The Financial Barometer of U.S. Small Business Health
As citizens, many of us closely follow a number of economic indicators that are regularly reported in the media, which include most notably unemployment rates, home sales, and Gross Domestic Product (GDP).
These figures provide us with a general sense of how the economy is performing and whether we are moving in the right direction. So important are these indicators that they often influence how we spend, how we vote, and how we plan for the future.
An important question to ask is this: As small-business owners, what do these indicators mean to us—or, rather, how do they matter to our businesses? Do they correlate with the health and activity of small businesses across the country?
The answer is: Not necessarily. Although these figures offer us an indication of how healthy the economy is overall, they lack the ability to measure in a direct way the state of the small-business community.
This is where The Small Business Authority Index provides an important source of information for the small-business community—our index is the most accurate and comprehensive financial barometer of U.S. small-business health in existence.
Why The Small Business Authority Index Matters
Economists, politicians, and everyday people can agree that small businesses are vital to the U.S. economy. Small businesses contribute significantly to local economies, job growth, and half of our total GDP. They grow into larger businesses, they provide essential services to their communities, and they encourage entrepreneurship. Without them, our economic landscape would be vastly different.
The Small Business Authority Index drills down to the heart of small-business activity and provides us with a clear picture of the performance of this essential part of the economy, which is composed of more than 27 million small businesses across the country.
The Index—Eight Powerful Indicators
The Small Business Authority leverages eight authoritative economic indicators to determine its index. Computed relative to the base year of 2007, each indicator is factored into a mathematical formula based on correlation coefficients that monitor the strength of the small-business economy.
If Joe’s Shoes experienced a drop in business in June 2008, for example, and the owner wants to know how other small businesses fared during that period, the owner can turn to The Small Business Authority Index for that information.
The eight indicators that the index leverages include:
1. ADP National Employment Report
2. Russell Microcap Segment of the U.S. Equity Market
3. Prime Rate
4. Retail Sales
5. Newtek Merchant Processing
6. Approved SBA Loan Volume
7. GLS Estimated Small Business Loan Default Rate
8. State of Delaware—New Business Formations
The Small Business Authority Index was established using valuable, real-time information while providing small-business owners with a tool that they can use month after month to observe trends among other small businesses.
The weakness in U.S. housing, financial institutions, health, and profitability led to a decline in U.S. business activity. The lowest point in recent times occurred in the first quarter of 2009, and The Small Business Authority Index demonstrated an accurate depiction of the movements in small-business activity as it closely correlated to movements in GDP.
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