Despite the troubling economic times, small businesses are still hiring.

What’s happening right now in the small business economy is puzzling.

The small business economy is defying gravity. Despite the economic downturn, small businesses are hiring.

Yet, despite the odds against them, the SurePayroll Small Business Scorecard data shows definitively that small businesses have been increasing their payrolls.

There are three key factors that are making it possible for businesses to grow:

First and foremost, small business salaries are down. It costs less today to buy an employee than it did one month ago. For those small businesses that have business and need to grow, it’s a buyer’s market.

Second, economic pain is industry-specific. Luxury goods companies, home construction businesses, and five-star restaurants are seeing fewer customers walking in the door. But other verticals are doing just fine, thank you. Companies that export, for example, are benefiting from a very weak dollar. Businesses that focus on repairing goods (car, etc.) or that sell used goods are seeing business increase dramatically, as customers push off purchasing new replacement goods. As cash tightens, payday loan companies and legal funding companies are seeing high volumes of business. Long story short, there are pockets of recession and there are pockets of growth. It all depends on what you do for a living.

Third, small businesses are an economic complement for large business spending. When large businesses cut back on expenses or layoff employees, they often fill the gap by outsourcing more work to small businesses. Alternatively, they stop doing business with other large businesses and look for cheaper equivalents in the small business economy. So, counterintuitively to some extent, when large businesses suffer, it can actually help small businesses to grow.

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This entry was posted on Thursday, April 3rd, 2008 at 9:50 am and is filed under From The Street. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.