The economy has improved significantly over the last few years and put millions of small businesses in a position to succeed in a number of ways once again. However, it now seems as though this change is really only benefiting existing independent firms, as new ones are really not being created very much at all. That, in turn, could prove problematic for sustaining and improving economic growth going forward.
There has been very little increase in small business creation since the end of the recession, which is a major issue because of how badly that economic downturn hit the business creation rate in the first place, according to a report from the Washington Post. This creates a number of problems, and perhaps most significantly, relates back to job creation in particular. That’s because the number of people between the ages of 25 and 55 – who would generally be expected to be in the workforce – is growing far more quickly than business or job creation, and that could create a paucity of employment opportunities for them as time goes on.
“It all feels pretty good,” Mark Zandi, chief economist at Moody’s Analytics, said during an event Wednesday in Washington, D.C., according to the newspaper. “But I think there are things to be worried about, and the state of entrepreneurship is one of those things.”
How big could this problem be?
Each year in the 1990s, between 7 million and 7.5 million new jobs were created, but in the 12-month period ending June 2014, that number was only 5.2 million, the report said. Moreover, in the few years before the recession, there was only about 6 million jobs being created annually, so this problem really isn’t getting much better. In fact, it could be getting worse, as businesses are now closing at rates not seen in decades, and when experts couple that fact with the slower business creation, this presents a major cause for concern.
Owners of existing companies who want to make sure they’re scooping up the best possible candidates for whatever open jobs they might have may want to consider the benefits of having as much money freed up as possible. One way to do this may be to find more affordable small business insurance options, as cutting costs for errors and omissions insurance, for example, could end up saving thousands of dollars per year.