Small Business Job Act may not be helping with business formation

| Feb 14, 2014 | Business Formation & Planning

It was thought that the 2010 signing of the Small Business Job Act would make things easier for small mom-and-pop businesses, but it appears that might not be the case. The problem lies in what is considered a small business or start-up. Many financial institutions, funding agencies and government programs are defining a start-up as a company that has already been in business for one or two years, not a business that is newly formed. Also, a small business is defined as a business that has at least 100 employees — far more than what many mom-and-pop companies have — and up to $2.5 million a year in receipts.

The number of small businesses in 2006 that met those requirements was only 90,560, according to the U.S. Census businesses and nonemployer statistics. On the other hand, 97 percent of business owners are considered to be running micro businesses and are arguably the ones most in need of government support.

Some believe that a shift toward funding these micro businesses could have a positive effect on the economy because the more money a company has, the more people it can hire, creating both jobs and consumers in the process. At least one Massachusetts organization is taking the initiative to help these micro businesses and mom-and-pop operations. The Massachusetts Latino Chamber of Commerce provides educational workshops and training, as well as access to capital funding, for start-ups and other micro businesses.

Business formation often involves more than owners are expecting, including finding investors, obtaining licensing and making large purchases of property or equipment. Before starting a business or looking at business reorganization, current and prospective business owners may benefit from discussing their situations with someone who can help them understand and navigate the various laws and opportunities.

Source: MassLive.com, “Outlook 2014: Mom-and-pop businesses need help to bolster economy” Carlos Gonzalez, Feb. 07, 2014