unchanged from the prior month and its reading is only slightly above the 35-year record low.
Yikes!
The survey also noted that small business owners continued to liquidate inventories and weak sales trends gave little reason to order new stock. In fact, more owners plan to reduce stocks than plan new orders, according to the NFIB.
Meanwhile, regular borrowers continued to report difficulties in arranging credit. “Historically weak plans to make capital expenditures, to add to inventory and expand operations also make it clear that many borrowers are simply on the sidelines, waiting for a good reason to make capital outlays and order inventory that requires businesses to take out the usual loans used to support these activities,” the report notes.
Obviously, small businesses are not going to turn this economy around any time soon.
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Accounting News Roundup: Vault Accounting Firm Rankings and Marijuana Businesses | 04.20.17
- Caleb Newquist
- April 20, 2017
Vault accounting firm rankings In general, I don’t get as excited about rankings like I […]