Newspaper article St Louis Post-Dispatch (MO)

Small Firms Top the Growth Chart

Newspaper article St Louis Post-Dispatch (MO)

Small Firms Top the Growth Chart

Article excerpt

Small, young companies that sought growth regardless of the economic climate produced the most jobs in the United States over the last several years while large, older companies shrank, according to a new study.

That trend is likely to continue, creating opportunities for new businesses and jobs for the bulk of the new workers in the American economy.

The study by Cognetics Inc., a Cambridge, Mass., small-business research group, confirmed the headlines that have become commonplace over the last few years - big business is on balance cutting back jobs. But it highlights a second element that the headlines may be missing - that the lion's share of job growth over the last few years is coming from small, growing companies, regardless of the economy's overall strength. The study could be instructive for small businesses in a number of ways. First off, don't transpose grim headlines to your own business. If the economy is doing badly, it may actually be more advantageous for a small and nimble company. Secondly, just because small companies have the fastest growth and create the bulk of new jobs doesn't mean that a small business will automatically be part of that group - indeed, the study says most small businesses don't grow. You have to aim for growth to become one of the economic engines. The study clearly shows where job growth has originated over the last several years. Contrasting the smallest companies with the biggest over the period, the results are startling. Companies with one to four workers created 3.8 million more jobs than they eliminated in 1991-1995, the study said. But the giants, companies with more than 5,000 workers, eliminated 3.4 million more jobs than they created. The study points out that this occurred in a recovery period from the last recession, and is fairly typical. In hard economic times, small firms tend to dominate in growth. But even when the economy is expanding, they tend to outpace larger companies, creating two out of every three jobs, the study said. …

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