Two Years Later, Small Business Economy Finally Improving

Skye Leist
July 04, 2011

The Great Recession officially ended two years ago. But the recovery has been weak and uneven, with large corporations benefiting much more than small businesses.

This is continues to be the case. Stock market analysts are forecasting S&P 500 companies, on average, will see earningsgrowth of 17% in 2011 and 14% in 2012.

A major driver is exposure to faster growing international markets. Key quote from the Motley Fools article The Earnings Boom:

“Ten years ago, less than a third of S&P revenue came from overseas. Today its nearly half and growing.”

Most small businesses dont directly benefit from overseas markets, but the domestic economy has recovered enough that they are starting to see revenue growth.

The chart below is from the Forbes article The State of Small Business. The data comes from Sageworks, a company that collects financial data on small businesses.

Their data shows how bad things were for small businesses in 2009 and 2010, but also how much business is improving.We think this trend will continue for the rest of 2011.

Many of economic headwinds – higher oil prices and commodity prices, global debt problems, etc. – weve faced in the 1st half of 2011 are easing. This should lead to moderate U.S. economic growth in 2nd half of 2011.

Dont get me wrong – with unemployment over 9% and job creation anemic were not suggesting a strong 2nd half. But small business survivors of the recession are leaner and meaner, and well positioned to take advantage of moderate economic growth.

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