Economic recovery depends on start-up businesses

June 1, 2010

Tech Journal South reports on a recently released study from TD Economics that concludes new businesses are critical to job growth:

“Over the 25 year period between 1980 and 2005, without the contribution of start-up firms, net job creation would have been negative.”

This recession, like others, disproportionately affected small businesses.  However, the nature of the downturn has been unlike others in ways especially challenging to SMBs:

  • The degree to which credit contracted was the highest ever recorded by the NFIB (National Federation of Independent Business).  “Corporate bond spreads rose to unprecedented heights during the financial crisis in late 2008, but came down just as quickly as the crisis subsided. For small businesses, dependent on bank lending, the situation has been slower to improve.”
  • The downturn struck sectors in which small businesses are extremely vulnerable:  construction, real estate services, professional, scientific and technical services, and other services.

Tech Jrnl SMB 2

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