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23% of Small Business Owners Report "No Pay for a Year"
Townhall.com ^ | June 13, 2012 | Mike Shedlock

Posted on 06/13/2012 2:51:15 PM PDT by Kaslin

Citing a new survey by Citigroup, CNBC Reports All Work, No Pay for Some Small Business Owners.

Here are some interesting highlights.


I would like to show a link to the Citigroup report but I cannot because CNBC did not provide one. Readers know this is one of my pet peeves, so I am calling them on it.

Recession Brought Small-Business Boom

Inquiring minds just may be wondering how many small businesses there are. A report written May 20, 2011 may surprise you.

Please consider Recession Brought a Small-Business Boom
“Compared to 2007, there was a huge increase in the number of business failures in 2008, 2009, and 2010. In fact, the number of business failures in 2009 was almost twice that of the amount of failures in 2007,” writes Byron Vielehr, president of global risk and analytics at D&B, in response to questions emailed by Portfolio.com.

“2009 and 2010 bore witness to the highest percentage of startups in more than a decade. The rate of new businesses had also been steadily climbing since 2006. As a result, the number of businesses in 2010 compared to 2007 is higher.”

As of 2010, D&B estimates, there were about 23 million small businesses in the United States, employing nearly 81 million workers.
27 Million Small Businesses

Citing the Small Business Association (SBA) Get Busy Media reports 27 million small businesses in Small Business Stats for Small Business Week 2011
According to the SBA


Startup Times and Costs

There are some interesting charts and graphs in the article. Here is a clip showing several pertinent pieces of information.



Singapore and New Zealand are the best two places to start a business and run a business. The US is 4th and 3rd respectively.

It would be interesting to see where Greece, Italy, Spain, Ireland, and Germany fall, but there are no links to the data or studies.

Ease of Startup Explains Recession Boom

Notice the success stats on the above graph do not add up.  If 44% of new firms survive 4 years, by implication 56% don't. Yet somehow only 49% fail in 5 years. 

Regardless, the above chart explains the startup boom at the height of the recession. Millions of people started businesses and most of them will not make it.

Stats from 2007 and 2008 as to how many businesses will last 5 years are invalid. Business climate is far more unfavorable now.

Crunching the Numbers

If there are 27 million small business owners and 23% have not received any pay for a year, there are 6.21 million business owners who received no paycheck for at least a year.

Notes About Unemployment

Bear in mind, that making money or receiving a paycheck is irrelevant to the BLS when they compute the unemployment rate. If you work as little as 1 hour, whether you collect a paycheck or not, you are considered employed.

In addition to the 6.21 million business owners with no paycheck, factor in those selling trinkets on EBay out of desperation and collecting a few dimes in the process.

Also factor in all those starting multi-level marketing schemes and calling it a business. How many get sucked into that losing proposition every year? Yet, to the BLS, it's a job if you worked any hours.

The ease of starting a business in the US is a great thing. Unfortunately, making money in a small business startup is not so easy.

Historic trends suggest half of small businesses will fail within 5 years, and I highly suspect future trends will be much worse.


TOPICS: Business/Economy; Culture/Society; Editorial
KEYWORDS: bad; nopay; smallbusiness

1 posted on 06/13/2012 2:51:24 PM PDT by Kaslin
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To: Kaslin

Wow, so the CIC is really wrong about the private sector; or was it the economy. Not sure if his teleprompter got either one correct.


2 posted on 06/13/2012 2:55:07 PM PDT by SkyDancer ("Talent Without Ambition Is Sad - Ambition Without Talent Is Worse")
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To: Kaslin

Business is to Obama what Jews were to Hitler.


3 posted on 06/13/2012 2:57:21 PM PDT by gorush (History repeats itself because human nature is static)
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To: Kaslin

But Chairman Maobama said the private sector was “doing just fine”? I’d hate to see how it looked if he ever said it was doing terrible.


4 posted on 06/13/2012 3:00:37 PM PDT by ReformationFan
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To: Kaslin
I just got back, not two hours ago, visiting a friendly competitor. He had not paid himself all year. He's basically giving the business away to a trusted colleague.
5 posted on 06/13/2012 3:02:44 PM PDT by Focault's Pendulum (If Obama was any more thin skinned, he'd have a receptacle end: Dennis Miller)
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To: Kaslin

I hate inconsistency in reporting statistics. It can’t be right can it.

“Notice the success stats on the above graph do not add up. If 44% of new firms survive 4 years, by implication 56% don’t. Yet somehow only 49% fail in 5 years.”

Rearranging a bit this is what the chart says:

44% of new firms SURVIVE four years
49% FAIL within five years
31% SURVIVE at least 7 years

Now, putting it all in the same frame of reference it should say:

44% of new firms SURVIVE four years
100% - 49% = 51% Survive at least five years
31% SURVIVE at least 7 years

Wrong or just new math?


6 posted on 06/13/2012 3:08:02 PM PDT by Sequoyah101 (You've been screwed by your government.)
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To: Kaslin

My wife and I opened a small business shortly after zero got into power. Been looking up at the bottom ever since...


7 posted on 06/13/2012 3:17:15 PM PDT by Dubh_Ghlase (Therefore, send not to know For whom the bell tolls, It tolls for thee.)
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To: Kaslin

As a small business owner, I can identify with all of the above — less pay, more hours, using own money to keep business afloat.


8 posted on 06/13/2012 3:20:18 PM PDT by afraidfortherepublic
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To: afraidfortherepublic

Same here. Built and sold two companies, doing another startup right now. Obama doesn’t have a clue how free enterprise works.


9 posted on 06/13/2012 3:26:29 PM PDT by dinodino
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To: dinodino

When Obama was elected I owned a saltwater fish store. Obama all but killed that market. Hobbies are the first thing to go.

So I went back to my roots. Renewed a few certifications and got back in to the tech sector. The type of work I do is needed regardless of market conditions. When things don’t work, they need to be fixed in the area I specialize in.

I’m turning work down I am so busy.


10 posted on 06/13/2012 3:46:50 PM PDT by cableguymn (If your policies are pushing the economy in to headwinds.. TURN YOUR POLICY AROUND!)
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To: afraidfortherepublic

My business imploded when Dear Reader took office. 2009, 2010, and 2011 were decreasing income, withe total business receipts in 2011 being less than $1000. Yet I am called by Dems as one of the greedy one percenters, not hiring anyone out of pure greed, and sitting on a pile of money like Scrooge McDuck. In 2011 I got out of Minnesota and took a job on the Houston Ship Channel. Small business owners are the kulaks to this Regime.


11 posted on 06/13/2012 3:54:48 PM PDT by Fred Hayek (The Democratic Party is the operational wing of CPUSA.)
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To: Kaslin

bflr


12 posted on 06/13/2012 4:07:12 PM PDT by rockinqsranch (Dems, Libs, Socialists, call 'em what you will, they ALL have fairies livin' in their trees.)
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To: cableguymn

“Hobbies are the first thing to go.”

Anywhere people used to spend discretionary dollars in the “before-times” are getting killed. High-end restaurants, shopping malls, etc. - all getting crushed. Here in northern NJ we have a brand-new mall, completed a couple of years ago (complete with an indoor ski slope) that never opened. It is absolutely creepy; this isn’t a strip mall, but the real deal (right by Giants Stadium in the Meadowlands).


13 posted on 06/13/2012 4:09:36 PM PDT by kearnyirish2
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To: Dubh_Ghlase

Hubby and I own a small HVAC company... no one has money for repairs. Been the worst summer for our business in 10 years.


14 posted on 06/13/2012 4:13:04 PM PDT by backinthefold
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To: Kaslin
The only way to survive this economy as a small business owner was to dramatically cut costs and expenses. You basically needed to do the exact opposite that Obama was recommending. He wanted people to go out and spend as if the economy was not weak. That advice was absolutely horrible.
15 posted on 06/13/2012 4:16:55 PM PDT by justa-hairyape
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To: backinthefold
Hubby and I own a small HVAC company... no one has money for repairs. Been the worst summer for our business in 10 years.

I've needed a new central air for a while, but I've made do with a bedroom window AC and just sweating during the day. Every paycheck might have been my last and I would rather have food and mortgage money in the bank than a working AC.

16 posted on 06/13/2012 4:31:49 PM PDT by KarlInOhio (You only have three billion heartbeats in a lifetime.How many does the government claim as its own?)
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To: dinodino

Ditto.... Business is really slow. This year worse than last. If revenue doesn’t go up, no new hiring. Plain and simple. No matter what incentives given to hire. You can only do without paying yourself so long.


17 posted on 06/13/2012 4:40:03 PM PDT by vicdoc
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To: Kaslin

I have been in small business for 35 years. When the economic catastrophe hit in 2008, I said, “what is so bad here?” They said, “if we do not bail out the banks, this will not be just a Wall St. crisis, it will be a Main St. crisis.”

“How so? tell me more”

“Businesses will not be able to get the credit they need to expand and hire new workers. They will have to lay off people. Their suppliers will go out of business. We must bail out the banks....” they said.

“Oh really? I have been in business 35 years. Sounds like another day at the office. Welcome to MY world.”

The politicians gave the banks their bail outs, every horrible consequence that they predicted would happen if we did NOT bail them out, happened anyway.


18 posted on 06/13/2012 5:09:23 PM PDT by mission9 (It is by the fruit ye shall know.)
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To: justa-hairyape

I went in to a field that is mainly all labor. I did need some basic hand tools and 3 very high end tools. The rest is just me selling my time.

I used sites like slickdeals, craigslist and fatwallet to get the hand tools and ladders. I used e-bay for the high end tools. I got them for 10-20 cents on the dollar from company liquidations.

We are going on our first vacation in 8 years tomorrow. We’re driving not flying, we’re camping not staying in hotels. I got discount coupons for all the attractions we want to go to..

While we are at our destination (grandma’s house) I am doing a 2 day project so I am able to deduct the travel costs and some of the expenses.


19 posted on 06/13/2012 6:33:44 PM PDT by cableguymn (If your policies are pushing the economy in to headwinds.. TURN YOUR POLICY AROUND!)
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To: Kaslin

38 years... two businesses... and this article is the absolute truth... only it paints a rosier picture than the reality of the state of small business in America today.

LLS


20 posted on 06/13/2012 6:53:05 PM PDT by LibLieSlayer (Don't Tread On Me)
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To: mission9

The bailouts were for them, not for thee. Those supporting the bailouts here on FreeRepublic, do not post much anymore.


21 posted on 06/13/2012 7:19:34 PM PDT by justa-hairyape
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To: cableguymn
Vacation ? Have not had one of those in a long time, but my business partner for my small partnership company claims I am always on vacation. Funny guy.

At any rate, good news for you. Have fun. Enjoy life.

Bailed on Kalifornia myself. Living in Texas now with the real people.

22 posted on 06/13/2012 7:28:40 PM PDT by justa-hairyape
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To: KarlInOhio

I had to get a new AC unit this year for reasons of health. I need it to breathe. But I’m not taking a vacation. I’m not replacing the garbage disposal. Everybody I know is cutting costs to the bone.


23 posted on 06/13/2012 9:57:32 PM PDT by Ciexyz
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To: Kaslin; sickoflibs; stephenjohnbanker; NFHale

Tell us how good the private sector is doing Barry.


24 posted on 06/14/2012 1:49:36 AM PDT by Impy (Don't call me red.)
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To: Kaslin; sickoflibs; stephenjohnbanker; NFHale

Though this has always been true, it’s tough running a small bidnezz. But it’s worse now.


25 posted on 06/14/2012 2:09:33 AM PDT by Impy (Don't call me red.)
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To: backinthefold
I own a 2-story with split units. Both coils needed to be replaced, but I only did the upstairs with the idea it would cool the downstairs too until I could get to that. May be next year before the downstairs one.

also planted a garden for the first time in years with hopes to cut the food bill. Yes, it is scary...

26 posted on 06/14/2012 3:52:39 AM PDT by Dubh_Ghlase (Therefore, send not to know For whom the bell tolls, It tolls for thee.)
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To: Dubh_Ghlase

We have a huge garden also, along with chickens and 3 goats to not only mow the yard but supply milk, cheese and butter. Sad, we are also considering a small still come fall to get through the winter months :) Private sector is doing fine, my ass Barry


27 posted on 06/14/2012 7:56:22 AM PDT by backinthefold
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