07 Jan

ADP Jobs Report Shows Why Small Biz Will Be the Innovators Coming out of This Recession

The ADP Small Business Report shows that the job losses among small businesses were steep during December 2008.  Small businesses lost 281.000 jobs during December. 

Note that small businesses have not lost as many jobs as larger companies. As the above chart shows, in December some 693,000 jobs were lost at all company sizes.  Roughly 60% of the job losses were at medium to large businesses (the green line) as compared with job losses in small businesses (the blue line).

This is why I think small businesses have a good shot at getting ahead during this slow economic period compared with their larger brethren (assuming they have the free cash flows to get through it). 

The big companies are reeling from job losses and expense reductions.  Positions are being cut and corporate employees are distracted and fearful they will be next.  Employees will be afraid to step out of line and takes risks on anything unproven or new in that kind of environment.

The money is no longer as free flowing in larger businesses for skunk-works projects and new innovation.  If something doesn’t hold the promise of near term ROI … managers certainly aren’t going to devote their already reduced budgets to it.  A perfect example of this is Google, which in the past was known for its employees having time to work on pet projects –well, not so much anymore.

For purposes of the report ADP defines small businesses as having fewer than 50 employees.  ADP’s data is based on about 400,000 businesses (of all sizes) covering 24 million employees.  It’s not full data on the entire workforce, but it is a significant sampling and therefore I put stock in the numbers.

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  1. Arthur Bland said on January 8th, 2009 at 2:31 am

    It is only justifiable, Anita. Larger companies have obviously larger number of jobs than small businesses have. Obviously, in times like this — it will be them who will really have that larger number of lost jobs. What do you think?

    Reply
  2. Amanda said on January 8th, 2009 at 11:11 am

    Wow, that is a lot of jobs lost when you combine the two totals. What a bummer during the holidays. You’re right though, employees will be only doing what they need to do to get by. Staying in line and flying under the radar until things get better.

    Reply
  3. Arthur Bland said on January 8th, 2009 at 11:23 pm

    Staying in line and flying under the radar until things get better. — Do we have the choice not to do it, Amanda?

    Reply
  4. susan kuhn frost said on January 12th, 2009 at 7:58 pm

    Actually I believe small companies employ more people than do large companies on the whole. And of course there are also the incomes from self-employment where there is no “employee” per se.

    Both large and small companies are getting hammered, and I place my bets with entrepreneurial companies of all sizes.

    This is a critical time to be an entrepreneur: To go out and find opportunities to use what your do well to help others, and to use the downtime to become a better company so that you will be first in line to benefit in the recovery.

    Entrepreneurs will try and try again to find what workd. And that process — not government stimulus jobs — is what will ultimately power us out of recession and create jobs.

    Reply
  5. [...] The big companies are reeling from job losses and expense reductions.  Positions are being cut and corporate employees are distracted and fearful they will be next.  Employees will be afraid to step out of line and takes risks on anything unproven or new in that kind of environment. Read More [...]

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