Independent Businesses Report Growing Sales and Hiring, but Policies Tilted in Favor Large Companies Hold Them Back

2016 Independent Business Survey CoverA large national survey has found that public support for independent businesses led to brisk sales and a sharp increase in hiring in 2015, but biased policies and other obstacles are limiting their success.

FOR IMMEDIATE RELEASE

MINNEAPOLIS, MINN. (Feb. 10, 2016) — Independent businesses experienced healthy sales growth in 2015, buoyed by their strong community ties and growing public awareness of the benefits of locally owned businesses, according to a large national survey released today.  (Download the full report.)

The Independent Business Survey, which is conducted by the Institute for Local Self-Reliance in partnership with the Advocates for Independent Business and is now in its 9th year, gathered data from over 3,200 independent businesses. The respondents reported brisk sales in 2015, with revenue growing an average of 6.6 percent. Among independent retailers, who comprised just under half of survey respondents, revenue increased 4.7 percent in 2015, including a 3.1 percent gain during the holiday season. These figures contrast sharply with the performance of many national retail chains, and overall holiday retail sales, which rose just 1.6 percent in December according to the U.S. Department of Commerce.

This growth led to a significant increase in hiring. Overall employment at the independent businesses surveyed expanded by 5.6 percent in 2015, with more than 30 percent of respondents reporting the addition of at least one employee.

Local First initiatives are part of what’s strengthening independent businesses, the survey found. Two-thirds of respondents in cities with an active Local First, or “buy local,” campaign said that the initiative is having a noticeable positive impact on their business, citing benefits such as new customers and increased loyalty among existing customers.

About one-third of businesses in Local First cities also said that the initiative had led them to become more engaged in advocating on public policy issues, and 44 percent said that the campaign had made elected officials more aware and supportive of independent businesses.

That’s significant because the survey also found that independent businesses are facing a number of challenges, many related to public policy.

One obstacle is a lack of credit for businesses seeking to grow. The survey found that one in three independent businesses that applied for a bank loan in the last two years failed to secure one. That figure was 54 percent among minority-owned businesses, and 41 percent among young firms, whose expansion has historically been a key source of net job growth. Continue reading

Before You Click on Amazon, Here’s Why Your Choice Matters (Infographic)

Image: Amazon vs. Local Business.Amazon is rapidly expanding its online empire, but behind the conveniences that the company offers are a lot of hidden costs.

The Advocates for Independent Business put together an infographic, released today, that shows how shopping at Amazon compares with shopping at local businesses in its impact on jobs, taxes, the local economy, and community.

Before you click, here’s why your choice matters:

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5 Things Local Officials Need to Know Before Welcoming an Amazon Warehouse

Image: Amazon fact sheet.Amazon is on a building spree, and many local officials are eager to bring one of its giant fulfillment centers to their own backyard. But a new factsheet released today by Advocates for Independent Business, drawing on research from the Institute for Local Self-Reliance, shows how communities are losing more than they gain in these projects.

Cities are so eager to lure Amazon that many have resorted to offering the company lavish tax breaks and other public assistance. Between 2012 and 2014, public records show, Amazon picked up $431 million in local tax incentives to finance its warehouse expansion.

Yet, Amazon fulfillment centers impose so many hidden costs on local economies that cities ought to reconsider welcoming them at all, much less greasing the way with public funds.

Download the fact sheet: 5 Things Local Officials Need to Know Before Welcoming an Amazon Warehouse

Small Business Groups React to Study Showing State Tax Incentives Overwhelmingly Favor Large Companies

Image: Small businesses receive only 10 percent in state incentive spending.Advocates for Independent Business (AIB), a coalition of 15 national organizations representing small businesses, welcomed the release today of new data showing conclusively that state economic development incentives overwhelmingly favor big business. The study, Shortchanging Small Business, produced by the research group Good Jobs First, examined subsidy awards in 14 states and found that 90 percent of the $3.2 billion in incentives awarded went to large firms.

“It’s stunning to see just how much state economic development programs are biased against locally owned businesses,” said Stacy Mitchell, coordinator of AIB. “We know from extensive research that small businesses, especially new and growing firms, often deliver out-sized benefits to local economies. Yet, state governments are putting these businesses at a competitive disadvantage by steering billions of dollars in public subsidies to their big corporate competitors.  We hope this report will be a wake-up call for state lawmakers.”

Of the thousands of subsidy awards that Good Jobs First analyzed, all were granted by programs that are accessible, at least on paper, to both small and large companies. In practice, however, the study confirms that these programs are biased toward big business.

As a policy solution, the report recommends that states reform their incentive rules by tightening eligibility to exclude large recipients and by implementing safeguards such as dollar caps per deal and per company. The report also notes that big tax breaks often mean little to small businesses, and that the savings from these reforms would be best spent funding public goods like infrastructure and education that benefit all employers.

The report is the second in a series of three that Good Jobs First will release this fall. See AIB’s statement on the first report, In Search of a Level Playing Field.

AIB Statement on New Report, “In Search of a Level Playing Field”

Graphic: Report finding.In a report released today by Good Jobs First, leaders of small business organizations from around the country overwhelmingly agree that despite pro-small business talk, states’ economic development incentives favor big businesses at the expense of small firms looking to grow.

Good Jobs First surveyed 41 small business leaders representing 24,000 member businesses in 25 states,  and found:
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AIB Hails New Requirement for Subsidy Transparency

Photo: Accounting.Advocates for Independent Business (AIB) today hailed a newly issued accounting rule that will require local and state governments to annually disclose the amount of tax breaks they give to corporations in the name of economic development.

The rule change was proposed earlier this year by the Governmental Accounting Standards Board (GASB). In February, AIB submitted a public comment letter strongly supporting the proposal and urging the board to go further by mandating that governments not only report the aggregate amount they spend on corporate tax breaks, but also disclose the details of individual deals.

“This issue is of significant interest to our member organizations, because when cities and states use tax breaks, as they often do, to subsidize the growth of large companies like Walmart and Amazon, it directly affects the competitive landscape for independent businesses,” said Stacy Mitchell, coordinator of AIB. “We commend GASB for issuing this new rule, which will make the total cost of these tax breaks transparent for the first time and open the way for meaningful public debate about whether they are warranted.”

Cities and states currently spend an estimated $70 billion a year on tax breaks for economic development. Studies indicate that subsidizing big retailers does more harm to the local economy than good by causing job and revenue losses at competing small businesses.

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AIB Submits Comments Supporting Greater Flexibility for Credit Unions in Small Business Lending

Image: AIB letter to NCUA.Driven by concern over the limited availability of credit for independent businesses, AIB has submitted comments largely in support of a proposal to give credit unions more flexibility to meet the needs of small business borrowers.

The National Credit Union Administration, the federal body that regulates credit unions, has proposed regulation that would lift existing prescriptive rules that set hard-and-fast standards on issues like personal guarantees and collateral. Instead, credit unions would be allowed to develop their own business lending underwriting policies, which would be reviewed yearly by their regulator. This is more akin to how banks operate.

AIB expressed support for the proposed regulation, with a modest caveat about how participation loans that are commercial in nature are regulated.

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