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Seven Sources of Essential Small Business Info
Published on Jul 20, 2012
Read our article, 'Seven Sources of Essential Small Business Info' at 'Time to Start Up,' the small business blog by BizFilings.
"Knowledge is power" may be a cliché, but like so many well-worn phrases, it rings true. As you seek ways to finance your small business, you'll find that the more information you have, the better off you'll be.
To set your expectations and pursue dollars in a savvy way, you'll want to know what kind of funding is available, what kind of financing your competitors are securing, what the general business climate is and where the economy might be headed. In this day and age, there's no shortage of info, but the following seven resources will provide some of the most essential and highest quality data you'll want to have at your fingertips.
The U.S. Small Business Administration's "Frequently Asked Questions about Small Business Finance" document. This eight-page report "sketches the ecosystem or life-cycle of small business financing." It addresses some of the most fundamental questions an entrepreneur might have, such as "What share of small businesses use financing?" and "How much do small businesses rely on credit cards?" To answer these questions, the SBA refers to authoritative studies, and provides sometimes conflicting information to convey the complexity of the small business landscape. For example, it points out that while credit cards account for only about 7 percent of startup capital, a National Small Business Association study showed credit cards are the most common type of small business financing. The document's charts and graphs illustrate everything from the types of financing used by woman-owned startups to trends in venture capital investment. It also provides an overview of the SBA's financing programs and explains some major public policy issues and laws affecting SMBs, such as the Sarbanes-Oxley Act.
The Kauffman Firm Survey. Founded by entrepreneur Ewing Marion Kauffman, the Kauffman Foundation has been advocating for small businesses and providing them with valuable opportunities and information for four decades. The Kauffman Firm Survey started in 2004, and is the largest longitudinal study of new businesses in history, involving 4,928 businesses in the baseline survey. With the fifth follow-up survey having been released in August 2011, the KFS provides a unique and valuable snapshot of U.S. small businesses, and the survey data includes information related to the participants' financing. It's a good idea for entrepreneurs to explore the foundation's website, as well, because it offers grants and other funding for small businesses.
National Venture Capital Association reports. The NVCA compiles reports on venture capital disbursements, commitments made to venture capital firms, venture-backed exits and venture capital performance. The NVCA provides a big-picture overview of VC investments, and breaks down the numbers regionally and by industry, allowing business owners to grasp the trends in equity investment that are most applicable to them. The association website is also a great place to find other studies related to VC, such as the Bancroft Library Venture Capital Oral History Project.
The U.S. Census Bureau's "Survey of Business Owners." The 2002 SBO included data gleaned from about 16.7 million U.S. businesses. In addition to information such as the gender and ethnicity of small business owners, the SBO gathered information related to businesses capital requirements and sources of financing. It found, for example, that 11 percent of all businesses secured a bank loan, and that women-owned businesses are more likely than male-owned companies to use a credit card for startup financing.
Federal Financial Institutions Examination Council reports. These reports provide essential information related to the capitalization and structure of most banks and other financial institutions insured by the Federal Deposit Insurance Corporation. Call reports, known more formally as Reports of Condition and Income, are available for download via the FFIEC website. Small businesses that are researching financial institutions can refer to these reports, as well Uniform Bank Performance Reports, to gauge the health of a bank or other FDIC-insured institution. The UBPRs use quarterly call report information to provide a profile of a bank, compared with a group of peer banks. The UBPR for a big institution like Bank of America includes information such as its balance sheet, a capital analysis, and a summary of securitization and asset sale activities.
U.S. Federal Reserve Bank loan officer surveys. The Fed's "Senior Loan Officer Opinion Survey on Bank Lending Practices" is a quarterly survey that involves about 60 big U.S. banks and half a dozen U.S. branches of banks based in other countries. It paints a picture of what the lending environment is like. The survey includes questions such as how a bank's credit standards have changed for businesses with annual sales of less than $50 million. In response to this question, 94.3 percent of respondents to the January 2012 survey said the standards had "remained basically unchanged" since the previous survey. The report also includes information related to things such as collateralization requirements, premiums charged on riskier loans and the costs of credit lines for small businesses. The surveys also include questions that are specific to timely economic conditions, so the January 2012 survey, for example, included questions regarding the impact of the European debt crisis on banking.
U.S. Federal Reserve Bank Beige Book. While entrepreneurs can refer to the loan officer survey to get information pertinent to their bank-related financing, for an overview of the U.S. economy as a whole, they can look to the Fed's "Summary of Commentary on Current Economic Conditions by Federal Reserve District." These reports, commonly called the Beige Book reports, are issued eight times a year, and describe economic conditions around the country based on interviews with bank directors, business leaders, economists and other sources. The reports break down the outlook by industry (such as manufacturing and business services) and key sectors of the economy (such as residential and commercial real estate markets).
Whether you're preparing a presentation for potential investors or planning a long-term financing strategy, the information in these reports is sure to come in handy. And the footnotes, citations and bibliographies in these documents are sure to lead you to other useful repositories of business information, meaning you'll soon have more than seven solid sources to keep you up to date and in the know.