SBA: Avoid negative cycles, find success

The cycles of growth and decline that small businesses experience tend to persist and are not easy to reverse, according to a study the Small Business Administration’s Office of Advocacy released today.

“We know that, overall, small business is a dynamic sector of the economy,” said Chad Moutray, chief economist at the SBA Office of Advocacy. He said the study shows that firms that grow and decline tend to stay in that mode over time. “Consequently, policies that affect growth or decline can have an impact on small businesses over a longer term than originally anticipated,” he said.

The study, “Volatility and Asymmetry of Small Firm Growth Rates Over Increasing Time Frames,” was written by Rich Perline, Robert Axtel and Daniel Teitelbaum of NuTech Solutions, with funding from the Office of Advocacy.

“Successful small companies -- including those on their way to becoming midsize or larger firms -- must have a way to grow steadily and avoid negative growth episodes," the study found.

SBA said the new report is a follow-up to a 2005 study that examined growth rates by company size and industry type. The current study examined growth rates from a five-year period, using special tabulations of the Census Bureau’s Business File dataset.

About the Author

David Hubler is the former print managing editor for GCN and senior editor for Washington Technology. He is freelance writer living in Annandale, Va.

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