While the economic environment remains challenging, small businesses are bucking the trend, according to the November update to the Intuit Small Business Employment Index. The monthly report showed 0.24 percent job growth for small businesses last month -- about 49,000 new jobs nationwide.
"The recovery that began late last summer for small businesses is still underway," said Susan Woodward, the economist who worked with Intuit (NASDAQ:INTU) to create the index. "While employment at the national level for all businesses is barely rising, small businesses are showing a more robust increase. This is in line with what we've seen with past recessions -- small businesses are the first to hire when recovery begins."
That said, Woodward noted while the signs are positive, it's only a start.
"The fact that small businesses are hiring is comforting, but this is going to be a slow recovery," she said. "The flood of houses coming onto the market from foreclosures, that's going to continue this year and next year, and as long as we have that going on, construction can't really recover. It's not going to come back soon."
Intuit also found that compensation per employee fell in November. The average monthly pay for small business employees in November was $2,592 per month in November, according to the index. That's a 0.3 percent decline from October's $2,600 per month, or about $31,100 per year.
Woodward noted that this suggests small businesses are using the soft job market to their advantage.
"Compensation is down," she said. "It's down just a little bit. Both compensation and the hourly rate are down from about six months ago. This is a sign that the labor market is still soft. The federal numbers are not down. They're pretty flat but they're not down. The sector of the economy that's hiring the most, which is these small businesses, is paying people a little bit less than it used to."
Meanwhile, the hours worked stayed flat compared with October, which Woodward said saw a spike in hours worked. The index found that small business hourly employees worked an average of 105.9 hours in November.
"It's good to see that hours worked are still high despite a relatively strong rise in employment," Woodward said. "This means that small businesses are busy. Even though they are hiring more people, they haven't reduced the hours of their hourly employees."
The index is based on anonymous employment data from about 59,000 small businesses (with fewer than 20 employees) that use Intuit Online Payroll. Woodward noted that the Intuit Online Payroll customers are actually growing faster than average small businesses.
"They're growing a lot faster than the average small business," she said. "We take their numbers and then we back out what we see is the excessive growth for them in particular. Businesses in this size classification have actually been shrinking over time for the past 25 years, but these guys have been growing."
She explained that it's not surprising that those businesses are doing better than the average, in that they're doing well enough to require support from a payroll service.
SMBs Go Online with Intuit Websites
Intuit itself is benefiting from the relative strength of the small business sector. While the company did post a loss of $70 million for its first fiscal quarter, reported last month, it also showed 12 percent year-over-year growth in revenues. Intuit President and Chief Executive Officer Brad Smith cited the company's Small Business Group as one of the driving forces.
"We delivered double-digit revenue growth, demonstrating that our strategy is working. Our Small Business Group continues to show strength across the board. The early feedback on QuickBooks 2011 and QuickBooks Online is very positive and shows the potential of our core products. We are also seeing more people choosing Intuit Websites solutions, and healthy interest in our newly available mobile solutions coming to market."
"About 20,000 small businesses choose us every month," he added.
Matlack noted that it is essential for small businesses to acquire a presence online, as 93 percent of U.S. consumers are now turning to the Internet to find local businesses.
Intuit Websites is a service built on technology Intuit acquired with Homestead Technologies in 2007. It debuted in August and provides small businesses with a do-it-yourself Web site building tool that bypasses the expense of a third-party Web designer.
"Our goal is quite simply to help small businesses get customers," said Ralph Matlack, group product manager for Intuit Websites. "We're very focused on just making things simple, making things affordable. We want to deliver great service to small businesses that are trying to get started or take their business to the next level and don't have the budget to take their Web site to a third-party Web designer."
The online tool features more than 2,000 customizable templates SMBs can use to build their Web sites. You can just drag-and-drop website elements, such as pictures or text.
"If you're comfortable with Microsoft PowerPoint, then everything is pretty familiar," Matlack said. "All of the shortcuts that you would normally have in a desktop app are all there."
Matlack noted that you can use your own images or choose from the Intuit image library, which consists of 250,000 royalty-free images.
Once you've built your website, the tool allows you to embed "follow me" buttons for social networks like Twitter, Facebook and LinkedIn. It also supports blogs to help you communicate with customers.
It also allows you to add a shopping cart and other ecommerce capabilities.
The service includes access to Intuit's team of Web Advisors -- most of whom have owned or worked in small businesses -- who can help with the tools, offer design tips and even suggest online marketing tactics.
Intuit Websites Features and Pricing
The service starts at $4.99 a month for a personal website that supports five pages and 25 MB of storage. Small businesses looking for more robust websites will want to look at the Business and Professional tiers.
The Business package supports up to 100 pages and 5 GB of storage. It also includes a domain name and up to five email addresses and costs $19.99 a month. The Professional package, which costs $49.99 a month, supports an unlimited number of Web pages and 10 GB of storage. It also comes with three domain names, up to 50 email addresses and tools to provide website statistics and listings on search engines.
Thor Olavsrud is a freelance writer and a former senior editor of InternetNews.com. He has covered operating systems, standards, telecom and security, among other technologies.
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