state of small business report fall 2011 · state of small business report fall 2011 by dr. john k....
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S TAT E O F S M A L L B U S I N E S S R E P O R T F A L L 2 0 11
By Dr. John K. PagliaDenney Academic Chair and Associate Professor of Finance
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PEPPERDINE PRIVATE CAPITAL MARKETS PROJECT | STATE OF SMALL BUSINESS REPORT – FALL 2011
© 2011 | PEPPERDINE UNIVERSITY GRAZIADIO SCHOOL OF BUSINESS AND MANAGEMENT. All Rights Reserved. | 1
TABLE OF CONTENTS
PEPPERDINE PRIVATE CAPITAL MARKETS PROJECT ............................................................................................. 3
ACKNOWLEDGEMENTS ...................................................................................................................................... 3
FOREWORD ....................................................................................................................................................... 5
STATE OF SMALL BUSINESS ................................................................................................................................ 7
Profile of Respondents .......................................................................................................................... 7
National Survey Findings...................................................................................................................... 13
State‐by‐State Survey Findings ............................................................................................................. 42
ABOUT THE AUTHOR ......................................................................................................................................... 44
INDEX OF TABLES .............................................................................................................................................. 46
INDEX OF FIGURES ............................................................................................................................................ 46
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For more information, visit:
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NOVEMBER 14-16, 2011andAPRIL 18-20, 2012
The Certificate in Private Capital Markets (CIPCM) is a 3-day curriculum-
based training program developed by Dr. John Paglia in association with
his ground-breaking research, Pepperdine Private Capital Market Project.
PEPPERDINE PRIVATE CAPITAL MARKETS PROJECT | STATE OF SMALL BUSINESS REPORT – FALL 2011
© 2011 | PEPPERDINE UNIVERSITY GRAZIADIO SCHOOL OF BUSINESS AND MANAGEMENT. All Rights Reserved. | 3
PEPPERDINE PRIVATE CAPITAL MARKETS PROJECT
Senior Researcher JOHN PAGLIA, PhD, MBA, CPA, CFA
Research Support
IRINA SHAYKHUTDINOVA, MBA
Executive Officer MICHAEL SIMS
Advisor to Project RACHEL WILLIAMS
Public Relations F. DOUGLASS GORE KP PUBLIC AFFAIRS
Design
R&R PARTNERS
ACKNOWLEDGEMENTS
This research was made possible by the generous funding from the Denney Endowed Professorship.
PEPPERDINE UNIVERSITY
Dean Linda A. Livingstone, PhD Associate Dean David M. Smith, PhD
Mark W. S. Chun, PhD, Director, Center for Applied Research Dianne King
Michael Stamper Darlene Kiloglu Roger Lotho
Juan Mena Jing Zhang Doris Jones
DUN & BRADSTREET CREDIBILITY CORP.
Jeffrey Stibel, Chair and Chief Executive Officer Aaron Stibel, Senior Vice President, Technology
Judy Hackett, Chief Marketing Officer Erik Simon Brenda Gary
PEPPERDINE PRIVATE CAPITAL MARKETS PROJECT | STATE OF SMALL BUSINESS REPORT – FALL 2011
© 2011 | PEPPERDINE UNIVERSITY GRAZIADIO SCHOOL OF BUSINESS AND MANAGEMENT. All Rights Reserved. | 4
SURVEY DESIGN, DISTRIBUTION, AND OTHER SUPPORT
Robert T. Slee Michael McGregor
Tim Rhine Barry D. Yelton Everett Walker Samir Desai
Richard J. Crosby
Leonard Lanzi
Gray DeFevere Jan Hanssen
Robert Zielinski Kevin D. Cantrell
Scott Jones Deidre A. Brennan
Eric Nath Gunther Hofmann Michael Painter
James A. Nelson, MD John Davis Larry Gilson
Andrew Springer Jeri Harmon
Letitia Green Gloria Guenther Steven Brandt Dat T. Do
Andy Wilson Yingping Huang Jason Baum Jason Kumpf Hal Spice Jane Pak
Ralph Adams Eric Williams Dan Deeney John Graham Jeff Nagle
Greg Howath
Nevena Orbach
John Dmohowski Brad Triebsch Gary W. Clark
M. Todd Stemler Patrick George
Sean Samet Mark Walker Kelly Szejko Kevin Halpin
Andre Suskavcevic Chris M. Miller Brian Cove
Jeff Thomas
John Lonergan
Rob Brougham
Brett Palmer
Gary LaBranche
Jamie Schneier
Troy Fukumoto
Dennis Gano
Linh Xavier Vuong
Chris de Vries
Tucker Herring
Michael Nall
Simon James, PhD
PEPPERDINE PRIVATE CAPITAL MARKETS PROJECT | STATE OF SMALL BUSINESS REPORT – FALL 2011
© 2011 | PEPPERDINE UNIVERSITY GRAZIADIO SCHOOL OF BUSINESS AND MANAGEMENT. All Rights Reserved. | 5
FOREWORD
Too Small To Borrow
By JOHN PAGLIA
October 3, 2011 marked the three year anniversary of President George W. Bush signing into law the
Troubled Asset Relief Program (TARP) which authorized the U.S. Government to purchase assets and equity from
financial institutions to strengthen the financial sector. In addition to stabilizing the market and protecting
taxpayers, the program also aimed to encourage lending to resume to levels before the financial crisis. While the
program has been helpful over the short‐term in helping financial institutions, the major criticism of government
stimulus efforts is that they have done little to make credit available especially for small businesses.
Since the passage of TARP additional steps have been taken to help small businesses. President Obama
highlighted the importance of small businesses in the United States when he signed the Small Business Jobs Act in
September 2010; “Now this is important because small businesses produce most of the new jobs in this
country. They are the anchors of our Main Streets. They are part of the promise of America – the idea that if
you’ve got a dream and you’re willing to work hard, you can succeed. That’s what leads a worker to leave a job to
become her own boss. That’s what propels a basement inventor to sell a new product – or an amateur chef to
open a restaurant. It’s this promise that has drawn millions to our shores and made our economy the envy of the
world.”
The President’s points are spot on, yet the small business economy continues to sputter. Small businesses
are not only the anchor on Main Street, but they are also the anchor of our economy. According to the Small
Business Administration, small businesses represent 99.7% of all employer firms and employ more than half of
private sector employees in the US. They also serve as the major job creation force in our nation. In fact, over the
past 15 years small businesses have generated 64 percent of the net new job growth. In terms of Gross Domestic
Product, small businesses create more than half of the nation’s nonfarm GDP.
The Pepperdine Private Capital Markets Project State of Small Business Report gives capital providers and
policymakers a unique look at how small businesses are faring. A comprehensive solution to our economic crisis
must include input from small businesses as well as members of the private capital community.
PEPPERDINE PRIVATE CAPITAL MARKETS PROJECT | STATE OF SMALL BUSINESS REPORT – FALL 2011
© 2011 | PEPPERDINE UNIVERSITY GRAZIADIO SCHOOL OF BUSINESS AND MANAGEMENT. All Rights Reserved. | 6
Key findings from the report include:
1. Overall business conditions are declining and not expected to improve: The Fall 2010 report indicated
that nearly 42% of privately held businesses owners reported that economic conditions improved over the
previous six months. While that number increased in the Spring 2011 report to 51%, the Fall 2011 report
has shown a strong drop‐off of in the number of businesses ‐‐ only 19% of respondents ‐‐ who say
business conditions improved over the previous six months. Looking ahead, just 29% expect an
improvement in business conditions over the next twelve months versus 25% who expect a continued
deterioration.
2. There is an aspiration to hire: The Fall 2011 survey of more than 10,600 small businesses nationwide
indicated that 44% of respondents plan to hire in the next six months. Of those that do plan to hire, sales
and marketing skills are in greatest demand (47.8%) followed by skilled labor (41.6%) and
service/customer service (38.8%).
3. Economic uncertainty biggest impediment to growth: Nearly 38% of respondents believe that economic
uncertainty is the largest inhibitor to growth. 26% of respondents said access to capital and 25% said that
government regulations and taxes are the number one issue facing small businesses.
4. Improving access to capital will help create jobs: Companies with less than $5 million in revenue were
clear in the Pepperdine study that of those policies most likely to lead to job creation in 2012, “increased
access to capital” was number one (36.0%) followed by “tax incentives” (22.5%), and “regulatory reform”
(17.8%). 47.2% of respondents said access to bank loans declined from six months ago versus 10.3% who
say it increased.
5. Businesses that are looking to hire believe training is needed: Of the privately‐held businesses that are
looking to hire, 48% indicate that sales and marketing skills are their primary focus while 42% of
respondents are looking for skilled labor 82% of respondents believe that they will need to train those
they hire.
The current policy response to the Great Recession and tumultuous global economy is vitally important to the
success of small businesses and our nation. Through the Pepperdine Private Capital Markets Project State of Small
Business Report we gained important insight that will facilitate improved communication between small business
owners, capital providers and policy makers. We hope that this information will underscore the importance of
privately‐held businesses in America’s economy and will help guide future economic policy.
PEPPERDINE PRIVATE CAPITAL MARKETS PROJECT | STATE OF SMALL BUSINESS REPORT – FALL 2011
© 2011 | PEPPERDINE UNIVERSITY GRAZIADIO SCHOOL OF BUSINESS AND MANAGEMENT. All Rights Reserved. | 7
STATE OF SMALL BUSINESS
Of the 10,637 privately‐held businesses that responded to the survey, 24% had businesses that involved customer goods and services, 21% were in the manufacturing, construction and engineering industry, and 17% were in wholesale and distribution. Approximately 62% of businesses have annual revenues less than $1 million. Nearly 91% of business owners report having the enthusiasm to execute growth strategies, yet just 49% report having the necessary financial resources to successfully execute growth strategies. Other findings include: Nearly 35% of respondents tried to raise outside funding in the last 12 months. Of the respondents who were seeking financing in the last 12 months, approximately 54% anticipated to raise less than $100,000 in capital. Approximately 53% of respondents reported that they were seeking bank loans or credit card financing as a source of funding, followed by friends and family (16%). Of all financing options, bank loans emerged as the financing source with highest “willingness” for small business to use (72%), followed by angel financing (35%) and asset based lending (33%). However, results also showed that of 2,595 small businesses that sought bank loans over the past 12 months, just 50% were successful. Survey results indicated that business owners who raised capital on average contacted two banks and invested close to seven full days for the process to successfully obtain financing. Nearly half of small businesses (44%) are planning to hire additional workers. Approximately 60% of respondents indicated the American Jobs Act will not change their hiring plans for the next 12 months. According to respondents employer tax credits and payroll tax cuts are the most likely provisions of the American Jobs act to have influence on plans to hire in the next twelve months. Nearly 38% of respondents believe economic uncertainty is the number one issue small businesses face today, followed by access to capital (26%), and government regulations and taxes (25%). According to small businesses, of those policies most likely to lead to job creation in 2012, “increased access to capital” emerged as number one (34%) followed by tax incentives (24%), and regulatory reform (19%). The study showed that of those that do plan to hire, sales and marketing skills are in greatest demand (48%) followed by skilled labor (42%) and service/customer service (38%). Also, 82% of companies planning to hire indicate they’d need to train those they hire. Only 19% of respondents believe that general business conditions improved in the last six months compared to 51% surveyed in February/March 2011.
Profile of Respondents
The privately‐held business survey results were generated from 10,637 participants. The locations of businesses are distributed over all regions of the United States.
Figure 1. Respondents Distribution by State
less than or equal to 5051 - 100101 - 200201 - 300301 - 400401 - 500501 - 1000more than 1000
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OR
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T – FALL 2011
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EPPERDINE UNIVE
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2.5
T – FALL 2011
ts Reserved. | 16
on
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1.3
T – FALL 2011
ts Reserved. | 17
Than $1 Mill
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45 3422.5
T – FALL 2011
ts Reserved. | 18
r Than $10 M
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6 53 2
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% 40%
T – FALL 2011
ts Reserved. | 19
ng (time spent brs, furnishing
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of privately‐heldternal financingwhose revenue
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DINE PRIVATE CA
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ted “My businemonths, wherear higher.
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ed “My Businital in the Las
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% 12%
T – FALL 2011
ts Reserved. | 20
ess didn’t have as for privately‐h
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2.9
T – FALL 2011
ts Reserved. | 21
ancing, whereas
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nancing, Rev
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USINESS REPORT
GEMENT. All Right
1 Million - $5
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2.7
2.5
T – FALL 2011
ts Reserved. | 22
5 Million
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2.4
T – FALL 2011
ts Reserved. | 23
25 Million
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© 2011 | P
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USINESS REPORT
GEMENT. All Right
0 Million - $10
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2.4
2.5
T – FALL 2011
ts Reserved. | 24
00 Million
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ncing, Reven
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ATE OF SMALL B
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USINESS REPORT
GEMENT. All Right
eater Than $5
ucts or services
Revenue Size
2.7
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aising financingecuring capita
T – FALL 2011
ts Reserved. | 25
500 Million
as the area the
es
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Fi
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0%
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PEPPERD
© 2011 | P
igure 50. The
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DINE PRIVATE CA
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rtant Area to
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e Less Than
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e $5 Million -
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T – FALL 2011
ts Reserved. | 26
n $1 Million
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6%
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DINE PRIVATE CA
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$10 Million -
$25 Million -
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4%
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T – FALL 2011
ts Reserved. | 27
- $25 Million
- $50 Million
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3%
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ure 56. The M
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planning to hire
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ocus On, Rev
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additional wor
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%
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xt Six Month
n are planning t
6%
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Yes
No
Don't kn
T – FALL 2011
ts Reserved. | 28
- $500 Million
n $500 Million
hs
to hire addition
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g/l
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Figure
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DINE PRIVATE CA
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umber One R
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million ‐0 million
$10 m$25 m
0%
Other
partners
certainty
nflation
mployees
o capital
nd taxes
pending)
omestic)
1
0%
Other
partners
certainty
nflation
mployees
nd taxes
o capital
pending)
omestic)
S PROJECT | STA
O SCHOOL OF BUSI
onal Workers
ncertainty in thregulation and t
venting Privavenue Sizes
eventing Prive Less Than
1%72
million ‐million
$25 m$50 m
1%
3%
3%
9
5% 10
1%
3%
3%
5%
ATE OF SMALL B
NESS AND MANAG
s by Annual R
e U.S. market itaxes (20%).
ately-Held Bu
vately-Held B$1 Million
2% 72%
illion ‐million
$50 mil$100 m
15%
9%
15%
15%
0% 15%
14
8%
12%
14
10% 15%
USINESS REPORT
GEMENT. All Right
Revenues Si
s the number o
usinesses fro
Businesses f
% 75%
lion ‐million
$100 mil‐ $500millio
%
%
20%
20% 25%
4%
4%
17%
% 20%
T – FALL 2011
ts Reserved. | 29
izes
one reason
om Hiring, A
from Hiring,
78%
llion0n
Greater th$500 milli
3
% 30% 3
27%
25% 3
ll
hanion
33%
35%
%
30%
Fig
Fig
Fig
Competi
Con
Economic
Competi
Con
Economic
Competi
Con
Economic
PEPPERD
© 2011 | P
gure 62. The N
gure 63. The N
gure 64. The N
itiveness with f
International
Ability to fin
Government
nsumer/Busine
c uncertainty/c
itiveness with f
International
Ability to fin
Government
nsumer/Busine
c uncertainty/c
itiveness with f
International
Ability to fin
Government
nsumer/Busine
c uncertainty/c
DINE PRIVATE CA
EPPERDINE UNIVE
Number OneR
Number OneRe
Number OneRe
foreign trade p
economic unc
I
d qualified em
Access to
t regulations an
ess demand (sp
confidence (do
I
foreign trade p
economic unc
Access to
d qualified em
t regulations an
ess demand (sp
confidence (do
foreign trade p
economic unc
I
d qualified em
Access to
t regulations an
ess demand (sp
confidence (do
APITAL MARKETS
ERSITY GRAZIADIO
e Reason PreRevenue Size
e Reason Preevenue Size
e Reason Preevenue Size $
1
0%
Other
partners
certainty
nflation
mployees
o capital
nd taxes
pending)
omestic)
1
0%
Other
nflation
partners
certainty
o capital
mployees
nd taxes
pending)
omestic)
1
0%
Other
partners
certainty
nflation
mployees
o capital
nd taxes
pending)
omestic)
S PROJECT | STA
O SCHOOL OF BUSI
eventing Prive $1 Million -
eventing Priv$5 Million - $
eventing Priv$10 Million -
1%
3%
3%
8%
5% 10
1%
2%
3%
6%
8%
5% 10%
8%
1%
3%
3%
6%
8%
5% 10%
ATE OF SMALL B
NESS AND MANAG
vately-Held B$5 Million
vately-Held B$10 Million
vately-Held B$25 Million
10%
%
10%
15%
0% 15%
13%
16%
16%
15% 20%
17%
1
15% 20%
USINESS REPORT
GEMENT. All Right
Businesses f
Businesses f
Businesses f
%
19%
20% 25%
% 25% 30
9%
% 25% 30
T – FALL 2011
ts Reserved. | 30
from Hiring,
from Hiring,
from Hiring,
31%
% 30% 3
35%
0% 35% 4
34%
0% 35% 4
%
35%
40%
40%
Fig
Fig
Fig
Con
Economic
Competi
Con
Economic
Competi
Con
Economic
PEPPERD
© 2011 | P
gure 65. The N
gure 66. The N
gure 67. The N
International
Ability to fin
Government
nsumer/Busine
c uncertainty/c
Ability to fin
itiveness with f
Government
nsumer/Busine
c uncertainty/c
itiveness with f
Ability to fin
International
Government
nsumer/Busine
c uncertainty/c
DINE PRIVATE CA
EPPERDINE UNIVE
Number OneRe
Number OneRev
Number OneRev
I
economic unc
Access to
d qualified em
t regulations an
ess demand (sp
confidence (do
d qualified em
foreign trade p
Access to
t regulations an
ess demand (sp
confidence (do
I
foreign trade p
Access to
d qualified em
economic unc
t regulations an
ess demand (sp
confidence (do
APITAL MARKETS
ERSITY GRAZIADIO
e Reason Preevenue Size $
e Reason Prevenue Size $
e Reason Prevenue Size $1
0%
Other
nflation
certainty
o capital
mployees
nd taxes
pending)
omestic)
0%
Other
mployees
partners
o capital
nd taxes
pending)
omestic)
0%
Other
nflation
partners
o capital
mployees
certainty
nd taxes
pending)
omestic)
S PROJECT | STA
O SCHOOL OF BUSI
eventing Priv$25 Million -
eventing Priv$50 Million - $
eventing Priv100 Million -
5%
3%
5%
7%
8%
5% 10%
2%
2%
7%
5% 10
3%
6%
6%
6%
3%
5%
ATE OF SMALL B
NESS AND MANAG
vately-Held B$50 Million
vately-Held B$100 Million
vately-Held B$500 Million
15%
16%
15% 20%
0% 15%
%
%
%
10%
USINESS REPORT
GEMENT. All Right
Businesses f
Businesses f
Businesses fn
25% 30% 3
20%
18%
18%
20% 25%
14%
17%
17%
15%
T – FALL 2011
ts Reserved. | 31
from Hiring,
from Hiring,
from Hiring,
40%
35% 40% 4
3
% 30% 3
%
%
23
20% 2
%
45%
33%
35%
3%
25%
Among thosix months
Privately‐heemployees planning to
For those blabor (42%)
0%
10%
20%
30%
40%
50%
010203040
50607080
Lessm
Finance/f
InSer
PEPPERD
© 2011 | P
ose respondents.
eld businesses win the next six
o hire 73 additio
Figure 69. A
businesses who ) and service/cu
46%
1 ‐2
5
s than $1million
$1 m$5 m
Global bHuman re
UnskilleEntrepren
financial manaMana
nformation tecrvice/customer
SkilleSales and ma
DINE PRIVATE CA
EPPERDINE UNIVE
s who do expec
Figure 68.
with annual revmonths, whereonal employees
Amount of Em
do plan to hireustomer service
Figure
31%
1
3‐5 6
51
million ‐million
$5 m$10 m
0%
Otherbusinessesourcesed laborneurshipagementagementhnologyr serviceed laborarketing
APITAL MARKETS
ERSITY GRAZIADIO
ct to hire, 46% a
Amount of E
venues less thaeas privately‐hes on average.
mployees Pla
e, sales and mare (38%).
70. The Skill
11%5
6‐10 11
10 1
million ‐million
$10 m$25 m
15%7%
10%
S PROJECT | STA
O SCHOOL OF BUSI
are planning to
Employees P
n $1 million on eld businesses w
anned to be H
rketing skills are
ls in Demand
5% 3%
1‐20 21‐
321
illion ‐million
$25 mil$50 mi
2%
13%15%
18%22%
20%
ATE OF SMALL B
NESS AND MANAG
hire one or two
Planned to be
average are plwhose revenues
Hired by Ann
e in greatest de
d for New Hi
% 1%
‐50 51‐10
1 21
llion ‐illion
$50 mill$100 mi
%25%
30%
USINESS REPORT
GEMENT. All Right
o additional em
e Hired
anning to hire fs are higher tha
nual Revenu
emand (48%) fo
ires
% 1%
00 Greater t100
31
ion ‐illion
$100 mil‐ $500million
38%42%
40%
T – FALL 2011
ts Reserved. | 32
mployees in the
five additional an $500 million
ues Sizes
ollowed by skille
2%
than Unknow
73
lion0n
Greater th$500 milli
48%
50% 6
next
are
ed
n
hanion
60%
82.0% of bu
According temerged as
Figure
Greater
$100 mil
$50 mil
$25 m
$10 m
$5 m
$1 m
Le
PEPPERD
© 2011 | P
usiness plannin
to respondents s number one (
e 73. “Increas
19%
12%8%
4%
than $500 mil
lion ‐ $500 mil
lion ‐ $100 mil
illion ‐ $50 mil
illion ‐ $25 mil
illion ‐ $10 mil
million ‐ $5 mil
ess than $1 mil
DINE PRIVATE CA
EPPERDINE UNIVE
g to hire indica
Figu
of those policie34%) followed
Figure 72. G
sed Access
18%
34
24%
0%
lion
lion
lion
lion
lion
lion
lion
lion
APITAL MARKETS
ERSITY GRAZIADIO
te they would n
ure 71. Need f
es most likely toby tax incentive
Government
to Capital” PRev
82%
4%
5% 10%
S PROJECT | STA
O SCHOOL OF BUSI
need to train th
for Training
o lead to job cres (24%), and re
Policies to L
Policy to Leavenue Sizes
Increased
Tax incen
Regulator
Other
Increased
Education
17
15%
15%
ATE OF SMALL B
NESS AND MANAG
hose they hire.
of New Hires
reation in 2012,egulatory refor
Lead to Job C
ad to Job Cre
d access to cap
tives
ry reform
d competitiven
n reform
7%
20%
22%
23%
20% 25%
USINESS REPORT
GEMENT. All Right
s
, “increased accrm (19%).
Creation
eation, Opini
Yes
No
ital
ness with foreig
%
29%
30%
% 30%
T – FALL 2011
ts Reserved. | 33
cess to capital”
ions by Annu
gn trade partne
38
35% 40
ual
ers
8%
0%
Figure
Figure
Figur
Greater
$100 mil
$50 mil
$25 m
$10 m
$5 m
$1 m
Le
Greater
$100 mil
$50 mil
$25 m
$10 m
$5 m
$1 m
Le
Greater
$100 mil
$50 mil
$25 m
$10 m
$5 m
$1 m
Le
PEPPERD
© 2011 | P
74. “Tax Inc
e 75. “Regula
re 76. “Increa
than $500 mil
lion ‐ $500 mil
lion ‐ $100 mil
illion ‐ $50 mil
illion ‐ $25 mil
illion ‐ $10 mil
million ‐ $5 mil
ess than $1 mil
than $500 mil
lion ‐ $500 mil
lion ‐ $100 mil
illion ‐ $50 mil
illion ‐ $25 mil
illion ‐ $10 mil
million ‐ $5 mil
ess than $1 mil
than $500 mil
lion ‐ $500 mil
lion ‐ $100 mil
illion ‐ $50 mil
illion ‐ $25 mil
illion ‐ $10 mil
million ‐ $5 mil
ess than $1 mil
DINE PRIVATE CA
EPPERDINE UNIVE
entives” Pol
atory Reform
ased CompeCreatio
0%
lion
lion
lion
lion
lion
lion
lion
lion
0%
lion
lion
lion
lion
lion
lion
lion
lion
0% 2
lion
lion
lion
lion
lion
lion
lion
lion
APITAL MARKETS
ERSITY GRAZIADIO
licy to Lead t
m” to Lead to
etitiveness won, Opinions
5% 10%
5% 10%
2% 4%
S PROJECT | STA
O SCHOOL OF BUSI
to Job Creati
o Job Creatio
with Foreign Ts by Annual R
15%
11%
17
15%
8
6% 8%
ATE OF SMALL B
NESS AND MANAG
tion, Opinion
on, Opinions
Trade PartneRevenue Siz
21%
21%
20% 25%
23%
21%
21%
7%
20% 25%
9%
8%
10%
9%
8%
8%
% 10%
USINESS REPORT
GEMENT. All Right
ns by Annual
s by Annual R
ers” Policy tozes
28%
30%
29%
27%
% 30%
25%
26%
%
% 30%
12%
12% 14%
T – FALL 2011
ts Reserved. | 34
l Revenue Siz
Revenue Size
o Lead to Jo
33%
36%
35% 40
34%
35% 40
17%
16% 18
izes
es
b
0%
0%
%
8%
Figur
Approximamonths.
Fig
Greater
$100 mil
$50 mil
$25 m
$10 m
$5 m
$1 m
Le
PEPPERD
© 2011 | P
re 77. “Educa
tely 60% of res
gure 78. Wou
than $500 mil
lion ‐ $500 mil
lion ‐ $100 mil
illion ‐ $50 mil
illion ‐ $25 mil
illion ‐ $10 mil
million ‐ $5 mil
ess than $1 mil
32%
DINE PRIVATE CA
EPPERDINE UNIVE
ation Reform
pondents indica
uld the Ameri
0%
lion
lion
lion
lion
lion
lion
lion
lion
9%
60%
APITAL MARKETS
ERSITY GRAZIADIO
m” to Lead to
ated the Ameri
rican Jobs Ac
1%
1%
S PROJECT | STA
O SCHOOL OF BUSI
Job Creatio
can Jobs Act wi
ct Change Hi
%
2%
ATE OF SMALL B
NESS AND MANAG
on, Opinions
ill not change t
Hiring Plans f
3%
3%
3%
3%
3%
3%
Yes
No
Unsure
USINESS REPORT
GEMENT. All Right
by Annual R
heir hiring plan
for the Next 1
4%
4%
T – FALL 2011
ts Reserved. | 35
Revenue Size
ns for the next 1
12 Months?
6%
5% 6
es
12
6%
According tinfluence o
Figure 79
Approxima
28%
Employecredits ($4,000
hiring wolooking job for m
than 6 mo
1
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
PEPPERD
© 2011 | P
to respondents,on plans to hire
9. Provisions
tely 18% of res
%
25
er taxup to0 fororkersfor amoreonths)
Employecuts (pa
tax femployfrom 6.2
3.1%
1%
2%
4%
5%
DINE PRIVATE CA
EPPERDINE UNIVE
, employer tax in the next twe
s of the Ame
pondents indica
5%
1
er taxayrolloryers2% to%)
Emplocuts (p
taxemplfrom 4
3.1
9% 9%
4%
5%
APITAL MARKETS
ERSITY GRAZIADIO
credits and cutelve months.
erican Jobs Ain the N
ated their busin
Figure 80. C
16%
yee taxpayrollx foroyees4.2% to1%)
Equidedu(dedvalueequi
%
2%
8%
2%
5%
S PROJECT | STA
O SCHOOL OF BUSI
s are the most
Act That Are Next 12 Mon
ness cost of equ
Cost of Equity
14%
ipmentuctionsduct fulle of newpment)
Pubp
(schroapr
%
1%
3%
4%
1
ATE OF SMALL B
NESS AND MANAG
likely provision
Likely to Haths
uity capital is in
y Capital
9%
blic worksprojectshools andad/bridgerojects)
un
1% 1%0.5%
1%
USINESS REPORT
GEMENT. All Right
ns of the Americ
ave Influence
n the range of 8
5%
Extendingnemploymentbenefits a
1%
2% 2%
1%
T – FALL 2011
ts Reserved. | 36
can Jobs act to
e on Plans to
% ‐ 12%.
4%
Localgovernment
aid (emergencypersonnel andteachers)
% 1%0.5%
1% 1
have
o Hire
yd
%
Privately‐hestrategies (with smalleprivately‐he
2
0%
5%
10%
15%
20%
25%
Le$1
Necessar
Eng
PEPPERD
© 2011 | P
eld businesses w91%) as privateer revenues repeld businesses
23%
19%
17%
ess than1 million
$1 m‐ $
mill
A
ry resources (p
Financial st
Have k
Ha
gage in plannin
Desire to
R
DINE PRIVATE CA
EPPERDINE UNIVE
Figure 81
with revenues lely‐held businesport lower levelswith higher rev
Figure 82. Us
% 19%
15% 15
illion$5lion
$5 millio‐ $10million
n outside boar
eople, money,
tatements aud
Prepare an an
key performan
ave a solid grow
Known missi
ng beyond the
o execute grow
Revenues less t
APITAL MARKETS
ERSITY GRAZIADIO
1. Cost of Eq
less than $5 misses with revens of necessary venues (72%).
Usage of Fina
17%% 15%
on
n
$10million ‐$25million
rd of directors
, etc.) to grow
ited by a CPA
nnual budget?
nce indicators
wth strategy?
ion and vision
current year?
wth strategies
than $5 million
S PROJECT | STA
O SCHOOL OF BUSI
uity Capital b
llion on averagenues greater tharesources (peo
ancial Analys
15%15
13%
$25million ‐$50
million
$mi$m
15%
0% 10% 20%
n Revenu
ATE OF SMALL B
NESS AND MANAG
by Revenue
e have almost tan $5 million. Hople, money, etc
sis by Reven
5% 14%13%
1
$50illion ‐$100million
$100$500millio
25%%
45%
% 30% 40% 50
ues more than
USINESS REPORT
GEMENT. All Right
Sizes
the same desireHowever, privatc.) to grow (45%
nue Sizes
14%
11% 11%
0 ‐0on
Greaterthan $500million
72
7
%
51%
58%
59%
60%
67%
7
0% 60% 70% 8
$5 million
T – FALL 2011
ts Reserved. | 37
e to execute grotely‐held busine%) as compared
%
0
Mean
Median
2%
75%
74%
84%
78%
75%
81%
94%3%
91%
80% 90%100%
owth esses d to
n
%
%
Most of the3% plan to
Privately‐hethan those governmen
Figure
0%
5%
10%
15%
20%
25%
30%
th
Econo
Competit
Go
E
PEPPERD
© 2011 | P
e respondents aat the first avai
eld businesses wwith revenues nt regulations a
e 84. The Num
3% 2%
In lesshan oneyear
1 ye
omic uncertain
tion from forei
vernment regu
conomic uncer
DINE PRIVATE CA
EPPERDINE UNIVE
are planning to ilable opportun
Figure 83
with annual revgreater than $5nd taxes.
mber One Iss
%4%
ear 2 years
Ot
nty (internation
Inflat
ign trade partn
Access to cap
ulations and ta
rtainty (domes
Revenues less
APITAL MARKETS
ERSITY GRAZIADIO
transfer their onity.
3. Anticipatio
venues less tha5 million. Large
sue Facing P
5%
3 years 4
4%
3%
0%
3%
2%
2%
3%
0% 5%
ther
nal)
tion
ners
pital
axes
stic)
s than $5 millio
S PROJECT | STA
O SCHOOL OF BUSI
ownership inter
on of the Ow
n $5 million arer privately‐held
Privately-Held
2%
11%
years 5 yea
%
%
%
5%
%
% 10% 15
on Reve
ATE OF SMALL B
NESS AND MANAG
rest in more tha
wnership Tran
e much more cod businesses are
ld Businesse
%
25%
ars Between5 and 10years
17%
22%
% 20% 25
nues more tha
USINESS REPORT
GEMENT. All Right
an five years fro
nsfer
oncerned aboute more concern
es Today by R
17%
Between10 and 15years
Be15 y
3
30%
%
5% 30% 3
an $5 million
T – FALL 2011
ts Reserved. | 38
om now while o
t access to capined about
Revenue Siz
8%
22%
etweenand 20years
After year
3%
41%36%
5% 40% 4
only
ital
zes
%
20rs
%
45%
Figure 8
Econo
Competit
Go
E
PEPPERD
© 2011 | P
85. The Numb
omic uncertain
tion from forei
vernment regu
conomic uncer
DINE PRIVATE CA
EPPERDINE UNIVE
ber One Eme
Ot
nty (internation
Inflat
ign trade partn
Access to cap
ulations and ta
rtainty (domes
Revenues less
APITAL MARKETS
ERSITY GRAZIADIO
erging Issue
3%
0% 5%
ther
nal)
tion
ners
pital
axes
stic)
s than $5 millio
S PROJECT | STA
O SCHOOL OF BUSI
Facing Priva
%
7%
5%
6%
11
5%
5%
6%
5%
% 10%
on Reve
ATE OF SMALL B
NESS AND MANAG
ately-Held Bu
1%
15% 20%
nues more tha
USINESS REPORT
GEMENT. All Right
usinesses by
21%
24%
25% 30%
an $5 million
T – FALL 2011
ts Reserved. | 39
y Revenue S
34%
34%34%
% 35% 4
Sizes
40%
PEPPERDINE PRIVATE CAPITAL MARKETS PROJECT | STATE OF SMALL BUSINESS REPORT – FALL 2011
© 2011 | PEPPERDINE UNIVERSITY GRAZIADIO SCHOOL OF BUSINESS AND MANAGEMENT. All Rights Reserved. | 40
Most of respondents indicated slightly increased unit sales, decreased access to capital, decreased appetite for risk, and worsened general business conditions.
Table 1. General Business and Industry Assessment: Today Versus Six Months Ago
Characteristics Decreased
significantly Decreased
slightly
Stayed about
the same
Increased slightly
Increased significantly
% increase
% decrease
Net increase/decrease
Unit sales 13% 16% 26% 28% 16% 44% 29% 15%
Prices of labor and materials 1% 4% 31% 43% 21% 64% 4% 60%
Net income 13% 22% 27% 28% 10% 38% 35% 3%
Inventory levels 8% 20% 50% 17% 5% 22% 27% -5%
Capital expenditures 12% 12% 45% 22% 9% 31% 24% 7%
Opportunities for growth 11% 16% 28% 30% 15% 45% 27% 18%
Access to bank loans 28% 16% 44% 10% 3% 12% 44% -31%
Access to equity capital 29% 17% 45% 7% 2% 10% 46% -36%
Prices of your products or services 3% 11% 46% 34% 6% 40% 14% 27%
Time to collect receivables 3% 7% 50% 27% 13% 40% 10% 30%
Number of employees 5% 12% 60% 21% 3% 24% 16% 8%
Competition 2% 12% 52% 23% 11% 34% 14% 20%
General business conditions 14% 28% 39% 16% 3% 19% 43% -24%
Appetite for risk 12% 20% 45% 18% 5% 23% 33% -10%
Probability of business closure 15% 16% 48% 14% 7% 21% 31% -9%
Time worrying about economy 4% 6% 32% 26% 31% 57% 11% 46%
PEPPERDINE PRIVATE CAPITAL MARKETS PROJECT | STATE OF SMALL BUSINESS REPORT – FALL 2011
© 2011 | PEPPERDINE UNIVERSITY GRAZIADIO SCHOOL OF BUSINESS AND MANAGEMENT. All Rights Reserved. | 41
Participants of the survey believe almost all general business characteristics will increase slightly in the next 12 months. However, most of the respondents expect decreases in access to capital.
Table 2. General Business and Industry Assessment Expectations Over the Next 12 Months
Characteristics Decreased
significantly Decreased
slightly
Stayed about
the same
Increased slightly
Increased significantly
% increase
% decrease Net
increase/ decrease
Unit sales 3% 7% 23% 45% 21% 66% 10% 56%
Prices of labor and materials 1% 2% 32% 54% 11% 65% 3% 62%
Net income 4% 11% 24% 44% 17% 61% 15% 46%
Inventory levels 3% 11% 53% 25% 7% 33% 14% 18%
Capital expenditures 6% 9% 45% 31% 9% 39% 15% 24%
Opportunities for growth 5% 10% 27% 39% 20% 59% 14% 45%
Access to bank loans 13% 10% 52% 20% 5% 25% 23% 2%
Access to equity capital 13% 11% 53% 17% 6% 23% 24% -1% Prices of your products or services 1% 5% 44% 44% 5% 49% 7% 42% Time to collect receivables 2% 7% 63% 22% 7% 28% 9% 20%
Number of employees 2% 4% 49% 39% 6% 45% 6% 39%
Competition 1% 8% 58% 25% 8% 32% 10% 22%
General business conditions 7% 19% 45% 25% 4% 29% 25% 4%
Appetite for risk 8% 13% 52% 22% 6% 28% 21% 7%
Probability of business closure 15% 17% 53% 9% 5% 15% 32% -18% Time worrying about economy 6% 11% 47% 20% 16% 37% 17% 20%
PEPPERDINE PRIVATE CAPITAL MARKETS PROJECT | STATE OF SMALL BUSINESS REPORT – FALL 2011
© 2011 | PEPPERDINE UNIVERSITY GRAZIADIO SCHOOL OF BUSINESS AND MANAGEMENT. All Rights Reserved. | 42
State‐by‐State Survey Findings
Among the states with 100 or more respondents the state of Wisconsin has the highest revenue growth in the last 12 months (4.35%), whereas the state of Alabama has the highest negative change to revenues (‐11.31%). The state of Kansas has the highest revenue growth expectation for the next 12 months (12.33%), whereas the state of Alabama has the least revenue growth expectation (2.65%). The state of Louisiana has the highest bank‐loan success rate (75%), whereas Nevada has the lowest rate of only 27%. 53% of respondents from Utah are planning to hire additional workers in the next six months, whereas only 35% of respondents from South Carolina are expecting to expand amount of employees in the next six months.
Table3.StatesRankedbyRevenueGrowthfor12MonthsEndedSept.16,2011
State Revenue growth for
the year ended Sept. 16, 2011
Revenue growth expectation for the
next 12 months Bank-loan success Plan to hire
Rate Rank Rate Rank Rate Rank Rate Rank
Wisconsin 4.35% 1 7.23% 22 70% 2 43% 19
Ohio 3.02% 2 7.38% 20 54% 10 52% 2
Kansas 2.16% 3 12.33% 1 66% 3 41% 22
Oregon 1.47% 4 8.75% 7 44% 22 36% 28
Massachusetts 1.24% 5 6.50% 27 54% 11 45% 11
Indiana 1.02% 6 6.48% 28 60% 5 46% 7
Minnesota 0.90% 7 7.95% 11 47% 19 42% 20
Washington 0.73% 8 7.78% 14 38% 26 45% 13
Michigan 0.71% 9 6.58% 26 63% 4 43% 17
Louisiana 0.43% 10 6.87% 24 75% 1 41% 23
Missouri 0.20% 11 11.68% 2 58% 7 37% 27
Virginia 0.09% 12 7.76% 15 48% 17 49% 3
Texas -0.99% 13 7.93% 12 52% 13 48% 5
California -1.01% 14 6.69% 25 41% 23 45% 12
Pennsylvania -1.04% 15 7.44% 19 56% 9 39% 25
North Carolina -1.37% 16 8.54% 9 39% 25 39% 24
New York -1.60% 17 9.18% 5 47% 20 48% 4
Colorado -1.72% 18 7.11% 23 48% 18 45% 8
Illinois -1.94% 19 7.34% 21 58% 8 43% 18
Florida -3.06% 20 7.80% 13 44% 21 43% 16
Tennessee -3.29% 21 7.53% 18 58% 6 45% 10
Utah -3.56% 22 9.23% 4 36% 28 53% 1
Arizona -3.92% 23 8.68% 8 37% 27 45% 9
New Jersey -4.25% 24 10.33% 3 51% 14 42% 21
Maryland -4.43% 25 8.14% 10 53% 12 43% 15
Georgia -4.70% 26 7.63% 17 40% 24 46% 6
South Carolina -5.68% 27 9.15% 6 48% 15 35% 29
Nevada -6.06% 28 7.72% 16 27% 29 45% 14
Alabama -11.31% 29 2.65% 29 48% 15 39% 26
Average -1.5% 7.9% 50.3% 43.5%
PEPPERDINE PRIVATE CAPITAL MARKETS PROJECT | STATE OF SMALL BUSINESS REPORT – FALL 2011
© 2011 | PEPPERDINE UNIVERSITY GRAZIADIO SCHOOL OF BUSINESS AND MANAGEMENT. All Rights Reserved. | 43
Among the states with fewer than 100 of respondents the state of North Dakota has the highest revenue growth in the last 12 months (11.79%), whereas the state of Montana has the highest negative change to revenues (‐8.58%). The commonwealth of Puerto Rico has the highest revenue growth expectation for the next 12 months (15.50%), whereas the state of Wyoming has the least revenue growth expectation for the next 12 months (2.48%). The states of Maine and South Dakota have the highest bank‐loan success rates (90%), whereas District of Columbia has the lowest rate of only 22%. Approximately 62% of respondents from Puerto Rico are planning to hire additional workers in the next six months, whereas only 8% of respondents from Wyoming are expecting to expand amount of employees in the next six months.
Table4.RevenueGrowthChangeandExpectation,LoanSuccessRates,andHiringPercentagesbyStates
withFewerThan100Responses
State Revenue growth
for the year ended Sept. 16, 2011
Revenue growth expectation for the
next 12 months
Bank-loan success
Plan to hire
Alaska -3.98% 6.93% 67% 21%
Arkansas 8.11% 8.54% 56% 45%
Connecticut 1.51% 11.10% 52% 42%
Delaware -6.28% 9.24% 88% 45%
District of Columbia -2.55% 12.91% 22% 49%
Hawaii -4.27% 5.57% 40% 43%
Idaho -2.38% 4.68% 38% 48%
Iowa 2.20% 6.66% 79% 40%
Kentucky 1.38% 13.05% 71% 44%
Maine -2.72% 2.87% 90% 38%
Mississippi -8.52% 10.43% 50% 32%
Montana -8.58% 7.89% 65% 33%
Nebraska -6.27% 3.21% 70% 44%
New Hampshire 6.28% 14.95% 55% 38%
New Mexico -5.98% 6.10% 45% 45%
North Dakota 11.79% 5.79% 60% 50%
Oklahoma 3.30% 4.78% 62% 54%
Puerto Rico -7.91% 15.50% 50% 62%
Rhode Island -0.18% 13.60% 50% 24%
South Dakota -3.25% 9.29% 90% 37%
Vermont 8.33% 11.19% 75% 53%
West Virginia -5.96% 4.09% 50% 50%
Wyoming -2.46% 2.48% 75% 8%
Average -1.23% 8.30% 60.89% 41.03%
PEPPERDINE PRIVATE CAPITAL MARKETS PROJECT | STATE OF SMALL BUSINESS REPORT – FALL 2011
© 2011 | PEPPERDINE UNIVERSITY GRAZIADIO SCHOOL OF BUSINESS AND MANAGEMENT. All Rights Reserved. | 44
ABOUT THE AUTHOR
John Paglia, PhD, MBA, CPA, CFA
Associate Professor of Finance and Senior Researcher
Pepperdine Private Capital Markets
Dr. Paglia, a former Julian Virtue and Denney Professorship recipient, is an associate professor of finance at
Pepperdine University and directs the Pepperdine Private Capital Markets Project. He has over 10 years of
university teaching experience in finance, performs business valuations for privately‐held companies, and has
testified as an expert on economic damage and valuation matters.
His work on the Pepperdine Private Capital Markets Project—the first simultaneous, comprehensive, and on‐
going investigation of the major private capital market segments—has resulted in over 20,000 report
downloads in more than 60 countries and has earned him the 2011 “George Award,” which is given to the one
faculty member annually who best leverages the business community to make a difference in the classroom.
His research has appeared in the Wall Street Journal, CNBC, USA Today, and the New York Times, been
published in a number of journals and been presented at domestic and international conferences. Dr. Paglia
holds a PhD in finance, an MBA, a BS in finance, and is a Certified Public Accountant (CPA) and Chartered
Financial Analyst (CFA) Charterholder.
Contact: [email protected]
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PEPPERDINE PRIVATE CAPITAL MARKETS PROJECT | STATE OF SMALL BUSINESS REPORT – FALL 2011
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INDEX OF TABLES
Table 1. General Business and Industry Assessment: Today Versus Six Months Ago…………………………….…………40
Table 2. General Business and Industry Assessment Expectations Over the Next 12 Months……………………..……41
Table 3. States Ranked by Revenue Growth for 12 Months Ended Sept. 16, 2011……………………………………………42
Table 4. Revenue Growth Change and Expectation, Loan Success Rates, and Hiring Percentages by States with
Fewer than 100 Responses……………………………………………………………………………………………………………………………..43
INDEX OF FIGURES
Figure 1. Respondents Distribution by State ................................................................................................................ 7
Figure 2. Description of Entity ...................................................................................................................................... 8
Figure 3. Number of Employees .................................................................................................................................... 8
Figure 4. Ownership Role .............................................................................................................................................. 8
Figure 5. Annual Revenues ........................................................................................................................................... 9
Figure 6. Net Income ..................................................................................................................................................... 9
Figure 7. Current Sources of Financing ......................................................................................................................... 9
Figure 8. Current Sources of Financing, Revenue Size Less Than $1 Million ............................................................. 10
Figure 9. Current Sources of Financing, Revenue Size $1 Million ‐ $5 Million ........................................................... 10
Figure 10. Current Sources of Financing, Revenue Size $5 Million ‐ $10 Million ....................................................... 10
Figure 11. Current Sources of Financing, Revenue Size $10 Million ‐ $25 Million ..................................................... 11
Figure 12. Current Sources of Financing, Revenue Size $25 Million ‐ $50 Million ..................................................... 11
Figure 13. Current Sources of Financing, Revenue Size $50 Million ‐ $100 Million ................................................... 11
Figure 14. Current Sources of Financing, Revenue Size $100 Million ‐ $500 Million ................................................. 12
Figure 15. Current Sources of Financing, Revenue Size Greater Than $500 Million.................................................. 12
Figure 16. Change to Organic Revenues over the last 12 Months ............................................................................. 12
Figure 17. Expected Change to Organic Revenues in the Next 12 Months ............................................................... 13
PEPPERDINE PRIVATE CAPITAL MARKETS PROJECT | STATE OF SMALL BUSINESS REPORT – FALL 2011
© 2011 | PEPPERDINE UNIVERSITY GRAZIADIO SCHOOL OF BUSINESS AND MANAGEMENT. All Rights Reserved. | 47
Figure 18. Attempt to Raise Capital over the Last 12 months .................................................................................. 13
Figure 19. Capital Sources Contacted in the Last 12 Months ..................................................................................... 13
Figure 20. Success Rates, Revenue Size Less Than $1 Million .................................................................................... 14
Figure 21. Success Rates, Revenue Size $1 Million ‐ $5 Million ................................................................................. 14
Figure 22. Success Rates, Revenue Size $5 Million ‐ $10 Million ............................................................................... 14
Figure 23. Success Rates, Revenue Size $10 Million ‐ $25 Million ............................................................................. 15
Figure 24. Success Rates, Revenue Size $25 Million ‐ $50 Million ............................................................................. 15
Figure 25. Success Rates, Revenue Size $50 Million ‐ $100 Million ........................................................................... 15
Figure 26. Success Rates, Revenue Size $100 Million ‐ $500 Million ......................................................................... 16
Figure 27. Success Rates, Revenue Size Greater Than $500 Million .......................................................................... 16
Figure 28. Average Number of Capital Providers Contacted ..................................................................................... 16
Figure 29. Average Number of Capital Providers Contacted, Revenue Size Less Than $1 Million ........................... 17
Figure 30. Average Number of Capital Providers Contacted, Revenue Size $1 Million ‐ $5 Million ......................... 17
Figure 31. Average Number of Capital Providers Contacted, Revenue Size $5 Million ‐ $10 Million ....................... 17
Figure 32. Average Number of Capital Providers Contacted, Revenue Size Greater Than $10 Million .................... 18
Figure 33. Amount of Capital Attempted to Raise in the last Six Months ................................................................. 18
Figure 34. Average Time to Complete Financing Process in Days ............................................................................. 18
Figure 35. Days Spent During the Process to Successfully Obtain Financing ............................................................ 19
Figure 36. Next Steps to Satisfy Financial Needs ....................................................................................................... 19
Figure 37. Reasons for Not Trying to Obtain Capital in the Last 12 Months ............................................................. 19
Figure 38. Percentage of Businesses by Revenue Size That Indicated “My Business Didn’t Have Any Need in
External Financing” as a Reason for Not Trying to Obtain Capital in the Last 12 Months ............................. 20
Figure 39. Percentage of Businesses by Revenue Size That Indicated “My Business Would Be Rejected for
Funding” as a Reason for Not Trying to Obtain Capital in the Last 12 Months ............................................... 20
Figure 40. Willingness to Obtain Financing, All Revenue Sizes ................................................................................. 21
Figure 41. Willingness to Obtain Financing, Revenue Size Less Than $1 Million ...................................................... 21
Figure 42. Willingness to Obtain Financing, Revenue Size $1 Million ‐ $5 Million ................................................... 22
PEPPERDINE PRIVATE CAPITAL MARKETS PROJECT | STATE OF SMALL BUSINESS REPORT – FALL 2011
© 2011 | PEPPERDINE UNIVERSITY GRAZIADIO SCHOOL OF BUSINESS AND MANAGEMENT. All Rights Reserved. | 48
Figure 43. Willingness to Obtain Financing, Revenue Size $5 Million ‐ $10 Million ................................................. 22
Figure 44. Willingness to Obtain Financing, Revenue Size $10 Million ‐ $25 Million ............................................... 23
Figure 45. Willingness to Obtain Financing, Revenue Size $25 Million ‐ $50 Million ............................................... 23
Figure 46. Willingness to Obtain Financing, Revenue Size $50 Million ‐ $100 Million ............................................. 24
Figure 47. Willingness to Obtain Financing, Revenue Size $100 Million ‐ $500 Million ........................................... 24
Figure 48. Willingness to Obtain Financing, Revenue Size Greater Than $500 Million ............................................ 25
Figure 49. The Most Important Area to Focus On, All Revenue Sizes ........................................................................ 25
Figure 50. The Most Important Area to Focus On, Revenue Size Less Than $1 Million ............................................ 26
Figure 51. The Most Important Area to Focus On, Revenue Size $1 Million ‐ $5 Million .......................................... 26
Figure 52. The Most Important Area to Focus On, Revenue Size $5 Million ‐ $10 Million ........................................ 26
Figure 53. The Most Important Area to Focus On, Revenue Size $10 Million ‐ $25 Million ...................................... 27
Figure 54. The Most Important Area to Focus On, Revenue Size $25 Million ‐ $50 Million ...................................... 27
Figure 55. The Most Important Area to Focus On, Revenue Size $50 Million ‐ $100 Million .................................... 27
Figure 56. The Most Important Area to Focus On, Revenue Size $100 Million ‐ $500 Million .................................. 28
Figure 57. The Most Important Area to Focus On, Revenue Size Greater Than $500 Million .................................. 28
Figure 58. Plans to Hire Additional Workers in the Next Six Months ........................................................................ 28
Figure 59. Plans to Hire Additional Workers by Annual Revenues Sizes ................................................................... 29
Figure 60. The Number One Reason Preventing Privately‐Held Businesses from Hiring, All Revenue Sizes ............ 29
Figure 61. The Number One Reason Preventing Privately‐Held Businesses from Hiring, Revenue Size Less Than $1
Million ................................................................................................................................................................ 29
Figure 62. The Number One Reason Preventing Privately‐Held Businesses from Hiring, Revenue Size $1 Million ‐
$5 Million ........................................................................................................................................................... 30
Figure 63. The Number One Reason Preventing Privately‐Held Businesses from Hiring, Revenue Size $5 Million ‐
$10 Million ......................................................................................................................................................... 30
Figure 64. The Number One Reason Preventing Privately‐Held Businesses from Hiring, Revenue Size $10 Million ‐
$25 Million ......................................................................................................................................................... 30
PEPPERDINE PRIVATE CAPITAL MARKETS PROJECT | STATE OF SMALL BUSINESS REPORT – FALL 2011
© 2011 | PEPPERDINE UNIVERSITY GRAZIADIO SCHOOL OF BUSINESS AND MANAGEMENT. All Rights Reserved. | 49
Figure 65. The Number One Reason Preventing Privately‐Held Businesses from Hiring, Revenue Size $25 Million ‐
$50 Million ......................................................................................................................................................... 31
Figure 66. The Number One Reason Preventing Privately‐Held Businesses from Hiring, Revenue Size $50 Million ‐
$100 Million ....................................................................................................................................................... 31
Figure 67. The Number One Reason Preventing Privately‐Held Businesses from Hiring, Revenue Size $100 Million
‐ $500 Million ..................................................................................................................................................... 31
Figure 68. Amount of Employees Planned to be Hired .............................................................................................. 32
Figure 69. Amount of Employees Planned to be Hired by Annual Revenues Sizes ................................................... 32
Figure 70. The Skills in Demand for New Hires .......................................................................................................... 32
Figure 71. Need for Training of New Hires ................................................................................................................. 33
Figure 72. Government Policies to Lead to Job Creation ........................................................................................... 33
Figure 73. “Increased Access to Capital” Policy to Lead to Job Creation, Opinions by Annual Revenue Sizes ......... 33
Figure 74. “Tax Incentives” Policy to Lead to Job Creation, Opinions by Annual Revenue Sizes .............................. 34
Figure 75. “Regulatory Reform” to Lead to Job Creation, Opinions by Annual Revenue Sizes................................. 34
Figure 76. “Increased Competitiveness with Foreign Trade Partners” Policy to Lead to Job Creation, Opinions by
Annual Revenue Sizes ........................................................................................................................................ 34
Figure 77. “Education Reform” to Lead to Job Creation, Opinions by Annual Revenue Sizes .................................. 35
Figure 78. Would the American Jobs Act Change Hiring Plans for the Next 12 Months? ......................................... 35
Figure 79. Provisions of the American Jobs Act That Are Likely to Have Influence on Plans to Hire in the Next 12
Months ............................................................................................................................................................... 36
Figure 80. Cost of Equity Capital ................................................................................................................................. 36
Figure 81. Cost of Equity Capital by Revenue Sizes .................................................................................................... 37
Figure 82. Usage of Financial Analysis by Revenue Sizes .......................................................................................... 37
Figure 83. Anticipation of the Ownership Transfer .................................................................................................... 38
Figure 84. The Number One Issue Facing Privately‐Held Businesses Today by Revenue Sizes ................................. 38
Figure 85. The Number One Emerging Issue Facing Privately‐Held Businesses by Revenue Sizes ........................... 39
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