In February, the United States witnessed the creation of 275,000 new jobs, a development that underscores the nation’s ongoing economic expansion and boosts optimism for achieving a gentle economic downturn. However, this figure doesn’t capture the entire narrative.
Recent insights from Intuit reveal a concerning trend among the smallest businesses—those with nine or fewer employees, which represent 13 million jobs across the country. In the last month, this critical segment experienced a reduction in workforce numbers, with over 23,000 jobs being cut. This highlights the urgent need for targeted support towards this vital sector of the economy.
Navigating the small business landscape is fraught with challenges. Statistics indicate that approximately 50% of new small businesses do not survive beyond five years. Despite these daunting odds, small business owners are driven by a sense of pride, passion, and commitment to their visions, problem-solving, and customer service. Yet, they often feel overlooked and unsupported in their endeavors.
A significant part of the struggle for small businesses is their invisibility to policymakers. Economic reports and government data, including the recent job figures, fail to provide a detailed and timely snapshot of businesses with fewer than 10 employees. Moreover, the available government data on small businesses is outdated by six to nine months, leaving policymakers without an accurate and current understanding of small business health.
To bridge this information gap, Intuit collaborated with a team of economists led by Ufuk Akcigit from the University of Chicago to introduce the Intuit QuickBooks Small Business Index. This index leverages data from over 330,000 Intuit QuickBooks customers, adjusted against official government figures, to offer fresh and relevant insights that mirror the broader small business landscape.
The goal of this new, comprehensive data is to equip policymakers with the knowledge needed to make informed decisions that address the unique challenges faced by small businesses. Despite the strength of the overall economy, the index reveals that the small business sector is not faring as well, with ongoing struggles against inflation and high interest rates. The index has shown a slowdown in small business employment growth and an uptick in financial pressures.
Moreover, the index points to a concerning trend: an increase in business credit card usage among small business owners, driven by the need for financing and exacerbated by rising interest rates. This has led many to dip into personal savings to manage credit card debt, with 76% of small business owners reporting the use of 30% or more of their credit limit.
The challenges don’t stop there. Rising home prices add another layer of difficulty, making it harder for small businesses to compete with larger entities, grow, and create jobs. This situation should alarm lawmakers, as small businesses are crucial for employment and innovation nationwide. Without focused attention, we risk witnessing a decline in business dynamism with significant long-term implications.
To support small businesses in this challenging environment, several key measures are proposed, including providing access to digital tools through the Small Business Technological Advancement Act, enabling small businesses to leverage artificial intelligence via a new institute as outlined in a White House executive order, and facilitating access to credit by preserving bank-fintech partnerships.
Despite the polarized climate, small businesses enjoy widespread support among Americans, with over 90% holding a favorable view of small business owners. By making decisions informed by real-time challenges faced by small businesses, policymakers can help these enterprises thrive, contributing to job creation and economic growth.
Sasan Goodarzi, CEO of Intuit, emphasizes the importance of supporting small businesses. As the leader of a global financial technology platform providing essential tools like QuickBooks, Mailchimp, TurboTax, and Credit Karma, Goodarzi advocates for policies that enable small businesses to overcome obstacles and succeed in today’s economy.