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Front Page » Top Stories » Small Business Dominates Miamidade Job Growth

Small Business Dominates Miamidade Job Growth

Written by on January 26, 2012
  • www.miamitodayepaper.com
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By Rachel Tannenbaum
Expansion of small business, long the epicenter of Miami-Dade County’s natural job growth, is getting a boost from a rapidly falling unemployment rate and a revival of consumer confidence, says the federal official charged with building small business here.

Small business is the vast preponderance of Florida’s employers, 98.9% of them, said Francisco A. Marrero, director of the US Small Business Administration’s South Florida District Office since 2001.

Although the future for small business looks bright, Mr. Marrero said recovery and growth will be a lengthy process.

Unemployment in the county, which in June peaked at 13.9%, had dropped to 9.4% by November, according to the federal Bureau of Labor Statistics, before creeping back up to 10.3% in December.

"The business dynamics data that we have access to indicates that historically small business establishments — two to nine employees — have generated a large share of the job growth in Miami-Dade," said Robert D. Cruz, Miami-Dade’s chief economist.

From 1996 to 2007, business establishments increased to 410,000, with businesses with two to nine employees increasing employment by 296,000, while sole proprietors — one employee/owner — increased by 60,000, he said.

Over that same period, there was a net gain of 185,000 business establishments in Miami-Dade, and 66% of that gain was firms with two to nine employees.

Of the 185,000 establishments, 121,300 — 66% of the 185,000 — were firms with two to nine employees, and 59,600 were sole proprietors. The number of establishments with 10 to 99 employees increased by 3,000; while the number of firms with 100 or more employees increased by just 25.

The numbers cut off before the recession, Dr. Cruz said, instead showing the growth during the prior period of expansion.

"Historical data shows a large number of companies, with two to nine employees, dominate the job growth with most establishments’ headquarters in Florida," Dr. Cruz said.

Half of all private sector employment in the US comes from small business, said Althea Harris, the Small Business Administration’s assistant Miami district director for marketing and outreach.

Small businesses accounted for 2 million in the state in 2008. Those 410,339 employers accounted for 44.1% private sector jobs in Florida, according to the SBA’s Office of Advocacy. The SBA defines a small business as having with fewer than 500 employees.

In terms of the number of small businesses accelerating, Mr. Marrero said no magic wand or bullet can speed the development — it is a process.

"It doesn’t move at the pace that we would want it to. The financial institutes also need to get healthy," Mr. Marrero said.

One way small business is accelerating growth, he said, is by reaching out to SBA services, like the counselor services.

Through entrepreneurial development and access to counselors, he said, entrepreneurs are able to ask questions like "what to do first" and "how to expand." The SBA provides free individual face-to-face and internet counseling for small businesses and low-cost training.

The Small Business Administration, founded in 1953, is a loan guarantee program, but the SBA doesn’t provide grants or loans directly. It guarantees loans made to small businesses by other institutions.

Small businesses can also grow by expanding with the loans offered through the SBA.

Entrepreneurs trying to start a business or small businesses looking to expand can turn to the 7(a) loan guarantee program, a working capital program designed to help them through bank and non-bank lending programs, often when they aren’t eligible for loans elsewhere.

The major types of 7(a) loans are express programs, export loan programs, rural lender advantage program and special-purpose loans program

"These are all instruments for the small business community," Mr. Marrero said.

As for small businesses on the rise, the exporting industry continues to grow.

Since April 2010, the SBA has been offering more loans for exporting. Exporters can apply for the Export Work Capital Program, which allows them to finance their exports to cover the 60- to 120-day delay from the time they ship products to the time they get paid.

With about 7 billion people on the planet and only about 350 million living in the US, Mr. Marrero said 95% to 97% of the worldwide market is outside the US, which leaves a lot of the market on the table in an age of exporting and international trade.

"It is a very popular trend that will continue," Mr. Marrero said. "More businesses are becoming comfortable with exporting, which helps the economy and small businesses."

Besides the exporting field, Mr. Marrero said he has seen growth in the hospitality and leisure industries. Signs of increase, he said, are raising occupancy and rental rates.

"There has been an increase in employment in hospitality and leisure compared to last November — about 2.4% — but we do not have published statistics on how current employment breaks down by size of firms," Dr. Cruz said. "The data is for the industry as a whole."

As for the future, Mr. Marrero said, small businesses aren’t totally out of the woods but are headed in the right direction, often with his agency’s help.

"We act as a buffet table," he said of the Small Business Administration, "and it is important for the community to know we have a vast number of influences that they could use to really excel."To read the entire issue of Miami Today online, subscribe to e -Miami Today, an exact digital replica of the printed edition.

  • www.miamitodayepaper.com
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